4 March 2025

(10.00 am)

Lady Hallett: Mr Wald.

Mr Wald: My Lady, our first witness this morning is

Professor Albert Sanchez-Graells. Could the witness

please be affirmed.

Professor Albert Sanchez-Graells

PROFESSOR ALBERT SANCHEZ-GRAELLS (affirmed).

Questions From Lead Counsel to the Inquiry for Module 5

Mr Wald: Professor, could you start your evidence by stating your full name, please.

Professor Albert Sanchez-Graells: My name is Albert Sanchez-Graells.

Lead 5: Thank you.

Professor, you have produced, and we are grateful for it, a very comprehensive report. It is Inquiry document INQ000539153, to which we will be referring on a number of occasions in the course of your evidence today. Can I confirm that it’s your own work, that you are aware of your obligations as an independent witness –

Professor Albert Sanchez-Graells: (The witness nodded)

Lead 5: – and that you’ve signed it and that it’s true to the best of your knowledge and belief?

Professor Albert Sanchez-Graells: Yes, that’s correct.

Lead 5: Thank you for that. By way of brief introduction, Professor, you were asked, were you not, to provide an expert report on the key principles, important legal frameworks and relevant guidance in respect of public procurement by the UK Government and devolved administrations, and how this may be improved in the future?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: In terms of your own background, you are a professor of Economic Law at the University of Bristol –

Professor Albert Sanchez-Graells: Yes.

Lead 5: – Law School; is that right?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: You have previously held numerous academic posts. You have a European doctorate in law on your thesis, The Interaction Between Procurement and Competition Law?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: Your particular research and expertise interests concentrate on the way in which the public sector interacts with the market and how it organises the delivery of public services, especially healthcare?

Professor Albert Sanchez-Graells: Yes.

Lead 5: At risk of embarrassing you, Professor, you are globally recognised as a leading scholar in the regulation and governance of public procurement; is that correct?

Professor Albert Sanchez-Graells: I think that’s correct.

Lead 5: All right. You have to your name many publications,

including ones specific to procurement and Covid-19,

which are listed in your report. I won’t go to those

now. You were asked in relation to your expert evidence

to split it in a three temporal sections: first prior to

the pandemic or prior to 1 January 2020; is that right?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: Second, between 1 January 2020 and 28 June 2022?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Then, third and finally, after the pandemic, as defined as being after 29 June 2022 and onwards?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Yes. All right. I want to ask you, then, in relation to the temporal scope of your evidence and, to the extent that it’s relevant, Brexit, which falls within that initial period, could you offer a summary of the evidence that you’ve given in your report, please?

Professor Albert Sanchez-Graells: Yes. So I think it’s important to contextualise the timing in which the procurement for the pandemic took place, which overlapped for the first year with the transitioning out of membership of the EU, but, despite the fact that the UK left the EU and then was in a transition period and eventually fully left, the rules were consistent throughout the period. And also, despite the fact that the government at the time had quite vociferously complained about the EU procurement rules and promised a bonfire of procurement law, that change didn’t take place and actually the process of review of the EU derived rules only was completed last week and when Procurement Act came into force. So for the purpose of the report, the rules were constant for throughout those three periods you have mentioned: before, during and after the pandemic.

Lead 5: We will come back to the enactment of the new legislation – as you rightly point out, only as recently as last week – in due course. But before we move on from this topic, there was a joint procurement agreement, or the possibility of a joint procurement agreement, a matter upon which you touch in your report. Could you offer your evidence to the Inquiry in relation to that, please?

Professor Albert Sanchez-Graells: Yes. So while the UK was transitioning out of the European Union, the European Union was starting to put together its own collaborative approach to the procurement of supply, such as PPE or ventilators, and there was opportunity for the UK to join this joint procurement, which, in my view, the UK unilaterally decided not to take. I also explore in the report how the reasons given for not joining are, in my view, not particularly convincing because, even if it was true that specific officials of the UK Government were not reached because the email addresses were wrongly used by the European Commission, that didn’t mean the UK Government wasn’t aware of those efforts and they couldn’t have chased the opportunity of participating. It was also clear, in my view, that the opportunity to participate was open throughout the period, regardless of Brexit, and I think it’s also clear that, at the time, that was seen as a strangely missed opportunity for the UK Government to access another route to –

Lead 5: Well, that’s what I wanted to ask you: no matter the reasons for non-involvement, what was the effect of non-involvement?

