Exposed: Special procurement channels for ‘VIPs’ and Cabinet contacts29th October 2020
Leaked documents seen by Good Law Project set out special pathways by which “VIP” and “Cabinet Office” contacts could be awarded lucrative PPE contracts at the height of the pandemic – and at inflated prices.
Lord Bethell, a junior Health Minister, promised that “suppliers will be evaluated by Departmental officials on their financial standing.” But questions arose over how enormous contracts came to be awarded to dormant or new entities and those of dubious financial standing including:
- PPE Medpro won two contracts worth over £200m to supply PPE to the NHS. The £100 company, set up by the former business associate of Conservative peer Baroness Mone, won the contract just seven weeks after it was set up.
- SG Recruitment UK Limited, a staffing agency, won two PPE contracts worth over £50m, despite auditors raising concerns about its solvency. Tory Peer Lord Chadlington sits on the Board of its parent company, Sumner Group Holdings Limited.
- P14 Medical Limited, controlled by former Conservative Councillor Steve Dechan, who stood down in August this year, was awarded three contracts worth over £276m despite having negative £485,000 in net assets.
The leaked documents disclose that special procurement channels – outside the normal process – were set up for VIPs.
They also show that Cabinet Office was feeding its contacts into the procurement process, outside the normal public channel.
Good Law Project is also aware that successful contractors – like Ayanda which received a £252m contract for supplying facemasks most of which were unusable – were guided through the process by the Cabinet Office.
The leaked documents also evidence a startling opportunity for price gouging by favoured suppliers. It is only if prices were more than 25% above the average paid to other suppliers that questions were to be asked about value for money.
Good Law Project understands that most suppliers were operating on 10-20% margin. The leaked documents reveal that Cabinet Office contacts and others were helping ‘VIPs’ sell PPE to Government outside normal procurement channels. The information that Government would buy at 25% above the price paid to ‘regular’ suppliers was a licence to make enormous margins – 35% – 45% – on contracts sometimes worth hundreds of millions of pounds. Although Government has tried to cover up the per unit prices it paid to connected suppliers, we know that Ayanda enjoyed staggering margins above the prices paid to others. So there are certainly questions to be asked about whether other politically connected ‘VIPs’ benefited from lucrative inside information about pricing.
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