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DHSC report finds that Government failures to control PPE contracts could cost taxpayers £2.7 billion

Posted on 8 August 2022

In response to the COVID-19 pandemic, the Department for Health and Social Care (DHSC) went through a procurement exercise to purchase Personal Protective Equipment (PPE) such as gowns, gloves and masks for the protection of the public. Two years after purchasing just over £13 billion's worth of PPE, the DHSC is now in dispute with several suppliers over the quality of the PPE they provided and now faces a huge challenge to manage the stockpile of largely unusable PPE being stored in various locations in the UK and China.

In addition, suppliers and intermediaries are said to have made excessive profits while providing substandard PPE, with some suppliers even using a 'VIP lane' to obtain early contracts. The DHSC estimates that some of the PPE expenditure may have involved fraud, and now the UK public is inadvertently spending approximately £7 million a month to store unused or expired PPE.

A report released by the Public Accounts Committee on 20 July 2022 commented on the "significant failings" in the government's management of these PPE contracts. The disputes with PPE suppliers have put approximately £2.7 billion of taxpayers' money at risk and progress in tackling these issues has been slow. There is little sign of proactive enforcement action against potentially fraudulent suppliers, despite the DHSC's estimate that as much as 5% of PPE expenditure may have been fraudulent.

There is clear concern that the DHSC failed to undertake sufficient due diligence checks to prevent the supply of substandard PPE, while suppliers made excessive profits and the Government, therefore, failed to protect the wider public during the pandemic.

Mishcon de Reya Partner Kizzy Augustin commented: "The impending COVID-19 public inquiry is likely to begin hearing evidence into the Government’s handling of the pandemic in January 2023. The fact that there are contracts worth £2.7 million that have sparked disputes over the quality of PPE provided to those on the frontline shows that the Government (and perhaps also its enforcement agencies such as the Health and Safety Executive) has failed to carry out the due diligence necessary to prevent sub-standard PPE being provided to public and private sector workers during the pandemic.

This conduct should be scrutinised as part of the inquiry to assess whether key workers such as healthcare professionals, delivery drivers and construction operatives were afforded basic regulatory protections. In addition, we should question whether the Government has failed in its overarching legal duty to secure the health and safety of the public in controlling the transmission of the virus through the use of effective PPE and whether they adequately enforced the law on workplace safety. The initial Government guidance on PPE was unclear, the equipment was hastily procured and there is now a huge amount of PPE stock that cannot be used. Why should the taxpaying public be made to pay for this, especially when they are the ones who should have been protected as a priority?"

Partner Matthew Ewens added: "Although the poor quality and wasted costs involved in the supply of PPE will be a priority, the fact that approximately 5% of contracts may have been down to fraud, will raise further questions about the due diligence carried out on suppliers and the robustness of the selection process.

As we have seen in other areas of COVID relief schemes, a significant amount has been lost to fraud, with the government estimating that approximately £15 billion may have been obtained fraudulently. With HMRC seemingly struggling to recover any significant percentage of these funds, there will be renewed calls for the relevant stakeholders to be held to account in all areas of COVID-19-related measures, to ensure those engaging in fraud are investigated and, if appropriate, face criminal charges.

Against that backdrop, the way contracts were awarded for PPE, any influence offered or received during the process (including the "VIP lane") and public value must be heavily scrutinised."

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