Tag Archive for: Covid

, , , ,

Mone Moans, But Still PPE Questions to be Answered

Over the holiday period, we heard a lot more about the case of Medpro, the firm that is being taken to court by the UK’s Department of Health and Social Care over the supply of PPE, gowns in particular, which allegedly turned out to be unfit for purpose. The beneficiaries of this, the high profile Michelle Mone, a member of the House of Lords, and her husband Doug Barrowman, produced a documentary arguing their side of the case, and gave an interview on the BBC. This came after the couple had originally denied publicly that Medpro was anything to do with them, with Mone lying to the press and then getting lawyers to issue threatening letters to various publications.

The general response to all this new self-generated publicity was not very favourable for the couple. The interview was called a “car crash” and was likened to the Duke of York’s famous “I was at Pizza Hut and I don’t sweat” interview with Emily Maitlis in 2019. There are some questions though which still need answering on the government’s side of the story.

  • Why is this the only legal case that the government appears to be pursuing? There have definitely been other examples of quality issues, and cases of firms that look at least as dodgy as Medpro winning major PPE contracts. Is there a logic to this or has the government chosen to pursue Medpro because of Mone’s profile, know there would be more publicity given her involvement and that would show the authorities were taking action?
  • Mone claims that she has an email from an official on the PPE team saying, “the gowns have been approved by technical”.  But that seems to be pre-delivery so the approval was before anyone had seen the actual delivered product, which seems odd. Maybe there were samples? But the gowns were apparently inspected by Uniserve, the logistics provider appointed by the government, from July 2020 in China.  And £122 million was paid out in the summer of 2020 for the gowns, which would usually suggest the buyer is content with what has been delivered. 
  • The government says that random testing in April 2022 found that 54 of the 60 randomly selected Medpro gowns weren’t sterile. But that is almost two years after delivery. Even if those tests were accurate, Medpro lawyers may argue that the gowns might have become unsterile in the intervening almost two years, perhaps because of sub-optimal storage conditions?
  • As a buyer, if I have inspected the goods, told the supplier they meet my specification, and handed over the payment as per the contract, then it is pretty unusual, and very difficult to go back a year or two later and say, “hang on a minute, I’ve had another look and I don’t like that stuff I bought from you after all”. In my experience, the supplier would be likely either to laugh or (if they valued my business) say something vaguely sympathetic such as, “Peter, you said it was fine – you must appreciate we can’t really do anything at this stage, terribly sorry”.

However, the fact that Mone lied about her and Barrowman’s involvement and personal gains from the deal is a major issue working against them. There is also the question of alleged bribery. This has been part of the investigation, but there has been no hint as to who it was that Medpro might have  bribed. Their political contacts? PPE procurement people? Other officials?  Flows of money are usually relatively easy to check, unless it is literally £50 notes in a brown envelope, so that’s still an  interesting unanswered question.

In any case, this is likely to be a big story through 2024, not least because Labour will emphasise “Tory sleaze” when it comes to the UK election. Labour has also promised to appoint a “covid corruption commissioner” to look into PPE contracts, so this story will no doubt run and run.

/0 Comments/by
, , ,

The 2021 Bad Buying Awards – the UK Winners

Two more awards today.

UK (Private sector): The UK Water Industry

Not spending enough money (and failed regulation…)

There were a number of long-running procurement-related scandals which continued to rumble on this year, notably the investigations into the Grenfell tower disaster, and the Horizon Post Office scandal.  Both showed appalling behaviour from various suppliers along with failures on the buy-side. Procurement weakness allowed supplier failings to translate into tragic consequences for those affected by the Grenfell fire and those who lost their livelihoods or wrongly went to prison in the case of the Fujitsu / Post Office Horizon IT system. The judges were also tempted to look into the causes behind the global shortage of chips (electronic, not potato), which affected supply of all sorts of items. But they decided that was all a bit too complicated …

