A devastating report today breaks the guise of cronyism and ineptitude that marked the government's £ 18 billion rush to procure PPE and other equipment during the coronavirus crisis.
Michael Gove and Dominic Cummings were both dragged into the debacle after the spending watchdog said officials ignored potential conflicts of interest from their affiliates.
The National Audit Office announced that officials had signed contracts for hundreds of thousands of face masks that were found to be unusable and wasted hundreds of millions of pounds.
According to the National Audit Office's report, the government has placed over 1,300 contracts worth £ 10.5 billion without any competition
The bomb report found:
- Two of the companies named in the report have ties to the Prime Minister's former chief advisor.
- More than 1,300 contracts worth £ 10.5 billion have been awarded by the government with no competition whatsoever – which increases the likelihood of wasting money;
- Ministers set up a separate VIP procurement route, which allowed some companies to make decisions quickly – provided they had the right connections.
- Every tenth supplier processed via this high priority lane (47 out of 493) received contracts, compared to fewer than one in 100 suppliers who came via the normal lane (104 out of 14,892).
Rachel Reeves, spokeswoman for the Labor Cabinet Office, said, "The country deserves the confidence that its money is being effectively spent by the government – and knowing, without a doubt, that Conservative Party friends and donors are not benefiting from this pandemic."
The NAO report looked at 8,600 contracts awarded by the government between January and July.
These were valued at £ 18bn, of which £ 17.3bn were new contracts rather than contract renewals. Most of the money, £ 12.3 billion, went to PSA, the rest to other equipment and virus testing.
Ministers, MPs and officials were able to direct companies to a “high priority” lane, and companies granted this VIP access were more than ten times more likely to win an order than companies in the normal lane.
The leads came in a special mailbox, but officials only recorded the sources half of the time, although many came from ministerial offices after MPs gave clues about companies in their constituencies.
The NAO highlighted a £ 840,000 contract with Public First for focus groups and communications.
Dominic Cummings was dragged into the debacle after the spending watchdog said officials failed to consider potential conflicts of interest
The policy and research firm is owned by James Frayne and his wife Rachel Wolf, who both previously worked for Michael Gove, Secretary of the Cabinet Office. Miss Wolf co-wrote Boris Johnson's 2019 manifesto.
The NAO said there was no evidence that Mr. Gove was involved in the award, but "we did not find any documentation to consider any conflict of interest".
Mr Cummings' association with Mr Frayne dates back to at least 2000 when they worked together on a campaign against Britain's entry into the euro. You were also a co-founder of a right-wing think tank.
Another potential conflict of interest was discussed in the report with regard to Lord Agnew, a Minister in the Treasury and Cabinet Office.
He owned an interest in Faculty, an artificial intelligence company that had three coronavirus contracts worth £ 3 million for data analysis.
The faculty is also associated with Mr. Cummings. It worked with him on the 2016 election campaign, and The Guardian reported that he donated £ 260,000 to the company from his company Dynamic Maps in 2018 and 2019.
A faculty spokesman said: “The NAO found no evidence that Lord Agnew was involved in these procurements, which were made under delegated authority in various departments, none of which was his own.
The National Audit Office said there was no evidence that Mr. Gove was involved in the award
It also turned out that the minister had disclosed his interests. Lord Agnew maintains ownership of his shares by blind trust. & # 39;
The report made no mention of Mr. Cummings' connection with Public First or the Faculty. Public First's Mr Frayne said, "We have a pay-as-you-go deal that we can terminate at any time if they are not satisfied with our work."
A government source said Mr. Gove was not involved in the Public First contract.
Cabinet Minister Julia Lopez said: "We have robust processes in place to ensure critical equipment gets to where it is needed as quickly as possible while ensuring value for money for the taxpayer . "
Mr. Cummings did not respond to a request for comment.
Dominic Cummings has ties to two of the four companies singled out in the damn National Audit Office report.
The former chief advisor to the 48-year-old Prime Minister has ties to the artificial intelligence company, faculty and research firm Public First, which have signed contracts valued at more than £ 3.8 million.
Mr Cummings was omitted from the public watchdog's devastating report that found bidders with "VIP access" to ministers ten times more likely to win Covid contracts than those who did not.
Mr Cummings worked with the faculty in 2016, which won three contracts worth £ 3 million for data analysis.
Dominic Cummings has ties to the artificial intelligence company, faculty, and research firm Public First
He also has longstanding ties with Public First, led by James Frayne and his wife Rachel Wolf, who co-wrote the Conservative Party's 2019 manifesto.
His association with Mr Frayne dates back to at least 2000 when they were working on a campaign against Britain's accession to the euro.
The NAO report criticized the fact that the £ 840,000 Public First contract was retrospectively awarded. The report states that Public First billed a total of £ 550,000 for the works covered by the contract.
