£1bn 'at risk' in disputed pandemic PPE contracts signed by DHSC

Health department in negotiations over 36 contracts, with 3.8 billion items of PPE procured for Covid deemed not fit for purpose
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The Department of Health and Social Care is still attempting to renegotiate contracts worth more than £1bn for PPE where suppliers have fallen short, its permanent secretary has said.

The department has spent more than two years examining and renegotiating PPE contracts after it emerged that large amounts of the personal protective equipment procured at the height of the Covid pandemic was not up to scratch.

As of June, there were 36 contracts where DHSC had “some degree of dissatisfaction”, worth a total of £1.09bn, DHSC perm sec Sir Chris Wormald said in an update to the Public Accounts Committee. An estimated £1.04bn of that value is “at risk”, he said.

One of the 36 contracts is subject to litigation, while officials are in “commercial discussions alongside legal review” for the remaining 35.

DHSC’s PPE Contracts Dissolution Team has also been investigating contracts that were awarded by SCCL – the company which manages the NHS supply chain in England and Wales

By June, the team had completed its investigations into 35 SCCL suppliers that had breached their contractual obligations, with no suppliers remaining in dispute. The aggregate value at risk in those contracts was £548m.

Wormald has committed to providing PAC with a quarterly update on the department’s progress.

1.4 billion items of PPE not fit for any use

His letter also included the latest figures on PPE bought by the department as part of its response to Covid.

As of 30 June, 99.8% of the PPE stock DHSC had procured for the Covid pandemic had been quality assured, he said.

Of the 38.6 billion items of PPE – which includes gloves, aprons and masks – it had ordered, 34.8 billion had been deemed good to use.

Of the remaining items, 1.4 billion had gone to waste as they were not fit for any use, up from 1.2 billion nearly two years ago. A further 99 million had expired, and the rest was awaiting further checks or may be of use outside healthcare settings.

The number of items marked “do not supply” to the NHS had fallen from nearly seven billion two years ago to 3.8 billion in June. The figure included items that met technical specifications but were placed on hold for other reasons – with 3.5 billion gloves that had not been distributed because DHSC was investigating allegations of modern slavery in the supply chain among the December 2021 figures.

As of June, 568 million items were being held because of modern-slavery allegations.

As of June, the department had disposed of 474,087 pallets of PPE – which it said had saved £61.3m in annual storage costs. In the first quarter of 2023-24, DHSC spent £42.8m on storage for the 4.7 billion items of PPE that remain in its pandemic stockpile.

The bulk of the equipment is being burned – with 89% of the 142,555 pallets of PPE disposed of between April and June being used to fuel incinerators.

In April 2022, CSW reported that DHSC had signed contracts worth £35m with two waste companies to burn the disused PPE.

Burning the equipment has resulted in “environmental cost savings” of £59m so far, Wormald said.

“The department’s excess PPE would replace the coal that would normally be burnt in these kilns, so would offset the burning of that fuel. The 89% disposed of as EfW this quarter will result in around a £24.3m environmental saving through the switching of coal to plastic PPE to fuel the cement kilns,” the perm sec wrote.

This article was amended on 27 November to clarify that DHSC was investigating contracts awarded to 35  SCCL (full legal name Supply Chain Coordination Limited) suppliers, not suppliers of SSCL (full legal name Shared Services Limited) as previously incorrectly stated by us. We can confirm that SSCL has no connection with the activities stated within this article, the reference to SSCL in the previous version of this article was our error.

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