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Latest 18 November 2020

The National Audit Office report: The Good, the Bad and the Ugly

Overnight the National Audit Office released its report into the investigation into Government procurement. What follows are the headlines of that report, so far as they relate to extant litigation of the Good Law Project.

On VIP Channels, Good Law Project reported the existence of a VIP lane some weeks ago. We still don’t know, in many cases, how companies got into the VIP lane or who put them there. But what we have learned is that, if you were placed in the VIP lane often by ‘the private offices of ministers’, you were more than ten times as likely to win a contract.

We have learned that Pestfix – for reasons the National Audit Office cannot explain and which Government describes as a “mistake” – was placed in the VIP lane. Whilst Pestfix were in that lane, Government purchased from them 25 million FFP2 masks for a total of £59million, which cannot be used for their intended purpose.

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Ayanda which supplied £155m of masks that were not fit for their intended purpose – was also placed in the VIP channel. Internal documentation ignored the conflicts of interest posed by Andrew Mills, who had a significant economic interest in the transaction, being an advisor to Liz Truss. The NAO report suggests that Andrew Mills successfully lobbied for the contract to be signed off. We should say that we do not take at face value – indeed we do not accept – the explanations offered by Government for why the FFP2 facemasks supplied by Ayanda or Pestfix proved unfit for purpose.

Clandeboye, a confectionery wholesaler, received two contracts for a total of £108m – despite being rated “red” for financial risk – because Government entered into the contracts two months before it carried out the risk assessment. Its last reported accounts showed net current assets of only £26,349. One of those two contracts provided for Clandeboye to be paid 50% on the nail. Government told the NAO gowns ordered from Clandeboye had been “delivered”, which was not inaccurate. However, Government had previously disclosed to us, as part of our ongoing litigation, that the gowns had not been “cleared for use as gowns” but instead had been distributed to the NHS “as part of the PPE ensemble as required”. As of 14th August 2020, approval for use as gowns was still awaited. We do not know if the gowns have yet been, or are capable of being, assessed as compliant with the contract.

Of Public First, run by long-time associates of Michael Gove and Mr Cummings and awarded to them without any tender process, the NAO highlighted: “a lack of documentation recording the process for choosing the supplier, the justification for using emergency procurement, or any considerations around potential conflict of interest.” Although the NAO says it found no evidence that Michael Gove was involved in the award of the contract there is no similar assertion in respect of Mr Cummings, despite his connection being highlighted in our judicial review. The NAO also highlighted that Public First just worked casually – with no written contract – for two whole months. This suggests to us a relationship of considerable trust.

On transparency, we regret that the National Audit Office has misunderstood the law. The Report states that: “General guidance issued by the Crown Commercial Service recommends that awarding bodies publish basic information about the award of all contracts within 90 days of the award being made.” However, whatever that guidance provides, the law is clear and unconditional that that basic information must – not should – be published, and it must be published within 30 days. It is surprising that the Government, which has had the report for fact-checking for a number of weeks, chose not to correct that error. Nevertheless, the tenor of the National Audit Office’s criticism that “Of the 1,664 contracts awarded across government up to the end of July 2020 with a contract value above £25,000, 55% had not had their details published by 10 November” is one which Good Law Project endorses. 

As the NAO states: 

Transparency is one of the key controls to mitigate the risks associated with emergency direct awards. Therefore, during these types of situation, it is critical that basic information on contract awards is published as soon as possible

and it is unacceptable that Government has ignored the law and undermined that key control.

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