DHSC may not achieve value for money on 176 PPE contracts, NAO warns

The watchdog finds the Department of Health and Social Care is still paying millions of pounds to store PPE that is not suitable for frontline use
The department has 3.6 billion of PPE in storage that it found was not suitable for frontline services.

By Tevye Markson

04 Apr 2022

The Department of Health and Social Care may not get value for money for as many as 176 of the PPE contracts it signed, the National Audit Office has warned in a report detailing how the department is still dealing with the fallout of the pandemic.

An estimated £2.7bn could go to waste from these contracts, the NAO said.

The department said it is seeking to recover “significant amounts” of money from the contracts, with the primary issue being the quality of the PPE provided.

The report also found discrepancies between the amount of PPE ordered and the quantities received by the department for many of the contracts, with it receiving both more and less in different cases. The NAO said this could have been caused by double counting PPE as it moves between sites or stock stored by the supplier not being counted.

The department has so far spent £12.6bn of the total £13.1bn it expects to spend on almost 38 billion items of PPE, according to the report. The department has received 31.5 billion of the total so far, with a further 1.4 billion items stored in China and five billion yet be received.

Of the PPE received, 17.3 billion items have gone to frontline services and 14.2 million are in storage.

DHSC is still spending millions of pounds on storing PPE, with much of the outlay due to not having enough storage capacity, the report found. This includes more than three billion items not suitable for frontline services.

DHSC spent £737m on storing PPE between March 2020 and October 2021, including penalty charges of £436m for storing supplies in shipping containers for longer than agreed, the report found.

Sir Chris Wormald, permanent secretary for DHSC, revealed similar figures for the period between April and November 2021 in a letter last month.

Some 3.6 billion of the PPE in storage – 11% of all PPE that has been received – is considered not currently suitable for frontline services.

DHSC also has 3.9 billion more items of stock than it needs and is looking to sell, repurpose, donate or recycle, which it is spending £7m a month to store, the NAO report said. An additional 1.5 billion pieces of PPE currently in storage are estimated by DHSC to have passed their expiry date and therefore unable to be distributed.

The department has recently appointed a laboratory to begin tests on expired PPE to determine whether use-by dates can be extended, in a bid to cut down on waste.

Assessing the total demand for protective equipment at the start of the pandemic “was challenging due to the unprecedented nature of Covid-19 and the precise technical specifications for the PPE necessary to respond to it”, the NAO said.

DHSC awarded 394 contracts worth £7.9bn through two new supply chains, while 9,492 contracts worth £5.2bn were agreed through the existing NHS supply chain.

Almost two-thirds of items which were assessed as not being suitable for frontline services were procured through the new supply chains.

Of the 394 contracts procured through new channels, 115 went through the controversial VIP lane, with 51 VIP lane suppliers winning contracts. Nearly half  -40% - of these contracts did not go through due diligence checks, which were only put in place from May 2020 onwards.

More than half of the 51 VIP suppliers provided some PPE that DHSC says is not currently suitable for frontline services, the NAO found.

The report also revealed that DHSC made 52 upfront payments to suppliers after the government’s counter-fraud function issued advice to avoid upfront payments. The department made 298 upfront payments in total, worth £2.5bn.

The department has identified five contracts with prepayments, worth a total of £19m, where it believes there is still a risk the PPE will not be delivered.

A DHSC spokesperson said: “Our priority throughout the pandemic has been saving lives, and we have delivered over 19.1 billion items of PPE to frontline staff to keep them safe.

“Having too much PPE was preferable to having too little in the face of an unpredictable and dangerous virus, given this was essential to keep our NHS open and protect as many people as possible.

“Where contracts are in dispute, we are seeking to recover costs from suppliers and we expect to recover significant amounts of taxpayers’ money.”

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