Government did not adequately record decisions on Covid contracts – watchdog

When the pandemic hit, ministers were forced to act quickly to scale up testing capacity, working with the private sector to secure the necessary services and supplies, according to the National Audit Office (NAO).

As part of these efforts, between January 2020 and December 2021, the Department of Health and Social Care (DHSC) and Public Health England (PHE) awarded 22 contracts to health company Randox, or its strategic partner, Qnostics Ltd, with a maximum value of £776.9 million, the watchdog said.

By value, almost all the contracts were for the provision of Covid testing services, with less than 1% (£6.9 million) for the provision of testing-related goods, it added.

The NAO found that 60% of the total value of the contracts (£463.5 million) was awarded directly without competition, under emergency procurement rules.

The watchdog acknowledged in its report, published on Thursday, that these were “exceptional circumstances”, and said it had seen no evidence that the Government’s contracts with Randox were awarded “improperly”.

But it found that the DHSC did not “adequately” document key decisions, nor “fully” disclose ministerial meetings with the supplier.

“The gaps in the audit trail mean that it is not possible to provide positive assurance in the normal way,” the report warned.

The NAO said the DHSC first awarded a £132.4 million contract to Randox for testing services on March 30 2020.

It said it was told by the department that a competitive tender was ruled out due to the need to move quickly, and that it could not award the contract from an existing framework as its value exceeded the limit.

But the watchdog said “basic information about the emergency procurement process”, including evidence of approvals, was not recorded in the DHSC’s systems.

“The department had to review several officials’ email accounts to find evidence on its decision to award Randox the first testing contract,” the report said.

The NAO added that the DHSC provided it with “incomplete or no documentation” on “other significant aspects of the procurement”, including detailed contractual negotiations and consideration of potential conflicts of interest.

It also found that the department did not disclose Randox’s attendance at four ministerial meetings as it should have done in line with transparency requirements.

According to the report, minutes were kept for two of eight meetings on testing involving ministers and Randox that took place in 2020 and 2021.

In addition, it made reference to “some private correspondence exchanges” between the then health secretary Matt Hancock and then MP for North Shropshire Owen Paterson, which it said had “recently been made available to the department”.

Mr Paterson resigned from Parliament in November last year after he was found to have broken rules by repeatedly lobbying on behalf of Randox and another company, for which he was acting as a paid consultant.

“The then Secretary of State told us he did not forward all of these messages to the department at the time as they were not substantive discussions and so he was not required to do so,” the report said.

“These messages were not inconsistent with what the then Secretary of State saw as his ministerial responsibility to drive progress, rapidly building testing capacity with Randox and other suppliers.”

The messages not forwarded by Mr Hancock at the time were kept by him and made available to Parliament in February 2022, it added.

The watchdog concluded that the pace required at the start of the pandemic to build high-volume testing capacity “necessitated the use of emergency procurement without competitive tendering”.

The NAO said it had not seen any evidence that the Government’s contracts with Randox were awarded improperly.

But it said that because the department did not adequately document key decisions, disclose ministerial meetings in full, or keep complete records of ministerial discussions involving Randox, it was not able to “provide positive assurance in the normal way”.

Gareth Davies, the head of the NAO, said: “The overriding need to create a high volume testing capacity rapidly at the start of the Covid-19 pandemic meant that standard public procurement approaches were not appropriate. Even taking these exceptional circumstances into account, the documentation of the decision-making process for such large contracts was inadequate.

“Our previous reports on Covid-19-related procurement and those of Nigel Boardman have recommended improvements to ensure an adequate audit trail is maintained even when the priority is speed of action. Government has already started to implement some of these improvements, and we will follow up progress.”

Labour MP Meg Hillier, chairwoman of the Commons Public Accounts Committee (PAC), said the Government played “fast and loose” with spending public money.

“Government grasped the urgent need to increase the scale of testing early in the pandemic. But while it was fast on procurement, it was fast and loose on process,” she said.

“The Randox contracts illustrate that proper transparency by Government is vital. Government didn’t document decisions properly and the public is right to raise questions about whether it was playing with a straight bat.”

Randox said the fact the watchdog found no evidence of wrongdoing in the awarding of contracts “vindicates” its insistence that the process was in keeping with official protocols.

“We welcome the finding of the NAO report that there is no evidence of any impropriety in the awarding of Government contracts to Randox,” a spokesperson said.

“This independent finding vindicates what both Randox and the Government have always said, that these contracts were awarded on merit and in keeping with Government protocols and regulations at a time of acute national emergency.”

It added: “The report states that four ministerial meetings took place which were, apparently, not fully documented by the DHSC.

“While we cannot comment on Government minuting of meetings, Randox can categorically state that the awarding of contracts was not on the agenda at any of these meetings.”

Responding to the report, Mr Hancock said it “confirms a total clean bill of health on ministers’ work with Randox during the pandemic”.

“The report found no evidence of wrongdoing because there was no wrongdoing – just lots of hard work to expand testing capacity,” he said.

Lord Bethell, who was minister for technology, innovation and life sciences in the DHSC from March 2020 to September 2021, said the NAO’s conclusion that there was no impropriety “puts to bed wild speculation and conspiracy theories”.

A Government spokesperson said: “As the public would expect, at the start of the pandemic we took every possible step to build the largest diagnostic industry in UK history rapidly and from scratch – which has helped to limit the spread of Covid and save lives.

“Building the scale of testing needed at an unprecedented speed required extensive collaboration with businesses, universities, and others, to get the right skills, equipment and logistics in place as quickly as possible – and contracts with Randox and other suppliers made a significant contribution to the UK’s response to Covid.

“There are robust rules and processes in place to ensure that conflicts of interest do not occur, and all contracts are awarded in line with procurement regulations and transparency guidelines. The NAO concludes there is no evidence that the Government’s contracts with Randox were awarded improperly.”