It was found that the company's founders also worked for the Cabinet Minister Michael Gove. The report said there was no evidence that Mr Gove was involved in the award of the contract, but added that "no documents were found to address conflicts of interest".
There is no evidence that Mr Cummings played a role in securing the contracts.
Another company audited in the report is Ayanda Capital, which has won a £ 253 million contract to supply PSA.
The deal was brokered by Andrew Mills, who was one of 12 advisors to the Board of Trade, chaired by International Trade Secretary Liz Truss. Mr. Mills is also a Senior Board Adviser to Ayanda Capital.
Approximately 50 million pound sterling worth of masks supplied by the company were of the wrong specification and cannot be used.
Ayanda said last night, "Suggestions that the masks are unsuitable for the purpose or unsafe for NHS frontline workers are simply wrong and we are being classified as defamatory."
In addition to the three companies identified in the NAO report, the mail can display 12 other companies included in the graphic above. This includes Meller Designs, which has signed PPE contracts worth £ 163 million. It is operated by Tory donor David Meller.
P14 Medical Limited won three orders valued at £ 272 million to supply PPE. Its director is former Tory Councilor Steve Dechan.
Pictured: The Spanish middleman who was paid £ 21 million in tax dollars to sign a PSA deal between the NHS and the Florida-based jewelry designer
A Spanish businessman who acted as intermediary in securing PPE for the NHS was paid a staggering £ 21 million in cash by UK taxpayers.
The consultant had provided an additional £ 15 million in public funds, US court documents show.
Gabriel Gonzalez Andersson from Madrid was called in to help with the procurement, logistics, product sourcing and quality control of the lifesaving devices.
The court documents described him as "doing very well" under the deal – more than £ 35 million at one point.
Gabriel Gonzalez Andersson (pictured) from Madrid found manufacturers who could quickly deliver millions of PPE articles for offers that had already been agreed for Mr. Saiger
Florida-based jewelry designer Michael Saiger (pictured with Rachael Russell) started a PSA business during the coronavirus crisis and the middleman he employed was handed £ 21 million in taxpayers' money
He worked for Florida-based jewelry designer Michael Saiger, 31, who started a company earlier this year that sold protective clothing to governments around the world.
Mr. Saiger claimed his previous encounters with factories in China set him up well to fulfill orders. As a result, UK ministers gave his company "a series of lucrative contracts" worth £ 200 million to provide gloves and robes to NHS workers.
Jewelry designer Michael Saiger started a PSA business during the crisis – and a middleman he employed was handed £ 21 million in taxpayers' money
Mr. Andersson's job was to find manufacturers who could quickly supply millions of PPE for deals already arranged for Mr. Saiger.
And the Spaniard received more than $ 28 million (£ 21 million) to work on two NHS contracts before his boss signed three more contracts in June. But their relationship later broke down and resulted in a court battle in Miami that exposed the apparent sums.
Mr. Saiger is now suing Mr. Andersson for breach of contract and fraud in incitement.
He accuses Mr. Andersson of "not doing all of his duties" for the three newer deals. Upon completion of the contract, Mr. Andersson could have received additional fees of US $ 20 million (£ 15 million).
However, the court documents state that Mr. Andersson “failed to meet or refused to fulfill his contractual obligations” to Mr. Saiger – and should not receive a cent more. This is denied by Mr Andersson, the defendant, who feels entitled to the money.
The documents state: "Mr. Andersson did not address the procurement, logistics, product sourcing and quality control of PPE equipment at the heart of each agreement as promised, thereby violating each of the agreements."
Due to his alleged departure, Mr. Saiger tried to fulfill contracts and delayed the delivery of PPE to the frontline workers.
The dispute has given some insight into the amount of money some companies have made to provide protective gear for the NHS.
The Department of Health and Welfare recently released Mr. Saiger's contracts with Saiger LLC for £ 200 million. All orders placed with the jewelry designer were awarded by competitors without a tender, thanks to an EU regulation that enables quick procurement in emergencies.
The biggest deal was £ 103.1 million. The three contracts signed in June that Mr Saiger accuses Mr Andersson of have focused on the procurement of "Titan Gloves", "Blue Sail Gloves" and "PureMed Apparel".
Concerns have been raised about rushed government PPE contracts. Thousands of companies were commissioned with a budget of £ 13.8 billion. Others that get big deals include a six week old company, a small luxury packaging company, and a company based in an offshore tax haven.
The deals face a legal challenge in UK courts by activists The Good Law Project. The group, which claims to "use the law to protect the public interest", accuses ministers of failing to "take adequate account" of taxpayers. Money.
"We do not understand why the government was still awarding direct contracts in June that are so lucrative that such profits can be made," said a spokesman. "The real criticism to be made here is the enormous profit that the government is making."
Prior to providing life-saving equipment to the NHS, Michael Andrew Saiger was known as the owner and founder of the fashion accessory brand Miansai. The brand offers "something that everyone can wear".