Professor Albert Sanchez-Graells: So the effect of non-involvement is that the UK was outside of that collaborative effort that was trying to source PPE in a flexible way through the creation of so-called framework agreements. So they were not definite commitments but were sort of standby opportunities to draw from those framework commitments, and that forced the UK to put all of the mitigations and all of the routes to market that it thought it needed on its own in place. So I think that, in my view, exacerbated the risk of buying too much because the UK was going it alone and was not doing it in a flexible way, like the European model was doing.

Lead 5: You consider that it placed the United Kingdom at a competitive disadvantage in procurement terms?

Professor Albert Sanchez-Graells: I think so. I think it just didn’t take up an opportunity of having more options to source the materials that it required.

Lady Hallett: Could I ask you to slow down, Professor. We have a stenographer who is trying to take a note and I’m sorry, if you have a fast way of speaking, as I do, it’s difficult to change, but if you could just slow down.

Professor Albert Sanchez-Graells: Of course. Apologies, my Lady.

Lady Hallett: Can I just ask you to play devil’s advocate for one minute. So you say it exacerbated a risk and we should have participated. What are the arguments against participation?

Professor Albert Sanchez-Graells: So the arguments against participation mainly have been that, after the fact, the initial efforts from the European Commission were not particularly helpful and, for example, PPE had to be rerun.

Lady Hallett: Sorry, PPE had to be?

Professor Albert Sanchez-Graells: Had to be rerun, so the first call to market was not successful and they had to stop it and then go again to the PPE market, and so there’s the view that it had not – it wouldn’t have made a material difference at the time, but I think that’s not relevant because the question was: at the point of deciding whether to join or not, what was a possible downside? And this would not have committed the UK to actually buy anything under the European framework, it would just have been an additional opportunity to access markets in a different way.

Mr Wald: All right, thank you. Can I move you on to public procurement, what is it, if you’d like to say a few words on that.

Professor Albert Sanchez-Graells: Yes, so I think, in simple terms, public procurement is a set of rules and policies that try to constrain and guide how the state buys things or services from the market. And procurement rules have fundamentally two purposes: one is to ensure the integrity or the probity of the process, because it involves very large amounts of money and opportunities, so we want to make sure that access to those opportunities is on a level playing field and that there is no favouritism or corruption in any way; and it also tries to foster value for money, so it tries to ensure that the contracts that we put in place are such that we obtain value because we are spending taxpayers’ money. So procurement rules have these two considerations of preventing corruption and preventing maladministration.

And procurement looks a little bit different in different countries but there are very clear international standards and we also have very clear international frameworks, so fundamentally the rules are about the process. We try to regulate what transparency we need to give to opportunities, what times we need to follow, what sort of objective criteria are permissible or impermissible, and we try to create harmonisation of this procedure.

Procurement rules are not about what needs to be bought or for what purpose. Those are issues for policy. And in each country the policy looks a little bit different.

Lead 5: All right.

Do remain mindful of the requirement to keep the pace down if you wouldn’t mind.

Professor Albert Sanchez-Graells: Yes.

Lead 5: You say that very large sums of money are involved. Do you know, in broad terms, what the annual spend is for the United Kingdom?

Professor Albert Sanchez-Graells: So, for the United Kingdom, the estimate is in excess of £300 billion –

Lead 5: All right, and – sorry, please.

Professor Albert Sanchez-Graells: That represents about a third of the public sector budget, in simple terms.

Lead 5: What proportion of that is devoted to healthcare?

