This article is an excerpt from the 2023 edition of The Art of Tendering: A Global Due Diligence Guide.
As recent case studies illustrate, rushed pandemic purchasing resulted in significant lapses in transparency, record-keeping, probity, value-for-money, and oversight as public institutions across multiple jurisdictions parted company with due process and prioritized expedience over good governance.
For example, in its October 2021 report entitled The 2020/21 audit of NHS National Services Scotland Response to Covid-19 pandemic, the Auditor General for Scotland found that only 20 percent of the government’s emergency sole-source awards for personal protective equipment met the 30-day timeframe for publicly posting direct award notices. The Auditor General cautioned that the lack of a competitive process “makes it especially important for public assurance that procurement decisions are transparent.” By failing to meet its public disclosure duties, the report concluded that the government “reduced the transparency of decision-making” in relation to its rushed sole-source awards.
Similarly, in its March 2022 report entitled The COVID-19 pandemic: Supply and procurement of Personal Protective Equipment to local healthcare providers, Northern Ireland’s Comptroller and Auditor General found that rushed pandemic sole-sourcing resulted in overpayments, in the failure to perform proper conflict checks, and in the failure to publicly report the direct awards within prescribed timeframes. As the Comptroller and Auditor General cautioned, “to help maintain public trust, bring transparency to the process, and prevent procurement decisions being challenged, public bodies must fully document their procurement decisions and actions for contracts let without competition”. The government failed to meet these transparency standards in its rushed pandemic sole-sourcing.
Further, in its March 2022 report entitled Review of the Procurement of the Lateral Flow Tests, the Cayman Islands Office of the Auditor General raised concerns over the lack of proper record-keeping when the government’s Cabinet directly awarded pandemic-related emergency sole-source contracts. The Auditor General found that the existing statutory framework was ambiguous as to whether Cabinet could directly award those contracts or whether those transactions should have been delegated to the government entities that were regulated under the statute. The report also found that during the pandemic, senior government officials were at times required to act on verbal briefings from their respective ministers, rather than on formally documented decisions. The Auditor General found that the direct award decisions should have been supported with better record-keeping. This case study serves as a useful reminder of the importance of proactively establishing clear emergency contracting procedures to better ensure the probity of emergency award decisions.
Similarly, in its March 2022 report entitled Investigation into the government’s contracts with Randox Laboratories Ltd, the UK Comptroller and Auditor General found lax oversight and flawed record-keeping in the government’s rush to award over £770 million worth of COVID-19 testing services contracts to a single consortium. Noting that 85 percent of that total spending was awarded without competition, the report found that the Department of Health failed to seek Cabinet Office approval prior to making those awards and instead sought after-the-fact approval. However, the report found that those retroactive approvals were never obtained. Further, the Department of Health also failed to provide complete records for those awards. As the Comptroller and Auditor General concluded, the National Audit Office was provided “incomplete or no documentation on other significant aspects of the procurement, including detailed due diligence, detailed contractual negotiations leading to the first contract award, and consideration of potential conflicts of interest”. This lack of contemporaneous records is particularly surprising given the high likelihood that the massive amount of emergency sole-sourcing would ultimately be subject to audit scrutiny and potential legal challenge.
In fact, in its January 2022 decision in Good Law Project Ltd v. The Secretary of State for Health and Social Care, the England and Wales High Court of Justice found that the government failed to follow the standards of equal treatment under its emergency procurement rules when it purchased pandemic-related personal protective equipment. The case dealt with a legal challenge to the validity of £14 billion worth of emergency purchases through more than one thousand directly negotiated and awarded contracts. While the Court recognized that the emergency transactions allowed the government to bypass open competition, it determined that equal treatment standards still applied to those emergency purchases. The Court found that the government improperly designated certain contractors under a “high priority lane” that exempted their awards from following established emergency contracting protocols. While the Court declined to grant a remedy since it determined that the contracts would still have been awarded had the proper protocols been followed, this case serves as a reminder that rushed sole-sourcing remains subject to legal challenge.
Further, in an August 2022 report entitled EU Public Procurement Policy During Covid‐19: A Turning Point for Legitimate EU Governance?, Brigitte Pircher from the Department of Political Science at Sweden’s Linnaeus University cautioned that the European Union undermined competition and increased the risk of protectionism and corruption when it enabled uncompetitive rushed procurements under its newly created pandemic procurement guidelines. As the report stated, “while the acceleration of procurement procedures is efficient in the current crisis and allows for highly flexible procurement solutions, it also results in unintended consequences in practice.” The report found that the compressed tendering timeframes under the new guidelines resulted in an increasing number of contracts that received only a single bid. As the report concluded, the lack of competition raised concerns over the legitimacy of the rushed procurements since it increased “the risk of protectionism and political corruption”.
Finally, notwithstanding the apparent acceleration of procurement timeframes noted above, in its 2022 report entitled Special report 19/2022: EU COVID-19 vaccine procurement — Sufficient doses secured after initial challenges, but performance of the process not sufficiently assessed, the European Court of Auditors found that European governments undermined their negotiating leverage in their vaccine purchases by entering the market late compared to the United Kingdom and the United States. The report noted that the European Union “had limited leverage to overcome supply challenges” and raised concerns that the governments were then required to indemnify vaccine manufacturers against claims made by individuals who suffered serious adverse effects from the vaccines.
As these case studies illustrate, the failure to plan for emergency purchasing exposes public institutions to significant after-the-fact scrutiny regarding the probity of its rushed contracting decisions. Rather than waiting for the next crisis, public institutions should engage in proactive emergency planning and develop clear emergency procurement procedures so that their next round of rushed spending conforms with due process standards.
