Buying PPE – Is It Ok To Cut Corners During A Crisis?

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The devastation and disruption caused by COVID-19 are unprecedented. As a result, governments across the globe have been forced into making impossible decisions – shutting down their economies, imposing nationwide lockdowns, closing borders, and pausing critical medical services to accommodate the vast numbers of coronavirus patients.

One issue that continues to be at the forefront of coronavirus discourse is the woeful unpreparedness of the world’s health services to manage a pandemic of this scale. Personal Protective Equipment (PPE) has been in particularly short supply with seemingly endless stories of hospitals running out of masks, medical gloves and gowns, and respirators. In many cases, healthcare professionals have fashioned makeshift PPE or relied on donations from the general public. Meanwhile, several manufacturers retrofitted their factories to produce crucial medical supplies.

In the last few months, it quickly became apparent that there are too few suppliers producing too little of the most critically needed PPE, which has placed additional pressure on governments to secure vast quantities of the equipment as quickly as possible.

There is no question that we’ve been living through a desperately stressful time. But do these exceptional circumstances justify cutting procurement corners?

The UK government’s secretive PPE contracts are under attack

Last week, the UK government’s procurement practices hit the headlines as it was revealed that more than £5.5 billion of taxpayers’ money has been spent procuring PPE since the outbreak of COVID-19.

To date, details of less than one-seventh of the 600 total PPE contracts have been published, which means the public has no way of knowing the process by which the vast majority of these contracts were awarded, or to whom.

The single bidder emergency procurement process, which bypasses the requirement for rival bidders, was used 60 times in April and May 2020. Citing extreme urgency as justification, the government skipped the process of competitive tendering and instead directly awarded contracts to their chosen suppliers without explanation or full transparency, ignoring and undermining its own rules.

Some of the biggest controversies unearthed by UK-based investigative journalists this week include:

  • An £840,000 contract awarded to Public First to test the effectiveness of the government’s coronavirus messaging. Controversially, Public First is co-owned by James Frayne who has worked on political campaigns with Prime Minister Boris Johnson’s chief advisor since 2000.
  • A £32 million contract was awarded (without public advertisement or competition) to a pest control company called PestFix to produce surgical gowns. The company is an intermediary, not a manufacturer, and has listed net assets of just £18,000. The UK government’s own rules dictate that prepayments must be made only in exceptional circumstances and capped at 25% of the contract’s value. In this case, PestFix was given a 75% deposit despite the government being approached by 16,000 companies offering to supply PPE in the two weeks prior.
  • A £108 million contract was awarded to Clandeboye Agencies Limited, a wholesaler of sweets, without advertising or a competitive tendering process. Evidence suggests the company has no experience to date in supplying PPE.

Ten days ago, the Good Law Project (GLP) (a not-for-profit that uses the law to protect the interests of the public) launched proceedings in the high court against the UK’s Minister for the Cabinet Office, Michael Gove, alleging breaches of procurement law and bias in the granting of contracts.

Helen Hayes, a Cabinet Office spokesperson said, “The flexibility required by extraordinary circumstances is no excuse for reducing transparency or abandoning any attempt at due diligence,”

Meanwhile, the UK’s spending watchdog, the National Audit Office (NAO), has been urged by the Labour party to scrutinise the Conservative government’s procurement of PPE during the coronavirus pandemic. In a letter to NAO’s chief, Labour MPs said, “we recognise that the Covid-19 pandemic has been a significant challenge to government, not least because of insufficient PPE stockpile to meet the demand of this pandemic. However, there is also real public concern at some surprising or seemingly irregular arrangements made between the Government and some suppliers. This could lead to significant waste, fraud or inappropriate contracts being awarded.”

What can Australia learn from this?

Transparency and due diligence are crucial in the awarding of public contracts and the public deserves to know if and when emergency laws are being abused. Wherever possible, governments must uphold the proper procurement processes, not only to protect taxpayers’ money but (in this case) to save lives.

For the sake of maintaining the public’s trust in politics, extraordinary circumstances cannot enable corruption and cronyism or reduce transparency.

Back in April, Western Australia’s Corruption and Crime Commission flagged the risk that “the usual public sector checks and balances will be overlooked while resources are directed to the COVID-19 response and staff are working remotely”.  The Commission encouraged all agencies to “ensure good systems, processes, and controls are not overlooked while government is working in different ways”.

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PASA (Procurement and Supply Australasia) is the leading provider of information, education and networking opportunities to procurement professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, training, awards and PASA CONNECT membership network. PASA is a trading name of BTTB Marketing Pty Ltd. BTTB Marketing has operated under the BTTB, CIPSA Conferences and PASA names for over twenty years. https://procurementandsupply.com/

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