So the multiple winners here are the private water and sewage companies. Research by the Financial Times showed that they slashed investment in critical infrastructure by up to a fifth in the 30 years since they were privatised.  That reduction in spending came about despite bills going up 31% in real terms – and some £372 billion has been paid out in dividend payments to parent companies and investors. In 2019, only 16 per cent of England’s rivers and seas met the minimum “good or better” ecological status as defined by the EU’s water framework directive. And 2021 saw reports of raw sewage being regularly discharged straight into rivers and the sea whenever it rained hard. My friends who swim in the Thames thought it was algae coating their skin after their river swimming this autumn … 

Of course, this is a regulated industry so we might call it a joint public / private sector award as the government must share the blame for inadequate regulation and what is in effect a market failure. But this is a case where the “bad buying” failure is in not spending enough (rather than overspending). So we will hold our proverbial noses whilst awarding the water industry the Bad Buying UK (Private Sector) Award.

…….

UK (Public sector): Covid Test and Trace Programme

Incompetence in Managing Consultants

The judging panel had a difficult task in this category, with continued overspend on HS2 (and every other rail project), and more revelations about PPE expenditure. Social care is experiencing a sort of market failure, whilst the MOD Ajax armoured vehicles programme was particularly unfortunate not to win the prize given the various elements of that particular fiasco. And the panel argued long and hard about whether the crazy regulatory structure of the energy market which ended up with dozens of firms going bust might count as “bad buying”.

But ultimately, for a clear waste of money through inappropriate procurement and even worse ongoing contract management, the UK pandemic Test and Trace programme was finally declared the narrow winner.  

The programme kicked off during the first wave of Covid in early 2021, and we could understand why initially consulting resource was needed to make things happen quickly. But for 18 months now, various officials in the Department of Health and Social Care (DHSC) have promised that the number and cost of consultants was going to be dramatically reduced. But nothing appears to have happened, as hundreds of millions have been spent with the big consulting firms.

David Williams, then the DHSC second permanent secretary, assured Parliament’s Public Accounts Committee back in January that there was a plan in place to “reduce markedly” the number of consultants from Deloitte who were working on the programme. (Williams has since become permanent secretary at the Ministry of Defence – that bodes well for sorting out waste in that area!)  But at the time he claimed there were “around 900” staff from the consultancy working on Test and Trace, who he expected were costing £1,000 a day each – meaning the daily total was close to £1 million just for one firm.  Some Deloitte staff were charged at a rate of over £6 a day too.

Dr Jenny Harries, chief executive of the UKHSA which now runs NHS Test and Trace, said in July 2021 that there was a ‘very detailed ramp-down plan’ to reduce the number of contractors. But 1,230 consultants were still employed at the end of October, figures showed. At the sort of rates paid, that was still costing over £1.3 million A DAY.

This is not “consulting” in the true sense of the word. It is “warm reasonably intelligent bodies sitting at desks / at home on their laptops”. It is staff substitution, not consulting, and those people should not be costing £1000+ a day.

DHSC has had 18 months to actually recruit people on fixed term contracts at maybe £50K a year to replace the £250K a year consultants.  The profit for Deloitte partners (and indeed those of other firms who have been involved on the programme) is enormous, all based on undeserved income from the public purse. And it is not even as if the programme has been a great success … but let’s not get into that.

Despite the tough competition we are confident that this case is a worthy winner as it represents a basic old-fashioned lack of concern for spending public money with consultants – something that is far too common, unfortunately.  So the Test and Trace programme wins the Bad Buying UK (Public Sector) Award.

Look out for the final two awards tomorrow!

/1 Comment/by
, ,

Private Eye Identifies Covid Profiteering and Procurement Naivety

In the current issue of Private Eye magazine  – only on sale for another few days so hurry if you want to buy it – there is a special 8 page supplement titled “Profits of Doom”, covering the “bad buying” that went on in UK government around the pandemic, principally PPE (personal protective equipment), but also test kits and the track and trace programme.

Several procurement leaders get a mention, including Gareth Rhys Williams, Government’s Chief Commercial Officer, and Steve Oldfield and Ed James at the Department of Health.  I suspect there are others who actually had more to do with the PPE procurement waste but have escaped that attention …

If you have followed these stories in the media and on this website to some extent, much of the Private Eye report won’t be new to you.  But putting it all together does increase the sense of anger that most of us will feel about the vast sums of money extracted from the British taxpayer by certain firms and individuals, in return for very little effort. According to the magazine, one firm, Primer Design Ltd, went from a profit of £1.3m a year before Covid to making £178.2 million in the first Covid period.

