Over that last 20 or so years, there have been numerous examples of Public Sector projects taking either significantly longer than originally planned and/or ending up with a level of cost way beyond the original budget. The High Speed2 Rail link, which started construction in 2019, was originally designed to deliver shorter train times from London to Birmingham and Manchester, and the latter has been curtailed at a write-off cost of £2.7 billion and it has been confirmed that the original opening date of 2033 will not be reached. I’ve heard unsubstantiated rumours of 2039!
More recently, press coverage in this area has centred on the Labour Government’s desire to claw back money from companies that benefited from the billions spent on Personal Protective Equipment (PPE) contracts during the Covid epidemic – many of which were awarded without competitive tendering. The government is working to recover £468 million for communities and public services.
The company at the centre of the UK’s most high-profile Covid-era procurement scandal is PPE Medpro, linked to Baroness Michelle Mone. The company was founded in 2020 by her husband Doug Barrowman and last month the High Court ruled that the company had breached its contract by supplying gowns (25 million) that lacked the appropriate sterilisation and therefore had to be scrapped. The company has been ordered to repay £122 million plus £26 million in interest, and the company also owes the HMRC £39 million in unpaid corporation tax. The trouble is that PPE Medpro has gone into liquidation and has only a little over £640,000 available to unpaid creditors. Recent evidence suggests that getting the money is going to be difficult and from the eyes of an experienced negotiator, it looks as if there have been several missteps in the process.
The deal with Medpro in 2020 was one of a number of deals under the then Conservative Government led by Boris Johnson to set-up a VIP Lane to allow successful business leaders to provide much needed services to support the war against Covid. The evidence from the Medpro saga suggests that the results created a gold rush with what appeared to be very little scrutiny. The fact that Medpro was formed in 2020 should, at the very least, have raised some eyebrows.
Whilst most of the press has been based around Mone and Barrowman, the Government department responsible for procuring the gowns has a lot to answer for. Some examples…
- To what extent did they truly understand the balance of power?
- Why did they think that a company that had emerged in the pandemic would be able to deliver that type of volume, with the appropriate protection?
- To what extent did they probe Doug Barrowman’s commercial past and his reliability?
- Whilst difficult, did they take steps to get samples of the garments to test their efficacy?
- Without a clear understanding of the product's efficacy, why was a structure not put in place to stage the payments?
- Why were there no penalty clauses in place to enable the Government to recoup or at least mitigate their losses sooner?
It’s also worth mentioning that there is a belief in certain quarters that the current Government will end up spending more money on lawyers’ fees than they will extract from PPE Medpro.
Good negotiators are ambitious with their asks but recognise that situations and contexts change and where they are identified, they take steps to mitigate risk. ‘You and Yours’ on Radio 4 recently ran a piece that centred on guests who had faced situations where they had been ripped off by builders due to them paying large sums upfront, the work not being completed and leaving many of them being left significantly out of pocket. The obvious solution is to agree a timing plan with the builder and staging payments accordingly, as if you pay (too much) upfront, you run the risk of never seeing them again! Sounds simple, doesn’t it!