Professor Albert Sanchez-Graells: So the numbers are not always easy to track, but healthcare is the biggest non-defence spend in any jurisdiction and certainly in the UK.

Lead 5: Non-defence spend?

Professor Albert Sanchez-Graells: Non-defence spend. So defence probably accumulates also very large amounts. If you’re interested in the details, I can –

Lead 5: No, I think – because the detail is contained within the report. It’s sufficient, I think, for these purposes for you to provide the summary that you are.

Let’s move on to the aims of public procurement regulation, if we may.

Professor Albert Sanchez-Graells: So, as I was saying, the main aims of public procurement regulation are to ensure that there is integrity and good administration in the expenditure of public funds, and those aims fundamentally try to facilitate it through mechanisms of transparency. And that’s the short of it. So procurement regulation tries to ensure that the expenditure of public funds is transparent, is accountable, so that we prevent corruption and we ensure value for money to the maximum possible extent.

Lead 5: Are there different ways of achieving that or different choices to be made?

Professor Albert Sanchez-Graells: There are different choices, because procurement systems could be put on a spectrum. You could have very rigid procurement systems that create sort of very easy to follow step-by-step rules, but those are seen as maybe stifling commercial acumen or the possibility of doing things in a creative way. At the other end you could have very flexible procurement regimes that could be quite complicated and give lots of discretion to the specific officials, but those are seen as creating more difficulties, in particular in controlling the exercise of discretion. So there’s this spectrum of rigidity versus discretion-based, and each country makes its own choices.

Now, there are trade-offs in both of them. I think if we are really worried about corruption, we want to tend towards rigidity, because then we can control each process and each part of the process. If we are more worried about value for money, we probably want to create more flexibility and more discretion.

Now, the other trade-off is on the complexity of the system and the underlying infrastructure that we want to run the system. The more rigid the system, the less demanding it is on the procurement workforce. The more flexible and discretion based, the more it requires a highly skilled procurement workforce that will be able to exercise that judgement carefully.

So those are the choices that need to be made. And then there is also choices about the level of challenge of procurement decisions that is allowed. So if you want to have a very open and accountable system, probably you want to be quite generous in standing, for example, on the opportunities to challenge. If you want to have a very effective procurement system, you probably want to limit challenge. So that’s also another sort of spectrum where the systems move.

Lead 5: Are you able to comment on where the UK sits within this spectrum and that balance between rigidity and discretion compared to other countries?

Professor Albert Sanchez-Graells: So I think that the UK sits towards the discretion end of the spectrum, because there are many enablers for contracting authorities to do things in their own way, even in the regime that applied during the pandemic. It’s possible to carry out negotiations or to carry out competitive dialogues with a very low threshold of justification, so it’s not a very strict system where, for example, you would say, if you want to engage in negotiations, you necessarily have to negotiate with three or with five. In the UK, each contracting authority can come up with its own view on how many economic operators to engage with. And it’s also very flexible in that there are no hard constraints on what could be considered, for example, in terms of award criteria. So each contracting authorities decides its own mix of technical and price, and within technical what to look at. So I think it tends towards the discretion-based end of the spectrum.

Lead 5: All right. I think that takes us on to the basics of public procurement regulation. Would you say a few words about that topic, remembering to keep the pace a little bit down.

Professor Albert Sanchez-Graells: Yes. So I think, like I said, procurement regulation looks a bit different in each jurisdiction but there is a broad consensus on the main principles of procurement regulation. And those principles, in my view, include the predictability of the system, they include the effectiveness of the system, and by effectiveness I mean that, first and foremost, procurement is a tool for the public sector to obtain the goods or the services that it requires. So the main thing it has to do is deliver on that front.

But of course, it has to do it in a way that ensures the economy or value for money. It’s not about buying things at any price; it’s about having a good balance between what’s required and the outlay that it requires. It’s also important for it to be transparent and that transparency has to do both with what is disclosed to the public through proactive publications, but also with adequate recordkeeping, so it’s a principle that every decision has to be traceable and there has to be a record, so that can be scrutinised, and transparency is an enabler for accountability.

