The High Court has ruled that the Department of Health and Social Care’s use of a “VIP lane” to award contracts for personal protective equipment (PPE) to two companies was unlawful.
The Good Law Project and EveryDoctor took the legal action, claiming the Department of Health and Social Care (DHSC) unlawfully awarded contracts to supply PPE – such as gowns and medical quality facemasks – during the first wave of the Covid-19 pandemic.
The groups took legal action over more than £340m in contracts awarded to pest control product supplier PestFix, and a contract worth about £252m to hedge fund, Ayanda Capital.
In her ruling, Mrs Justice O’Farrell said, “the Claimants have established that operation of the High Priority Lane was in breach of the obligation of equal treatment…the illegality is marked by this judgment.”
However, Mrs Justice O’Farrell ruled that while the use of the VIP lane, officially known as the “high priority lane” was unlawful, she found that both companies’ offers “justified priority treatment” on their merits and were “very likely” to have been awarded contracts even without it.
The Judge agreed the VIP lane granted preferential treatment on bids: it sped up the process, which meant offers were considered sooner in a process where timing was critical, and VIPs’ hands were held through the process. She said:
“offers that were introduced through the Senior Referrers received earlier consideration at the outset of the process. The High Priority Lane Team was better resourced and able to respond to such offers on the same day that they arrived”.
The Court found the Government allocated offers to the VIP lane on a “flawed basis” and did not properly prioritise bids:
“There is evidence that opportunities were treated as high priority even where there were no objectively justifiable grounds for expediting the offer.”
The judge said the Government’s evidence “establishes that presence on the high priority lane did not confer any advantage at the decision-making stage of the process”, but she said it was clear that “offers that were introduced through the senior referrers received earlier consideration at the outset of the process”.
The Government took swift and decisive action:
A National Audit Office report found last year that up to the end of July 2020, about one in 10 suppliers who had been put in the high priority lane was then awarded contracts, while the figure was less than one in 100 for other suppliers.
A Department of Health and Social Care spokesperson said at the height of the pandemic there had been a “desperate need for PPE to protect health and social care staff” and said the Government “rightly took swift and decisive action to secure it”.
“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,” they said.
A spokesman for Former Secretary of State for Health and Social Care, Matt Hancock, who was leading the department at the time the contracts were awarded, said he was delighted that the court found that the priority treatment was “justified”.
He said: “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.”
A court previously ruled that Mr Hancock had acted unlawfully when his department did not reveal details of contracts it had signed during the Covid pandemic.
A PestFix spokesman said the company was pleased to have been “completely vindicated” by the High Court over how the contract was awarded, saying the decision was “based purely on our ability to deliver”. Adding the company had only been made aware that it had been placed in the high priority lane by a National Audit Office report in November 2020.
A spokesman for Ayanda Capital said: “We are pleased that, despite all the claims to the contrary, the court has rejected any suggestion that we were not an appropriate business to source desperately-needed personal protective equipment and concluded that the offer we made the Department of Health justified priority treatment on its merits.”
The company was “doing the best we possibly could to help to respond to an unprecedented national emergency”, he said, adding that the court had not criticised the way it had conducted itself in anyway.
Image: Royal Courts of Justice: Elisa Rolle