UK Edition
The Government’s use of a so-called “VIP lane” to award millions of pounds’ worth of contracts for personal protective equipment was unlawful, the High Court has ruled.
Campaigners took legal action over nearly £600 million of contracts awarded to pest control firm PestFix and hedge fund Ayanda Capital at the height of the first wave of the coronavirus pandemic.
The High Court heard that a VIP lane was reserved for referrals from MPs, ministers and senior officials, with campaigners arguing the Government “prioritised suppliers including PestFix and Ayanda because of who they knew, not what they could deliver”.
In a judgment on Wednesday, Mrs Justice O’Farrell said the operation of the VIP lane, officially known as the high priority lane, was “in breach of the obligation of equal treatment”.
However, she found both of the companies’ offers “justified priority treatment on its merits” and were “very likely” to have been awarded contracts even without the VIP lane.
Priority treatment 'justified'
A spokesman for Matt Hancock, the former Health Secretary, claimed the ruling as a victory for the Department of Health.
“We are delighted that the Department for Health has won this case, as the court found that the priority treatment was justified and rightly refused to grant any rectification for the way PPE was urgently bought in the height of the crisis,” the spokesman said.
“It is good that this costly legal action has come to an end with no further action necessary.”
"As the National Audit Office has confirmed, Ministers had no involvement in procurement decisions or contract management. The Department was doing the best it possibly could within the rules to respond to an unprecedented situation, and crucially, the court has rightly found that action was justified and absolutely no rectification or further action is necessary."
The challenge was brought by campaign groups the Good Law Project and EveryDoctor which argued that the PPE process gave preferential treatment to those with political connections.
Jason Coppel QC, representing the campaigners, argued that PestFix was referred into the VIP lane because an ex-director of the company was an “old school friend” of the father-in-law of Steve Oldfield, the chief commercial officer at the Department of Health and Social Care.
He also claimed Andrew Mills, a former member of the UK Board of Trade and representative for Ayanda Capital, was added to the VIP lane when he contacted a senior official at the Department for International Trade.
The DHSC had contested the claim, telling the court it “wholeheartedly” rejected the case against it and that the VIP lane was rational and resulted in a “large number of credible offers” in an environment where PPE deals often failed within “minutes”.
PestFix and Ayanda would have 'still been priority'
In her ruling, Mrs Justice O’Farrell said: “Even if PestFix and Ayanda had not been allocated to the high priority lane, nevertheless they would have been treated as priority offers because of the substantial volumes of PPE they could supply that were urgently needed.”
The judge later said DHSC’s evidence “establishes that presence on the high priority lane did not confer any advantage at the decision-making stage of the process”.
She continued: “However, what is clear is that offers that were introduced through the senior referrers received earlier consideration at the outset of the process.”
DHSC were found to have complied with the duty to give “clear and sufficient reasons” for awarding both sets of contracts and that “sufficient financial due diligence” and technical verification was carried out.
The judgment noted that gowns and masks supplied by PestFix were deemed unsuitable for use in an NHS clinical setting, while FFP2 masks supplied by Ayanda “have not been distributed into the NHS”.
Associates 'enriched at public expense'
Jolyon Maugham, the director of Good Law Project, said: “Good Law Project revealed the red carpet-to-riches VIP lane for those with political connections in October 2020. And the court has now held that, unsurprisingly, the lane was illegal.
“Never again should any government treat a public health crisis as an opportunity to enrich its associates and donors at public expense.”
A DHSC spokesperson said: “We are pleased the court has ruled that our industry call to arms was open and transparent. The ruling says it is highly likely these offers would have been awarded if they were processed through other channels also used to process offers.
“All contracts underwent sufficient financial and technical due diligence and the court found that we did not rely on the referral to the high priority lane when awarding contracts.”