It’s also very clear that procurement has to ensure integrity, and that will require preventing corruption, preventing conflicts of interest, and preventing collusion, which are three different ways in which the procedure could be tilted or not lead to a level playing field. And I could expand on any of those if they are of interest.

Lead 5: What I’d like to ask you is that these principles or these regulatory principles, are they applicable both in business as usual or normal forms of procurement as well as in emergency situations, to which we will turn in a few moments?

Professor Albert Sanchez-Graells: So the key principles are applicable throughout. What’s going to happen is that in emergencies the balance between the principles might shift. So it’s well understood that, for example, effectiveness and value for money may not always be maximised. There will be times, and I’m sure we will come to it, where the market is such that probably you cannot get things at the price you would want, and you still need to get the things, so you need to facilitate effectiveness over value for money, but that doesn’t mean value for money goes completely out of the window. The way that I phrased it in the report is that in normal times value for money is about maximising the value for the taxpayers’ funds.

In my view, in emergency times value for money is about minimising the excessive prices that are being paid, minimising the risk of waste of taxpayers’ funds, so what these principles look like or the way they are implemented may shift, but the principles apply throughout.

Lead 5: Is that true for all of the principles? Are there any that would apply in any event, whether it’s emergency procurement or business as usual procurement?

Professor Albert Sanchez-Graells: So the ones that apply in any event have to be transparency for sure, and they have to be accountability for sure. Those two, basically, without them you cannot achieve even the anti-corruption goal of procurement rules. So those definitely have to apply –

Lead 5: Do they apply in the same way in emergency procurement or in a different way?

Professor Albert Sanchez-Graells: They apply in a different way because there’s also an implicit principle of proportionality. So what would be disproportionate would be, for example, in an emergency to require long lead times and to ensure that transparency is out there for everyone to look at before things happen because it can be that transparency has to come after the fact, when you’re really rushing to market. But transparency has to be there.

And I think what is important to recognise in emergency situations is that while things can be done in a different way by shortening processes or dispensing with some phases, the fundamentals remain the same.

Lead 5: All right. Let’s move on. I think we’ll come back to those when we reach the specifics of emergency procurement in a few moments. Before that, I just want to ask you about thresholds or the scope and modes of application of public procurement regulation. Would you provide the Inquiry with your reflections on that topic, please?

Professor Albert Sanchez-Graells: Yes. So we said procurement rules apply whenever the public sector buys something but they don’t apply to any part of the public sector buying anything for any value. They are tiered to ensure that proportionality that we are talking about. So procurement rules will apply to most of the entities in the public sector and, for the purpose of the report, all Covid-related procurement was covered because it was carried out either by central governments, or the central government of a devolved imagination, or by a hospital which is funded by a public authority.

Lead 5: When you say “tiered”, do you mean by spend?

Professor Albert Sanchez-Graells: By spend is the main way of making the obligations proportionate, so the procurement rules establish different value thresholds above which full compliance is required and then –

Lead 5: What’s the value threshold for central government?

Professor Albert Sanchez-Graells: So the value threshold for central government is about £140,000 for goods and services, and for regional local government – but that would not cover devolved administration, because devolved administration is central government, for these purposes – at regional local government it would about £215,000 at the time.

Lead 5: So it’s a higher threshold?

Professor Albert Sanchez-Graells: It’s a relatively high threshold because it requires compliance, for example, with international advertising of opportunities, it requires compliance with the periods of time that we will discuss later. So below those thresholds, it is understood that it would be disproportionate to impose full compliance with those requirements.

Lead 5: Finally on this topic, how is oversight achieved in relation to this?

Professor Albert Sanchez-Graells: So oversight is achieved in two ways. There are, in each system, a mechanism of oversight through audit-based mechanisms, in the UK. It is well known that it is done for the English jurisdiction by the NAO and in each devolved administration by the equivalent audit offices. And then there is the possibility of judicial review and activity remedies under the procurement rules to challenge procurement decisions.

