Reflecting on COVID-19 procurement as a booster for general procurement rules

Just yesterday, The Guardian reports that Labour's Angela Rayner obtaining information about the infamous VIP procurement route set up by the UK Government early on in the pandemic. Despite official protestations that each contract had been awarded after an 'eight step process' - whatever that means - it turns out that at least 46 contracts were awarded before such magical process was in place. I guess that these may well be in addition to the 71 PPE contracts worth £1.5B the NAO identified last year as having been awarded in advance of the creation of the process.

Last week we found out that a £40.4m contract was sub-contracted out in full to a company ran by Matt Hancock's former publican (ie, the guy who managed the village pub). Now, this can happen at the best of times but it turns out that the publicly available documents pertaining to this particular contract blocks out the name of the sub-contractor (clause 7.3). Of course this was only found out as an unredacted copy of the contract was leaked.

Back in April, Transparency International published a report claiming that 20% of COVID-19 related contracts worth more than £3.7B raised corruption red flags. While a lot could be said about red flags in general, it was yet another brick in the wall.

This is not to say that the problems arising from COVID-19 related procurement are exclusive to the UK and there have been plenty of media stories about EU Member States as well such as Germany (1), (2), (3), (4), (5), (6), France, Netherlands or Ireland. Not all stories are bad though, with countries like Lithuania or Portugal going the extra mile to publicise COVID-19 related contracts, although Portugal in the meanwhile has gone back in time by rendering all actual contracts unavailable on the national portal.

It will be impossible to define in detail how many contracts and how much money was wrongly spent in the response to the pandemic, but the fact of the matter is that enough appears to have happened to allow us to make a couple of general considerations about the experience of using (and abusing) the exceptions conferred in procurement laws.

The first is mentioned in the heading. If anything the field experiment of jettisoning the main procurement rules for a significant number of contracts and a total expenditure in the billions shows why those rules exist in the first place: to ensure equal treatment and as a moat against integrity risks. Without those rules it is easy for markets to be foreclosed and contracts ended up in the hands of those well connected. In addition, it proves the point I've been making over and over again for the last few years, that general procurement rules exist to forestall horrible procurement not to enable great procurement. And that tilting the system in favour of trying to enable great procurement by increasing discretion actually leads to a worsening of results in general as only a small subset of authorities will be able to make good use of the discretion given and even then only some of the time.

The second is that we can now clearly see the accountability and enforcement limitations with post-award transparency and a remedies regime dependent on said transparency. The current approach of manual post-award transparency without any real incentive for compliance leaves the system bereft of contract information data. This is then compounded as the enforcement angle of the procurement system is dependent on the remedies system and that means private actions by aggrieved bidders. If contracts are awarded directly and not known about for months or even years, who will be bothered in spending money on an uncertain gamble of challenging such procurement decisions? It is unsurprising thus that we've not seen publicly discussed a single case of private enforcement being raised and only a handful of public interest groups attempts at providing the accountability.

So to me the bottom line is that the current substantive rules on how to deal with emergency procurement work as they should and should not be expanded upon but that we have significant issues in the accountability and enforcement of said rules.