The contracts came at a time when the NHS feared it would run out of life-saving clothing such as masks and robes
A spokesperson for Mr. Saiger said: “Our CEO has 15 years of specialist experience in manufacturing and selling high quality goods sourced at the best price from reputable factories in Asia.
& # 39; We have an extensive network of manufacturing and sales contacts in Asia and are an agile, nimble company that can move quickly.
'These characteristics mean that few other suppliers can match us to the taxpayer in terms of speed, quality or value and we have used this combination to great effect for the benefit of the UK.
& # 39; At the height of the pandemic and at a time when the NHS needed high quality PPE that met required safety standards, we delivered on time and at a reasonable price for the UK.
& # 39; We are extremely proud to have played our part in ensuring that frontline workers in the UK, including nurses, doctors and hospital staff, receive the millions of PPE they need to stay safe and live rescue.
"At no point have we ever used 'middlemen". We have few full-time employees, so for large projects we use short-term contractors for additional expertise and additional capacity so that we can deliver what is needed. "
A health ministry spokesman said: “We have worked tirelessly to deliver PPE and have delivered more than 4.9 billion items to the front lines to date.
& # 39; Almost 32 billion items have been ordered to ensure a continuous supply that will meet the future needs of health and social workers.
"Proper due diligence is carried out on all government contracts and we take these controls very seriously."
Mr Andersson was asked to comment.
A cynical and brazen cronyism: As the new report suggests, it is a farce for coronavirus PPE valued at £ 18 billion. DAVID ROSE argues that this is not how public procurement should work in the UK
By David Rose for The Daily Mail
The mismanagement, the incompetence, the reckless waste – all of this is shocking. But perhaps even worse is the brazen cronyism.
The National Audit Office's report on personal protective equipment procurement is a searing indictment of the government's incompetence.
Yes, there was an unprecedented crisis. As the virus raged through hospitals and nursing homes, there was a desperate shortage of PPE.
Understandably, the government has approached suppliers dramatically – please contact us, we need you.
At the beginning of the pandemic, the government made a dramatic appeal to suppliers of personal protective equipment
Personal protective equipment arrives at Bournemouth International Airport from Tianjin, China on May 10th
But it placed billions in PSA contracts with companies, not on the basis of quality or price, but in many cases – according to today's damn report – through which companies had the best personal connections in Westminster and Whitehall.
This is not how public procurement is supposed to work in the UK. Strict, legally binding rules are intended to enforce fairness and transparency, promote competitive prices and prevent conflicts of interest.
But thanks to the pandemic, the report said, the rules have been tossed aside – and in many cases replaced by the Old Pals Act.
The report confirms what that newspaper revealed two weeks ago that well-connected businesses and individuals could be put on a VIP route – officially known as a "high priority lane" – meaning decisions about their potential contracts have been accelerated.
Once recommended, these companies were more than ten times more likely to win contracts.
As the virus raged through hospitals and nursing homes, there was a desperate shortage of PPE
The result is we've ended up with devices that have often turned out to be useless and bills that are far higher than they should have been.
At the same time, those with real expertise and the ability to source quality products at a good price have been neglected.
Take Jonathon Bennett. As the Mail reported earlier this month, he is an experienced textile importer with extensive contacts in China, where most of the PPE is manufactured. Its offer to ship millions of masks in April was extremely competitive – well below the government reference price.
However, the £ 253m deal went to Ayanda Capital, an unexperienced firm that charged almost twice as much. Worse still, 50 million of their masks were the wrong design.
Mr. Bennett has long suspected Ayanda won his contract because it was brokered by someone who until recently was an advisor to Secretary of Commerce Liz Truss – an Ayanda employee named Andrew Mills.
Every time the Ministry of Health is asked how these contracts were awarded, it says the same thing: it always carries out strict "due diligence".
The NAO report confirms this. It was thanks to a "referral" from Mr. Mills that Ayanda's offer received VIP treatment.
Ayanda is far from the only company that benefited from rapid prosecution and produced unusable PPE.
Every time the Ministry of Health is asked how these contracts were awarded, it says the same thing – it always does a rigorous "due diligence" exercise.
However, the NAO report shows that when department officials did a "due diligence" on Ayanda, they somehow failed to notice Mr. Mills' involvement.
So what criteria determined who was granted VIP status? Amazingly, the NAO found that none existed, while "the source of the referral" for this treatment "was not always recorded".
In the Middle East, there is a term for this type of business: "Wasta". It means taking advantage of the access and influence someone has.
Could this system really be a feature of public order in Britain now? There are growing concerns about the allocation of up to £ 42 billion for mass virus testing at Operation Moonshot.
Insiders told me that there was also a VIP channel in this process. How many more contracts will NAO investigators now be of serious concern?
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