So the way I understand it is that oversight more in the public interest is carried out as a matter of course through these audit-based mechanisms, and challenge is based more on the private interest of those tendering for contracts is carried out down the judicial route but there are different models and the observation that I make in the report, and it will be important later, is that the mechanisms of oversight, but particularly of challenge in the UK, have not been as robust as would be desirable, and that’s one weakness of the system throughout the period covered by the report.

Lead 5: We will come on to a couple of those legal challenges in due course, both of them brought by the Good Law Project. Before that, I’d just like to understand from you the time frames that we can assume occur in ‘business as usual’ procurement exercises.

Professor Albert Sanchez-Graells: So in business as usual procurement, contracting themselves have an obligation to advertise for a relatively long period of time and it depends on whether they are running single stage or two-stage procedures. So if they are engaging in single-stage procedures, so what would be called the open procedure, they would have to advertise for about – adding the substantive period, about 35 days, and if they are in two-stage procedures, that goes longer. But that’s the minimum legal requirement. In any case, in practice, what the statistics show is that it can take more months for the completion of a procurement exercise. I think the average is in excess of 90 days. Of course, there would be quicker and longer periods involved in those statistics.

Lead 5: In a previous module, Module 3, Sir Christopher Wormald was asked about the procurement of gowns and, in that case, he said that a period of – I think it was either 9 or 11 months was quite normal. Is that your experience?

Professor Albert Sanchez-Graells: So I think what we need to distinguish is what will be a one-off procurement and what are called commercial vehicles for procurement. So I think that’s quite important to bring in. So if a contracting authority tries to buy of its own from scratch anything, be it gowns or any other material, they have to run through the process of designing it, advertising it, running the competition, awarding. Nine months doesn’t seem out of the norm but that’s not the only or even the quicker way that they usually can do that.

There are specialised central purchasing bodies that create what are called framework agreements or Dynamic Purchasing Systems, which are ready made route to market or commercial vehicles that means that they do the design and the advertising and the evaluation and preliminary award or preliminary inclusion into the Dynamic Purchasing System, so that when a contracting authority, say an NHS trust, wants to buy gowns, they can simply look at what framework or Dynamic Purchasing System has been put in place by NHS Supply Chain, for example, or the Crown Commercial Service, if they’re buying something else and then simply run a mini competition, which is much quicker and it could be a matter of couple of weeks.

So I think that it’s not untrue that it takes nine to ten months to buy gowns but I think it’s also true at the same time that, if the right framework is in place, it could take certainly under a month, maybe a couple of weeks.

Lead 5: I wanted to ask you: what are the other methods of accelerating procurement, short of direct awards, to which we’ll turn in a moment?

Professor Albert Sanchez-Graells: So the procurement rules already have embedded the understanding that things cannot always go according to the ideal plan, so when a contracting authority faces an urgent requirement, not an extremely urgent one but an urgent one, they can engage in what’s called accelerated procurement, which means that they can significantly shorten the period of time that will be required to advertise and to award contracts. And that, in short, cuts it to half the length of the period in ordinary times.

If you’re interested in the detail, I can also give it to you, I think it’s reflected in Table 3 of my report –

Lead 5: There is where you set out the time periods.

Professor Albert Sanchez-Graells: So in that table 3, which is page 27, the time periods show that, when the requirement is urgent, the advertising goes down to a total of 25 days for open procedures or 35 days.

Lead 5: I just want to pause for a moment and see if we can get that up on the screen it’s INQ – ah, you’ve beaten me to it. So this is – we have now the table that you’re speaking to.

Professor Albert Sanchez-Graells: Yes.

Lead 5: Can you see that, Professor?

Professor Albert Sanchez-Graells: Yes.

Lead 5: I’m sorry to ask you to do this but do you just want to go back to what you were saying and say it again by reference to this table?

