The PPE scandal shines a light on the worrying future of UK procurement law

By Professor Albert Sanchez-Graells (University of Bristol Law School).

The National Audit Office’s Report on its ‘Investigation into government procurement during the COVID-19 pandemic’ found that the relaxation of the standard procurement rules to allow for extremely urgent acquisitions, mainly of PPE, resulted in alarmingly widespread levels of procedural impropriety in the award of up to £18bn in public contracts. Most notably, the NAO report revealed the existence of a ‘VIP procurement channel’ for those with political connections, which resulted in much higher chances of obtaining very lucrative contracts than for those retained under the ‘normal’ pool of potential suppliers. This adds to (and partly explains) earlier reports of very large PPE contracts awarded to companies with no proven track record in the PPE market.

Despite its generally cautious or even conciliatory tone, the picture that the NAO Report paints is simply the opposite of what the rules on procurement integrity demand; the award of massive contracts in these conditions raises all sorts of additional questions, including the ultimate destination of the very substantial profit margins resulting from some of these contracts. In normal times, the NAO report would have triggered several high-level resignations and, very likely, some additional investigations, including of potential criminal activity. However, current times are anything but normal and the impact of the NAO’s eye-watering conclusions can be expected to be mild, at best.

It should be stressed that the procedurally improper award of contracts is not the only troubling aspect of the PPE scandal. What is perhaps less widely known is that the NHS supply chain should have been able to deal with the need for additional PPE as part of the centralised acquisition system that has been in place since 2018. As part of a ‘New Operating Model’ for NHS procurement, the Department of Health and Social Care created an arm’s-length organisation (NHS Supply Chain) tasked with managing the sourcing, delivery and supply of healthcare products, services and food for NHS trusts and healthcare organisations across England and Wales. NHS Supply Chain not only was unable to scale up its existing framework agreements for the procurement of PPE, but was also overwhelmed and unable to act as a proactive market agent. This resulted both in the award of additional consultancy contracts to effectively create a parallel centralised PPE procurement system (at high cost) and the emergence of competition for scarce PPE sources within the NHS, as Trusts took it in their own hands to try to supply the PPE needed at the frontline.

The PPE scandal not only shows that the deactivation of procurement rules and their checks and balances was exploited in dubious ways (and chumocracy is perhaps the kindest label this can be given), but also that the institutional arrangements for centralised commercial procurement for the NHS failed in the face of the challenge. It would be too easy to write all of this off as a ‘freak event’ due to the unprecedented challenges of a pandemic. The PPE scandal not only shows the inadequacy of the governance of public spending in the context of the COVID-19 pandemic but, more worryingly, shines a light on the dangers of unregulated procurement in the face of the many challenges that are fast approaching, including Brexit and the climate emergency.

Indeed, in a recent article, I argue that the PPE scandal was not the unavoidable consequence of the pandemic and that the UK healthcare procurement system was in a particularly weak position to deal with it as a result of its previous excessive and inadequate centralisation; the inadequate oversight, mismanagement, and underfunding of the outsourced strategic stockpile; and the additional impacts of Brexit. This turned the implementation of ‘unregulated procurement’ for the extremely urgent purchase of PPE into a governance Hydra that ate NHS Supply Chain up and resulted in the implementation of expensive and largely inadequate stop gap management solutions, and the waste of significant resources in a desperate attempt to scramble PPE supplies. It also created a regulatory vacuum which facilitated the improper award of contracts in an opaque manner. Sadly, in light of the NAO Report, this seems to be a fair reflection of the sorry state of affairs of procurement governance in the UK, as evidenced by the COVID-19 ‘stress test’. Perhaps the better question is what this means for the future.

To my mind, the existential challenge of climate change should be put at the forefront of policy and legal analysis—together with the also existential challenge of the development of digital technologies and social media, which is closely intertwined with the climate emergency. From that perspective, it seems clear to me that, before too long, the ecological and social breakdown resulting from climate change will pose more and more urgent challenges to all governments. And public procurement will, once again, be an essential part of an adequate response. There are a few things that need to be done to prevent falling on the trap of ‘unregulated procurement’ on the basis that extreme urgent needs become the ‘new normal’. Without attempting to be exhaustive, I would advocate for the following.

First, the procurement capability of the public sector needs to be re-established, which will require insourcing currently outsourced functions and providing substantially more resources. Second, reliance on ‘strategic providers’ and management consultants needs to be severely cut back and the development of more varied and resilient supply chains needs to be actively promoted. Third, there is a clear need for more (and much better) contingency planning, which also needs to be properly resourced. Fourth, we need to reorient procurement to put sustainability at its core. Fifth, we need to harness the potential of digital technologies to achieve higher levels of sustainability and, more generally, to achieve the UN’s sustainable development goals. Sixth, we need to facilitate and support the emergence of transnational and global institutions and governance networks capable of coordinating domestic procurement efforts aimed at tackling cross-border and global challenges.

Of course, the practical obstacles are significant, and the obvious constraint is that all of this would require significant resources and sustained effort to implement and consolidate changes that are not easy fixes of what is, in effect, a rather dysfunctional complex system. However, I hope the COVID-19 story will serve as a cautionary tale. If we fail to fix the system, it will fail when put under significant stress. And the only thing that we should not doubt is that systemic stress is coming our way.

The above is based on the author’s article available here, to be published in D Cowan and Ann Mumford (eds.), Pandemic Legalities (Bristol University Press, Forthcoming).

