Matt Hancock, the former health secretary, has been accused of using the covid emergency to help his friend and former landlord of his local pub, Alex Bourne, to land a lucrative £40m covid contract despite having no relevant experience.
Speaking in the House of Commons, Hancock said these allegations were a “slur” and “the man in question never got nor applied for a contract from the government or the NHS”.
And in answer to the allegation that Bourne’s company, Hinpack, was the main and only sub-contractor actually supplying the £40m worth of testing equipment Hancock said, “the Department of Health and the NHS does not have any say in sub-contracting arrangements”.
This is, of course, arrant nonsense. Let’s examine these claims in detail. First, a declaration of interest. I have been party to several government contracts and bids for government contracts, so I have a little insight into how the system works.
Governments buy stuff
Government normally spends around £300bn a year buying goods and services from the private sector. At the start of the pandemic, by July 2020, they had spent £18bn on covid-related contracts alone, 90 percent through the Department of Health and Social Care (DHSC). So how do they do it?
Contracting and sub-contracting
Contracting with government is not easy – precisely because they use very extensive contracting terms and conditions. Indeed, there has been a drift in recent years to only very large organisations winning government contracts because they are so tight and detailed and only big companies can cope with them easily.
One thing they would rarely do is allow their main contractor freedom to sub-contract to anyone they fancied. Usually the sub-contractor is agreed in the contract, and vetted by the government organisation placing the contract.
As it was in this case. The main contractor was Alpha Laboratories who were already a major supplier to DHSC.
The contract agreed between Alpha and DHSC, signed by a civil servant on behalf of Hancock, specified that Hinpack would be sub-contracted to deliver the goods.
The barrister Jo Maugham of the Good Law Project obtained an unredacted copy of the contract which makes this quite clear.
So Hancock’s statement about sub-contracting is wrong in general – government contracts usually do specify who the sub-contractors are. With very good reason. Government has a duty to ensure value for money, as well as compliance with the law and policies it promotes on a range of issues. It cannot be seen to be using suppliers who don’t conform.
And it is wrong in this specific case. DHSC can and did ‘have a say’ in who the sub-contractors were: Alex Bourne’s Hinpack. Which as they were going to be the real supplier is hardly surprising.
Misleading statements from the former minister
His other statements that Bourne “never got nor applied for a contract from the government or the NHS” is technically true, but also very partial and misleading.
Bourne may not have directly applied for, or got, a contract but he clearly approached Hancock about doing the work.
As the Guardian reported: “Exchanges between [Hancock and Bourne] later emerged … showing the former health secretary had personally referred his old neighbour on to an official.”
This referral was through something called the ‘VIP scheme’, which allowed ministers, MPs and others to recommend firms for covid-related contracts fast-track. The National Audit Office (NAO) found that suppliers recommended through this VIP route were ten times more likely to win a contract than those applying by ordinary routes.
The NAO concluded that, “we cannot give assurance that government has adequately mitigated the increased risks arising from emergency procurement” including “risks such as perceived or actual conflicts of interest”.
Hancock’s attempt this week to vindicate himself and close the investigation into this specific case may well backfire. His ‘defence’ raises more questions and is less credible than he seems to think. He has clearly broken Denis Healey’s famous dictum for dealing with crises: ‘when you are in a hole, stop digging’. Perhaps Mr Hancock should stop swinging his shovel?