This post has now been updated (29/10/2020). Even though the total value now exceeds £1 billion, it still does not give the complete picture.

The Good Law Project recently identified a number of ‘curious’ procurement transactions involving large amounts of taxpayers’ money being transferred to businesses with no apparently relevant qualifications for providing personal protective equipment (PPE).

An example is Ayanda Capital, a company with close ties to the government, which describes itself as follows:

“Ayanda Capital is a family office focused on a broad investment strategy. Founded by Tim Horlick and Nathan Engelbrecht, Ayanda Capital’s experienced team of finance, investment and technology specialists is based in London. We focus on currency trading, offshore property, and private equity and trade financing.”

A family office is a highly specialised, privately-held company that carries out investment management and wealth management (tax avoidance, estate planning, and philanthropic planning) for a wealthy family (which usually means over $100 million in assets), in order to grow and transfer wealth across generations. In other words, its mission is to make that family richer.

Being a family office is not an obvious qualification for providing PPE during the middle of a global pandemic.

Nevertheless, the Good Law Project found that:

“the Government has admitted that the 50 million FFP2 masks they purchased from Ayanda Capital – for a price that we calculate to be between £156m and £177m –  ‘will not be used in the NHS’ because ‘there was concern as to whether the[y]… provided an adequate fixing.’”

In other words, the government transferred between £156 million and £177 million of taxpayers’ money to Ayanda Capital and received nothing usable by the NHS in return. Ayanda Capital denies any wrong-doing.

Does this matter? Yes, of course it does. Even if this were an isolated incident, it would be extremely worrying, and it appears not to be.

It seems likely that there are many such ‘curious’ transactions, awarded outside the normal procurement processes to companies who would normally not be eligible to be considered for such contracts while established providers of PPE have been unable to bid, and the total value of these transactions is truly staggering:

• the government has used emergency procurement processes;
• there are many examples of these ‘curious’ transactions;
• their total value dwarfs the entire annual budget of Public Health England.

The government has used emergency procurement processes

A global pandemic is an emergency. And therefore it is understandable that the government might make some use of emergency procurement processes. Indeed, most governments have done so. As the Department of Health and Social Care explained:

“In March the NHS experienced severe shortages of PPE, modelling based the trajectory of other European countries forecast the need for significant and extremely rapid increase in the UK PPE capacity. Similar shortfalls in PPE stocks were identified globally. There was immense demand for PPE, requiring the UK government to actively seek and create new supply chains rapidly to meet that demand. In these circumstances, a procurement following the usual timescales under the PCR 2015, including accelerated options, was impossible. PPE manufacturers and supply chains were under immediate and unprecedented global pressure to provide products.”

But as Yorkshire Bylines points out, the UK was exceptional in its use of such emergency procedures:

“But other countries, Italy for example who had far more reason to claim the pandemic was an ‘unforeseen’ event, only had to resort to single bidders’ orders on 11 occasions. Spain did the same twice and Germany, with the second-highest number of single bidder contracts, placed 17 in total.

Britain is the exception. Despite having had two weeks of advanced warning of what was happening in Italy, the UK used the single-bidder emergency procurement process over 60 times between 1 April and the end of May, with 46 different suppliers.”

In a recent revelation by The Good Law Project, it has emerged that these emergency procedures have been carefully designed to have some very suspect features:

Leaked documents seen by Good Law Project set out special pathways by which “VIP” and “Cabinet Office” contacts could be awarded lucrative PPE contracts at the height of the pandemic – and at inflated prices.

The leaked documents also evidence a startling opportunity for price gouging by favoured suppliers.  It is only if prices were more than 25% above the average paid to other suppliers that questions were to be asked about value for money.

This suggests that these ‘suspect’ deals were a deliberate feature of the government’s procurement approach, not just a casualty of the pressure they were under.

There are many examples of these ‘curious’ transactions

The table below, which does not claim to be complete, summarises some of these curious transactions unearthed by the Good Law Project and by Yorkshire Bylines. Several of the companies were connected with or donors to the Conservative Party. There is no suggestion that there is fraud involved in these cases, merely that they deserve investigation to determine whether awarding such contracts constitutes responsible use of public money. Doubtless in some cases, it will prove to have been well-spent.

Most of these contracts were single tender – no other potential suppliers were invited to bid.  And yet the UK has many established suppliers of this kind of equipment.

Their value dwarfs the entire budget of Public Health England

The Treasury has announced a total expenditure of £15 billion on PPE; but so far, only £2.6 billion has been accounted for. Of course, the vast bulk of this is unlikely to be ‘curious’ transactions – most will be to established and reputable providers.

But even with what we know of the ‘curious’ transactions, their value is huge. It dwarfs the entire annual budget (£300 million) of Public Health England – the body responsible for protecting and improving the nation’s health and addressing inequalities in England.

What is really happening here? Only those on the inside can know.

But two possibilities spring to mind:

1. the government has so deeply internalised the myths of meritocracy that they genuinely believe that the bankers in the family office will do a better job than established providers of PPE; or
2. they are such committed market fundamentalists that they do not believe that this money is legitimately public property; and this form of ‘curious’ transaction is simply an expedient way to transfer it back where it belongs – into the hands of sovereign individuals.

And unfortunately, PPE procurement is just the tip of the iceberg. There are other areas such as Test and Trace contracts where the same thing may have been happening on an even greater scale.

If this matters to you, please write to your MP asking them to enure that there is a proper investigation – this site makes it easy to do that – and do sign-up  and join the 99% Organisation.

Finally, if you have information on other ‘curious’ transactions (full details plus source), please let us know on info@99-percent.org