Individuals did well too. Andrew Mills, who had been an adviser to government himself, made £32.4 million for doing very little as a middleman for Ayanda Capital, whose bosses also made tens of millions on PPE supply. Even the consulting firms raked in the cash working on various covid related tasks including the pretty useless track and trace programme, with Deloitte partners making record earnings of around £1 million each last year.

It is clear that cost really didn’t matter when the PPE shortage was at its worst last year, and to some extent that is understandable.  There is still some mystery about the demand forecasts that led to chronic over-ordering; that factor alone cost the taxpayer billions, but there has been little real insight into what went wrong there.

But why the procurement teams didn’t at least try and examine the margins made by the middlemen and agents, I don’t know. If the buyers had insisted on seeing a price breakdown, or set a maximum mark-up over factory gate prices, would Andrew Mills and others really have walked away from the deal?  They won the contracts in the first place because of their political connections that got them onto the “VIP route”, which gave priority to their supply proposals, so it is hard to see that they could have instantly taken their offer to another country.

Instead, they were allowed to make tens or hundreds of millions in profit by exploiting the naivety of the procurement operation, which seemed to focus almost entirely on just buying as much stuff as possible. Then we have the Randox contracts for test kits and analysis, where the picture is even murkier. Member of Parliament Owen Patterson was paid as an adviser by that diagnostics firm, and records of calls between him, the firm and health Minister Lord Bethell, have been “lost” apparently.  Randox was given £600 million worth of contracts without any tendering or competitive process. And it won a testing contract worth £133m, just days before government officials confirmed it did not actually have enough equipment to deliver the work, according to documents now released.

It would be good to think that some of those who profited from the pandemic and in effect took advantage of the taxpayer might lose friends because of their actions. But the culture in the financial world and “the city” is such that I suspect they will be celebrated as great examples of entrepreneurial spirit, exploiting a situation (and their connections) cleverly to make money.

Even if there wasn’t overt brown-paper-envelopes-type corruption here (or none that has been discovered yet, at least), sometimes it is just very easy to hate capitalism!

/0 Comments/by
,

Covid Tests Failure – More Questions About Pandemic Procurement

Another UK pandemic-related supplier appointed in haste without competition (and perhaps without proper due diligence) appears to have failed in performance terms.

Immensa Health Clinic is being investigated scrutiny after the UK Health Security Agency (UKHSA) found at least 43,000 people may have been given a “false negative” Covid test result.  That has serious consequences – if those people carried on working and mixing with others, when they were actually suffering with Covid, they may have passed on the virus to others.

That has led to operations at the firm’s privately run laboratory in Wolverhampton being suspended.  The NHS test and trace operation said about 400,000 samples had been processed by that lab, most of which will have been negative results, but around 43,000 people, mainly in the south of England, may have been given incorrect negative PCR test results between 8 September and 12 October. It doesn’t appear to be the kits but rather the analysis at fault – a people problem rather than an equipment issue, by the sound of it.

Immensa was only founded in May 2020 by Andrea Riposati, a former management consultant and owner of a DNA testing company. He is also the founder of Dante Labs, which is under investigation in the UK by the Competition and Markets Authority over its PCR travel tests.  But within three months of Immensa’s birth, it won a £119m PCR testing contract awarded by the Department of Health (DHSC).  That was awarded without being put out to tender, like so many contracts we have seen though the pandemic, some genuinely urgent and others less so.

Back in January this year, the Sun on Sunday newspaper found that workers at the Wolverhampton lab appeared to be sleeping, fighting, playing football and drinking whilst “working”.  (Pretty much like life in the civil service, really). The government said then it would speak to Immensa as it took “evidence of misconduct extremely seriously”.  Despite this, Immensa won another contract for £50 million in July.

We haven’t seen any suggestion of corruption, officials or politicians on the make, or Immensa doing anything dodgy. But again, there will be reasonable questions asked about lack of competition, lack of robust contract management, and why even after the warning signs, further work was given to the firm.