Professor Albert Sanchez-Graells: Yes. In this table the standard times for ordinary procurement are displayed on the first row, which talks about the default timescale, and those are the 45 days for an open procedure or 70 days for a restricted procedure. If you use an electronic procurement platform, which is the usual way of doing things these days, it gets reduced by five days, so it’s 40 or 65 days, and that would have led to those basically three months in practice of a standard procurement exercise.

But if the need is urgent and it would not be possible to comply with those more extended timelines, then it’s possible to cut it down, basically, by half and, if it’s a one-shot open procedure, the advertising will have to be open for 25 days. If it was a two-stage procedure then it’s a 10 plus – 15 plus 10 days, so it’s 35 days, a restricted procedure or a competitive procedure with negotiations.

Lead 5: So this deals with urgent and extremely urgent procurement?

Professor Albert Sanchez-Graells: But that’s different. So the difference between urgent and extremely urgent is that urgency is a low threshold to cross. It’s simply the contracting authority realises it needs something quickly and it can simply shorten – it’s not strictly a matter of convenience but it doesn’t have to provide very detailed reasons why they are doing things in an accelerated way but when things are extremely urgent, and this is a defined test, this has to be something that a diligent contracting authority couldn’t have foreseen, that it’s beyond its control, it didn’t do anything to contribute to that extreme urgency, and it would not be possible to even comply with those shortened timelines, in that case that’s when we open the possibility of what you refer to as direct awards, and those can take place without any minimum time period. So it could be a matter of hours.

Lead 5: There is no doubt, is there, Professor, that the pandemic itself is an example of where Regulation 32, direct awards, or extreme urgency did apply?

Professor Albert Sanchez-Graells: There is no question. But there is also no question that it didn’t apply throughout the pandemic in the same way, and it didn’t necessarily apply to any type of procurement. You still had to comply with the specific requirements for the award of each specific contract.

Lead 5: So, just to understand, unpack what you’ve just said, it’s not possible, at least under the old regime, pre the Act that came in last week, to issue a blanket Regulation 32 treatment of all types of procurement; is that right?

Professor Albert Sanchez-Graells: That’s –

Lead 5: Each individual act of procurement must be justified by reference to Regulation 32?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: We’re going to come on to it but, since it’s arisen now, is that position changed under the new legislation?

Professor Albert Sanchez-Graells: So the position has changed under the new legislation in that, under section 42 of the Procurement Act 2023, it is possible for a minister, by regulations, to authorise on that blanket approach for a specified period of time the resort to direct awards without having to engage in an award-by-award analysis of whether the rules for extremely urgent procurement apply or not.

Lead 5: All right. I just want to understand also from you, you’ve made it clear that the circumstances of the pandemic were such that it was clear that Regulation 32 would apply albeit on a case-by-case basis. How rare is the use of Regulation 32 more generally?

Professor Albert Sanchez-Graells: More generally it’s very rare. And I think that is borne out by the statistics. I mean, there’s no great quality procurement data, and I’m sure we’ll come back to that, but before the pandemic, it was extremely rare. You could almost count them with the fingers on one hand in any given year how many times you would have an extremely urgent procurement, and I think that’s probably for two reasons, why – and one is the test is very stringent, so this need to demonstrate a genuinely unforeseeable situation is a high threshold to cross, but the second one is that there are loads of frameworks in place, so when some contracting authority needs something really, really quickly, they could probably find a framework they could draw from.

Lead 5: All right. Could you tell us a little about the risks inherent in emergency or very urgent procurement and how to mitigate them.

Professor Albert Sanchez-Graells: So the main risk in extremely urgent procurement is that things are done at speed, and there’s no significant planning. There’s also no significant engagement with the market; it’s a matter of a contracting authority finding someone that can provide what’s required in the very short-term.

So there’s of course a challenge from a value-for-money perspective in how things are done. Competition is deactivated, so we cannot trust that the conditions given by whoever is approached are going to be reflective of the market. And also whoever is approached knows that the contracting authority has an urgency and therefore probably a higher risk appetite, to put it in those terms.

