'No documentation, no justification': NAO criticism of Covid contracts

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Watchdog questions how UK government came to award work to specific companies

James Frayne of PR consultancy firm Public First
James Frayne said his PR consultancy firm Public First got its government coronavirus work on merit. Photograph: YouTube
James Frayne said his PR consultancy firm Public First got its government coronavirus work on merit. Photograph: YouTube

Last modified on Sun 22 Nov 2020 08.15 EST

The National Audit Office has published a report that finds multiple shortcomings in the way the UK government awarded contracts to deal with the coronavirus pandemic. Following are some examples of contracts that were singled out for criticism.

Public First

The NAO report contains criticism of Cabinet Office procedures in the awarding of a contract under the emergency regulations, without a tender, that paid £550,000 to the policy consultancy firm Public First for polling and focus groups. The work began on 3 March, but as the Hlcarpenter.com has reported, no formal contract was put in place until 5 June.

The NAO said that by awarding contracts “retrospectively” after some work has already been carried out, the government “increases risks, including underperformance”. Of the Cabinet Office contract with Public First, the report said: “We found no documentation on the consideration of conflicts of interest, no recorded process for choosing the supplier, and no specific justification for using emergency procurement.”

Public First was founded by married couple James Frayne and Rachel Wolf in 2016. The report notes that Frayne worked as a director of communications at the Department for Education in 2011-12 when the education secretary was Michael Gove, for whom Wolf also worked as an adviser. It also notes, however, that Gove, now a minister for the Cabinet Office, was not involved in awarding or managing the contract.

Frayne has told the Hlcarpenter.com that when the pandemic struck in March, Public First was already providing some focus group work for the Cabinet Office, and it was asked to conduct urgent research on the public’s understanding of Covid-19 and the government’s messages.

Sunak refuses to apologise for PPE contracts given to firms with ties to MPs – video
01:51
Sunak refuses to apologise for PPE contracts given to firms with ties to MPs – video

The Cabinet Office agreed to the work being carried out for some time without any formal contract in place. Gabriel Milland, a Public First partner, was also seconded to work in communications in Downing Street.

Frayne has pointed out that the £840,000 stated on the contract was a maximum possible amount, and the NAO confirms his company billed £550,000 in total. He said his firm got the work on merit, and added: “We agreed a pay-as-you-go deal, where we could be terminated at any point if they weren’t happy with our work.”

The Cabinet Office has maintained that its due diligence processes were robust.

Ayanda Capital

One of the most controversial PPE contracts involved a £253m deal with Ayanda Capital, a London-based investment firm whose senior adviser was Andrew Mills. At the time, Mills was also an adviser to the Board of Trade, part of the Department for International Trade (DIT), whose minister is Liz Truss.

Mills’s “offer of support” was processed through the “high-priority lane”, which the government’s PPE team reserved for politically well-connected people and others it considered to be credible, according to the NAO report, “following a referral by an NHS official”. Mills acted as Ayanda’s representative and signed the contract with the Department of Health and Social Care on Ayanda’s behalf on 29 April 2020.

The NAO said that initial due diligence by the DHSC only checked for political connections of Ayanda’s directors. A second round of due diligence in May “did not include Ayanda’s senior adviser [Mills] and did not identify any conflicts of interest”.

The government paid Ayanda £155m for face masks with ear loops, but after that was agreed the NHS moved to preferring headband fixings. “The masks received will not be used for their original purpose,” the report states, “but may be able to be used for other purposes or resold”.

Tim Horlick, Ayanda’s chief executive, said Mills’s role at the DIT had “absolutely nothing to do with the award of our contract”, and that he was “not aware” of a referral by an NHS official.