Which brings me on to the recent report, Coronavirus: Lessons learned to date, from the UK parliament’s Health and Social Care Committee and the Science and Technology Committee, and elected members from all parties.  The report is rightly very positive about the vaccine procurement programme.

The procurement model deployed by the Vaccine Taskforce of making decisions at risk, outside conventional procurement procedures, proved highly effective. Lessons from this success should be applied to other areas of Government procurement.

I’m in agreement with looking at useful lessons learnt, but we can’t be naïve about this. This quote about the way vaccines were bought also comes from the report.

Dominic Cummings said: “Patrick Vallance and his team were saying that the actual expected return on this was so high that even if it does turn out to be wasted billions, it is still a good gamble in the end.”

This is absolutely true, and highlights the key issue of risk and reward.  The fact is, there are very few other purchases by government where the balance is similar to the vaccine example. Getting vaccines faster certainly saved thousands of lives and (possibly) billions of pounds in government expenditure.  But taking risks in procurement of other goods or services just does not have the same potential.  Who would seriously place orders for five different armoured vehicles, IT systems or management consultancy firms just in the hope that one or two of them worked out well?

There may well be learnings around how the vaccine team was run, but talk of getting rid of procurement process, rules and so on is unwise and will lead to waste and, unfortunately, to more fraud and corruption. More transparency would help alleviate some of those risks (see my paper for Reform here), but I suspect some of those in favour of radical procurement change are thinking more of the millions they, their chums and associates can extract from the public purse.    

/0 Comments/by
, , ,

UK Government Spends Millions with Consulting Firms – Did Buyers Know What They Were Doing?

UK government procurement related to the pandemic continues to be a source of some concern and confusion. More consulting contracts were published on the Contracts Finder website last week, showing the vast sums of money that are finding their way into the pockets of the partners at major consulting firms.

Deloitte were awarded two further consultancy contracts, via a call off from a Framework Agreement, worth a total of £8.7 million for:  “Buy Support for Ventilators – ICU equipment & consumables, ventilator sourcing, hard to source products” (£6.7m) and  “Support programme delivery including the identification and procurement of PPE” (£2.2m).

Two other unusual consultancy contracts were awarded to Boston Consulting Group to support the chaotic Test & Trace programme. That represented £4,992,059 for “strategic support” and £4,996,056 for “digital support” (very precise values!)

We don’t know whether there was any competitive process – for those of you who aren’t public procurement experts, you are not allowed to simply choose a “random” or favoured supplier from a “Framework” in most cases without running a competition between firms who are listed on it. Did that happen here? I have my doubts but we don’t know. There have also been comments from within the NHS suggesting that no-one quite knows what Deloitte actually did in terms of ventilator procurement. But hey, it was only £6.7 million.

But there was some good news as well. Gareth Davies, who heads up the UK National Audit Office, was interviewed by the Guardian and amongst other points, he confirmed that a report into government procurement processes during the coronavirus pandemic would be published later this year.

“We’re looking at the procurement process, a lot of public comments and concern about the transparency of some of the procurement contracts around PPE and other areas. We’re doing a detailed piece of work,” he said.

So here are a few of the questions NAO might like to ask the buyers of those consultancy services if they choose to examine that area in particular.

  • Did you understand what it was you really wanted to buy?
  • Did you consider the market in an appropriate manner, and use competition to arrive at the best fit / best value supplier to meet your needs?  
  • Do you understand the difference between the three basic reasons or needs behind buying consulting services – specialist knowledge & skills, intellectual horsepower, or execution / implementation capability?   
  • Did you think about the different commercial mechanisms and models – fixed price, time and materials, target pricing and all the variations? Are you clear you chose the most appropriate for your contract?
  • Do you understand the economics of consulting firms and therefore did you use that to negotiate confidently on daily rates (or fixed price)?
  • If you didn’t use competition, how did you arrive at a fair price for the work?
  • Did you make the deliverables, outputs or outcomes that you were expecting very clear?
  • Did you define the contract management process and the interim reporting that you wanted to see from the firm, and then follow through with professional contract management practice?

Let’s hope those responsible for spending money with these firms avoided Bad Buying and can answer these questions confidently and robustly.

/0 Comments/by