A version of this blog post was first published in the LSE Politics and Policy blog

Healthcare procurement and commissioning during Covid-19: reflections and (early) lessons – some thoughts after a very interesting webinar

By Prof Albert Sanchez-Graells, Professor of Economic Law and Member of the Centre for Health, Law, and Society (University of Bristol Law School)

On 30 September, the Centre for Health, Law, and Society had the honour of hosting an excellent panel of speakers for a webinar on ‘Healthcare procurement and commissioning during Covid-19: reflections and (early) lessons’. The speakers provided short presentations on a host of very complementary issues surrounding the reaction of NHS procurement and commissioning to the COVID-19 challenges. The ensuing discussion brought to light a number of general themes that are, by and large, aligned with the worries that others and I had expressed at the outset of the pandemic*, and a number of challenges that will shape the readjustment or reregulation of NHS procurement and commissioning in the medium and long term.

This blogpost initially provides some brief notes on the most salient points made by the speakers in their presentations, which do not aim to be exhaustive. It then goes on to offer my own reflections and views on what lessons can be extracted from the procurement and commissioning reaction to the first wave of Covid-19, which do not necessarily represent those of the panel of speakers. (more…)

Big divergences in procurement transparency across the EU – even under the new Open Data Directive

By Prof Albert Sanchez-Graells, Professor of Economic Law (University of Bristol Law School), Dr Kirsi-Maria Halonen, Senior Lecturer in Law (University of Lapland, Finland), Prof Roberto Caranta, Professor of Administrative Law (Turin University, Italy)

Together with competition and integrity, transparency is one of the fundamental pillars of every procurement system around the world. Much of the efforts to ensure probity in the expenditure of public funds through procurement concentrate on mandating competition-enabling transparency of contract opportunities and accountability-facilitating transparency of the outcome of procurement processes. In the European Union, the 2014 Public Procurement Package continued to place the principle of transparency amongst its general principles and established rather detailed disclosure obligations, including the mandatory publication of a wider range of electronic notices (including for contractual modifications), a consolidation of the tenderers’ rights to access information about the procurement process, and higher standards for documentation and record-keeping by the contracting authorities.

More generally, the push for the development and adoption of open data standards for public procurement—in particular by the Open Contracting Partnership—has renewed efforts to bring procurement under the open government umbrella and to facilitate higher levels of transparency and accountability, in particular through big data analysis. In the European Union, the Commission highlighted the importance of procurement transparency in its 2017 Communication on ‘Making procurement work in and for Europe’, stressing that ‘The digital transformation, the growing wealth of data in general and the availability of open data standards offer opportunities to create better analytics for needs-driven policy-making and warning systems to signal and tackle corruption in public procurement’. The Commission thus established the goal of increasing transparency, integrity and better data as one of its six key strategic priorities. In particular, the Commission advocated the creation of national public contract registers by the Member States, providing transparency on awarded contracts and their amendments to enable dialogue with civil society and hold governments more accountable. (more…)

Some thoughts on the frustrations of carrying out Brexit-related research (in the UK)

By Dr Pedro Telles, Senior Lecturer in Law (Hillary Rodham Clinton School of Law, Swansea University) and Dr Albert Sanchez-Graells, Reader in Economic Law (University of Bristol Law School).

Britain in the Crazed Brexit Vortex

Brexit, its research and its teaching are increasingly becoming a field of study on their own—see eg the illuminating contributions to the special issue edited by C Wallace & T Hervey on ‘Brexit and the Law School’ (2019) 53(2) Law Teacher 133-229, some of which build on the earlier series of SLS ‘Brexit and the Law School’ Seminars, one of which Albert had the pleasure to host at the University of Bristol Law School in July 2017. This seems rather natural, as it is hard to overstate the impact that Brexit is having on the work of academics active in all areas, but particularly for public and EU law scholars. In this post, we offer some personal reflections on the frustrations of carrying out Brexit-related research, some of which are related to Brexit and its unforeseeability, while others are derived from more general constraints on the ways legal research is published and assessed.

Researching a moving target …

The first issue that concerns us is the need to try to foresee what is likely to happen along the Brexit process (itself unknown and highly volatile), which puts legal scholars in a difficult bind because this is clearly a politics-driven phenomenon that curbs almost every imaginable rule or precedent remotely applicable to a comparable situation. We are not sure that legal scholars are in the best position to offer policy forecasts but producing research that is of any use to policy-makers requires such an effort. (more…)

NHS procurement and Brexit: limited scope for no-deal preparations

By Dr Albert Sanchez-Graells, Reader in Economic Law and Member of the Centre for Health, Law, and Society (University of Bristol Law School).

As Brexit day approaches and the UK and the EU fail to complete their negotiations for a withdrawal and transition agreement to ensure an ‘orderly Brexit’, more and more voices will raise strong concerns about the impact of a no-deal Brexit for important sectors of the UK economy and public sector. In a leaked letter, the trade association of NHS providers sent a clear warning message to the public bodies in charge of running the English NHS (NHS England and NHS Improvement). As widely reported by the press, NHS providers made it clear that poor co-ordination by ministers and health service bosses means there has been a failure to prepare for the UK to be left without a Brexit deal, and that this could mean “both stockpiles and shortages of medicines and medical devices”.

NHS providers have thus requested that the Department of Health and Social Care, NHSE and NHSI accelerate preparations for a no-deal Brexit. In this post, I argue that there is very limited scope for no-deal preparations concerning medical equipment and consumables, and that this can have a very damaging impact on the running of the NHS post-Brexit, given that it annually spends approximately £6 billion on goods (such as every day hospital consumables, high cost devices, capital equipment and common goods). (more…)