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Law360, London (May 19, 2021, 3:36 PM BST) -- Health officials who ordered more than £700 million ($990 million) of protective equipment were not warned that due diligence had not been carried out on the suppliers, a lawyer conducting an inquiry into a controversial fast-track route for PPE firms told a court.
Department of Health and Social Care procurement officials were under pressure to snap up stocks of gloves, gowns and face masks for frontline National Health Service workers from suppliers referred by lawmakers, Jason Coppel QC, a barrister for The Good Law Project, told the High Court on Wednesday.
The not-for-profit campaign group is seeking disclosure from the government on a controversial fast-track program for some businesses supplying PPE during the pandemic over allegations that well-connected companies were given preferential treatment, leading to wasteful spending.
Coppel said government accounting officers did not have due diligence information — or were given inaccurate data — about offers to supply PPE from a tiny pest control company, a confectioner and a private fund working with a Chinese manufacturer.
In the case of Ayanda Capital, a private fund, the government bought £252 million of face masks and other protective equipment, despite warnings from a cabinet official — who was not named — that it had received a "red" rating. The rating means there were major concerns because of the lack of financial information about the company.
The issues were not raised with accounting officials, who were told that due diligence had been completed before the contract was approved, Coppel said on Wednesday. The company's offer was fast-tracked through the procurement process because its representative, Andrew Mills — an adviser to the government's trade board — had pursued senior officials.
"The accounting officers who approved a quarter-of-a-billion-pound contract did not have the information in front of them," Coppel said.
Approximately 50 million masks delivered by Ayanda were later pulled out of circulation over concerns that they did not fit tightly. Ayanda has said that it was not aware of any favoritism and that allegations of impropriety are unfounded. The company has also defended the safety of its masks.
The lawsuit, which is also being brought by EveryDoctor, a campaign group for medical doctors, alleges that the government's lack of preparedness for the pandemic resulted in panic buying of large quantities of equipment before it was snatched up by other countries. The U.K. is estimated to have bought £15 billion of equipment, according to HM Treasury figures.
But while some companies submitted offers for contracts through an online government portal, other vendors referred by government ministers, MPs and other officials were shifted into a secret "VIP lane" that increased their chances of landing work.
In the case of Pestfix, a small pest control company, the government awarded contracts worth more than £340 million without conducting any financial due diligence, according to court documents. Pestfix had just £18,000 in assets, and the face masks it eventually supplied could not be used as intended because they failed testing.
The lawsuit alleges that Pestfix was allocated to the VIP lane ahead of a company with a solid track record of supplying PPE because of its connections with Steve Oldfield, the chief commercial officer at the Department of Health and Social Care.
A third company, Clandeboye, a Northern Ireland confectioner, was awarded £108 million in contracts for medical gowns despite the fact that financial checks were conducted only after the deals were signed, the lawsuit states. The company was just one of the 0.7% of suppliers not put in the VIP lane to receive contracts.
The campaigners claim that officials responsible for purchases should have been told that the equipment failed to comply with safety standards and that due diligence had not been run on the suppliers. The lawsuit seeks declarations that the contracts award to the companies in question were unlawful.
The allegations follow findings by the National Audit Office that the government was "overwhelmed" by the extraordinary demand for PPE equipment.
The claimants are represented by Jason Coppel QC of 11KBW, Brendan McGurk of Monckton Chambers, instructed by Rook Irwin Sweeney.
The government is represented by Michael Bowsher QC, Ewan West and Imogen Proud of Monckton Chambers.
The case is Good Law Project and another v. The Secretary of State For Health, case numbers HT-2020-000226, HT-2020-000291, HT-2020-000292 and HT-2020-000419, in the High Court of Justice of England and Wales.
--Editing by Joe Millis.
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