The UK government is facing mounting scrutiny over contracts totalling £5.5bn for personal protective equipment awarded to a range of companies in the first months of the coronavirus crisis as it scrambled to tackle a shortage of kit for frontline healthcare workers.
As the pandemic swept Britain, intense demand for masks, gowns and gloves — combined with a shortage of PPE stocks globally — forced the UK to look beyond the normal supply chain.
Around 16,000 potential suppliers contacted a 500-person buying team set up by the Cabinet Office in March to offer to supply kit for hospital staff.
However, the process has been criticised for awarding large sums of taxpayer money to several companies that appear to have no record in supplying PPE and have small balance sheets or poor recent financial performance. It has prompted concern over the extent of due diligence that was conducted before the contract awards.
Peter Smith, managing director at consultancy Procurement Excellence, said normal procurement practice had “gone out the window”, adding: “My hope is that there is some method in the madness.”
The size of the emergency procurement drive is also only just coming to light. The government has so far published details of contracts worth £1.5bn but in a letter to Jo Maugham, director of the Good Law Project, a not-for-profit group seeking a judicial review of at least one of the deals, officials have admitted that the figure is more than three times higher at £5.5bn.
“Vast sums have been spent with no scrutiny of whether they represent value for public money,” said Mr Maugham. “If government will not adhere voluntarily to its own transparency rules we have little choice but to ask the courts to check whether public funds are being properly spent.”
The contracts were agreed at speed without a competitive tender process under emergency rules invoked by ministers to ensure a quick response to the pandemic.
One business, a healthcare recruitment firm named SG Recruitment UK, with headquarters in Eastleigh, Hampshire, was awarded a £24m contract to provide protective coveralls to healthcare workers in April. That was despite a “going concern” warning from its auditors five months earlier, flagging that the company’s liabilities exceeded its current assets by £376,000.
The company made profits of £43,000 for 2019, compared with a £773,000 loss a year earlier. The auditors signed off the accounts in December despite the warning because SG had “continuing financial support” from its parent company, Sumner Group Holdings.
SG Recruitment told the Financial Times it was “proud” to have supported the PPE procurement drive and had won the contract because of its position as a long-term supplier of nurses to the NHS, adding that contracted revenues far exceeded its short-term liabilities.
Another company, P14 Medical, has recorded large losses in its most recent accounts. The Liverpool-based company has eight employees and made a £486,000 loss for 2019, yet it was awarded two contracts in April to supply face shields and other equipment worth £120m. It made a profit of £21,000 a year earlier.
P14 told the Financial Times the losses were owing to heavy investment in new chronic pain technology that it plans to market in Europe and the Middle East this summer. It said it had saved the government £55m on its face shield contracts, which had been completed “ahead of time and on budget”.
At least two companies were less than a year old when they were awarded large government contracts.
Euthenia Investments, a seven-month-old fund manager in the City of London, was given a contract of £880,000 in April to supply coveralls. The company said it was a distributor for a Hong Kong-based industrial conglomerate and had “supplied compliant and best quality PPE” to the NHS.
The letter to the Good Law Project from the government’s legal department detailed 600 contracts awards to almost 200 companies since March. “The nature of the changed market conditions required the development of alternative sources of supply and it was appropriate not to impose unnecessary hurdles in the way of securing that objectives,” the letter said.
It continued: “Given that the entire premise of the scheme was to identify new sources of supply (the established market being no longer able to fulfil demand), it would have been perverse to narrow down the field by imposing artificial pre-qualification requirements such as a minimum turnover requirement or unnecessary prior experience.”
So far the government has published about 80 of the PPE contracts. The largest was a £252.5m contract awarded to Ayanda Capital, a family investment firm that specialises in “currency trading, offshore property, private equity and trade financing”, according to its website.
Ayanda, which was contracted to supply masks to healthcare workers, is run by Tim Horlick, a former investment banker, and controlled by the Horlick family via a holding company registered in Mauritius.
When contacted by the FT, Ayanda said it was a UK limited company that paid UK taxes and was “happy to confirm that the contract has been successfully fulfilled”.
The letter also revealed that the government had wrongly announced a £108m contract with PestFix, a pest control company based in Littlehampton in Sussex, which was first reported by the FT.
Just to put this into context the DWP has an arm called Debt Management, they hound claimants for DWP Debts often for minuscule amounts in comparison giving the reason it is public money when these amounts below are ALSO Public Money and justice does nothing about it, one day we might rise up.
Am I angry, you bet I am and so should every good citizen be.
“£252m of public money given to Ayanda Capital, registered in Mauritius for tax dodging, to supply PPE that never appeared.
£186m of public money given to Uniserve Ltd of Essex, the UK’s largest privately owned logistics and global trade management company, to supply PPE that never appeared.
£116m of public money given to P14 Medical Ltd of Liverpool, which had liabilities exceeding assets by £485,000 in December 2019 with just £145 in the bank, for PPE that never appeared.
£108m of public money given to PestFix, with 16 employees and net assets of £19,000, for PPE that never appeared.
£14.2m and a subsequent £93.2m of public money given to Clandeboye Agencies Ltd, a confectionery wholesaler in Co Antrim, for PPE that never appeared.
£40m of public money given to Medicine Box Ltd of Sutton-in-Ashfield, despite having assets of just £6,000 in March, for PPE that never appeared.
£32m and a subsequent £16m of public money given to Initia Ventures Ltd, filed for dormancy in January this year, for PPE that never appeared.
£28m of public money given to Monarch Acoustics Ltd of Nottingham, makers of shop and office furniture, for PPE that never appeared.
£25m of public money given to Luxe Lifestyle Ltd, to supply garments for biological or chemical protection to the NHS. According to Companies House, the business was incorporated by fashion designer Karen Brost in November 2018. It appears to have no employees, no assets and no turnover.
£18.4m of public money given to Aventis Solutions Ltd of Wilmslow, with just £322 in assets, for PPE that never appeared.
£10m of public money given to Medco Solutions Ltd, incorporated on 26 March (three days after lockdown) with a share capital of just £2, for PPE that never appeared.
£1.1m of public money given to Bristol shoemaker Toffeln Ltd, had seemingly never supplied any PPE whatsoever in the past, for PPE that never appeared.
£825,000 of public money given to MGP Advisory, described as a venture and development capital business that was in danger of being struck off the companies register for failing to file accounts, for no one knows what…
Meanwhile the nurses and carers, of whom over 300 have died whilst trying to save over 65,000 lives that have now been lost, had to resort to wearing bin bags.”