Firm referred by Tory peer bagged PPE contracts at twice average price

When the Tory peer Lord Chadlington texted his colleague Lord Feldman to recommend SG Recruitment, it was enough for the company’s “interesting” proposal to be put into the Government’s VIP lane.

But Chadlington was a director and shareholder of SG Recruitment’s parent company, Sumner Group Holdings, and the two contracts the firm landed were signed at more than twice the average unit price at the time. These contracts were worth a total of £50m, and more than half of the items provided through these contracts were unsuitable for use in an NHS setting.

Chadlington, also known as Peter Gummer, used to be president of the Conservative Association in Witney, the former seat of the recently-ennobled Foreign Secretary, David Cameron. He is also the brother of the Tory peer Lord Deben, also known as John Selwyn Gummer, and is a longstanding Tory donor.

So when Chadlington texted Feldman (PDF) in 2020 to say, “Andrew I work with a company with PPE. D says you are helping. Shall I put you in touch?” Feldman replied, “Yes please. Best use my DHSC email address… thanks very much.” Requests to establish the identity of “D” have gone unanswered.

Following a call with the company’s CEO, David Sumner, Feldman forwarded details to civil servants, adding “an interesting offer from David Sumner, who was introduced to me by Lord Chadlington”.

According to internal Department of Health and Social Care documents, seen by Good Law Project, two contracts were signed without competitive tenders at markups of 2 and 2.6 times the average unit price.

Two million gowns were supplied at £11.95 each, at a cost of £23.9m. The average cost for gowns at the time was half as much: £5.87.

It is more difficult to estimate average prices for hand gel, because bottles vary in size, but the £26m SG Recruitment contract appears to have been signed at £9.50 a unit – 2.6 times the average price of £3.64.

Of the 3.75 million items supplied through this deal, Spotlight on Corruption has established that at least 2.36 million items, worth an estimated £26.4 million, were unsuitable for use in an NHS setting.

It is not clear whether these unusable items were bottles of hand gel or gowns, but the money is unlikely to be recovered. In July, the Department of Health and Social Care confirmed it was in dispute with SG Recruitment, with some items deemed substandard and other items allegedly never supplied. But Sumner Group Holdings has now gone into liquidation.

The parent company appears to have been in financial difficulties for some time. Court proceedings have revealed that it was already in trouble in 2018.

SG Recruitment, which supplied healthcare workers to the NHS and appears to have had no experience in delivering PPE before the pandemic, made a loss of over £700,000 for the year ending March 2020, with assets of -£23,000. The following year company assets rose to over £1,000,000.

Lawyers representing Chadlington have previously said that “he had no information which gave rise to financial concerns” regarding SG Recruitment or its parent company, and that he resigned as a director of the group after he lost confidence in Sumner’s management.

Two investigations into a potential breach of lobbying rules have cleared Chadlington, with the House of Lords watchdog stating “there is no evidence to suggest that the fact that Lord Chadlington provided Mr Sumner with the email address played any part in the decision to award the government contracts to SG Recruitment UK”.

A Department of Health and Social Care spokesperson insisted that ““Due diligence was carried out on all companies and every company was subjected to the same checks.”

“Our priority throughout the pandemic was to save lives,” the spokesperson added, “and we acted swiftly to procure PPE at the height of the pandemic, competing in an overheated global market where demand massively outstripped supply.

According to Good Law Project’s Executive Director, Jo Maugham, the story of these contracts is all too familiar.

“We know from the data that successful recommendations into the VIP lane – which were never made by non-Tory politicians – correlated with a hugely higher chance of winning a contract,” Maugham said. “And on average with a much higher price. And this contract shows exactly what that means in practice.”

SG Recruitment, David Sumner and Lord Chadlington were approached for comment.