But the second challenge is that it’s a free choice of who to approach, and therefore corruption becomes a significant issue to consider, because in having that free choice, and only having to provide transparency after the fact, it could be that the contracting authority is guided by considerations that are not permissible in other times.

Lead 5: It may be obvious, but just to put the matter beyond any doubt, where one is not engaging in direct awards, how is that risk of corruption or abuse minimised?

Professor Albert Sanchez-Graells: So when one does not engage in direct awards, the first thing a contracting authority has to do is publish a contract notice, which basically indicates they have an intention to award the contract, they have to describe what that contract looks like, and they will have a call for competition of different sorts.

And that will allow the market to be warned about what’s going to happen, and to look at those decisions. For example, they could challenge the specific procedure that wants to be used or they could challenge specific requirements if they think that that steers the contract in favour of specific potential providers. That’s one way of trying to minimise the risks of corruption.

The other one is, of course, that contract is going to be a matter of record. So, looking at oversight, it could be that the contract is going to be picked up later, and knowing that somebody could look into it is also a good deterrent for corruption. Whereas when one is engaging in direct awards, there is no transparency before the contract is awarded and, as we will see later, there is also no guaranteed transparency once a contract is awarded. So that contract can live in some sort of vacuum and in that way be shielded from oversight or from challenge, and that breeds risks of corruption and that’s why we have rules to try to minimise that.

Lead 5: What about contingency arrangements in the UK and, to the extent that you’re able to comment, abroad to address or mitigate these risks in advance? Was any of that done?

Professor Albert Sanchez-Graells: So some of that was done, both in the UK and in other places, through what’s called, maybe, “just-in-time” contracts or through this, more broadly, framework agreements. I think the international guidance is clear that you should try to avoid finding yourself in a position where you’re going to be extremely urgently awarding contracts, and that’s why you want to have either contracts with a standby clause or with some sort of suspension condition or you want to have framework agreements that you could draw from at the time of need. And this is, for example, how emergency response agencies operate. They know they will have to deal with some emergencies somewhere some time and they are not going to wait for that emergency to come up to put the contractual mechanisms in place. They have pre-defined suppliers with pre-agreed terms for those supplies or works that they would require.

Lead 5: Thank you, Professor.

Let’s move on, if we may, to public procurement legislation and guidance within the UK.

Your report sets out the provisions that apply across the devolved administrations so far as primary legislation is concerned, and you deal also with secondary legislation and so-called PPNs. Does that legislation differ to any great degree across the devolved administrations?

Professor Albert Sanchez-Graells: So up until last week, so in the regime applicable during the pandemic, there was no significant difference, from a substantive perspective, across the four nations.

In the UK there are two – or there were at the time two fundamentally distinct sets of legislation: one for England, Wales and Northern Ireland, another one for Scotland. They were two separate transpositions of the European directives, but they were fundamentally equivalent. And in the report I have highlighted where there is different wording, but that’s the exception; most provisions are exactly worded and they are also very closely tracking the European directive.

Lead 5: What about competitive procurement in UK law and policy?

Professor Albert Sanchez-Graells: So what’s clear under the regime is that the starting point is procurement has to be competitive, and contracting authorities will have a choice of different procedures. They had a free choice between open, one-shot procurement or restricted procurement, which was a two-stage process whereby any company could express interest in participating in the second stage and then, thorough shortlisting, some would be invited to that, and that’s how we expect procurement to be carried out.

But, at the same time, as I said before, there was flexibility in that when the grounds in Regulation 26 were met, it was possible to engage in other more flexible procedures, fundamentally allowing for negotiations or allowing for competitive technical dialogue. And what a contracting authority had to do in those ordinary times is choose the procedure that was more suited to the specific needs, so if they were buying something very complicated and very innovative, they probably wanted to go down the route of, say, a competitive dialogue or innovation partnership. If they were buying something extremely commoditised, they probably wanted to use an open or restricted procedure.

But also as I said, and this is a matter of concern for other reasons but there’s also been an increase in the use of these frameworks in commercial agreements. It’s been seen that contracting authorities don’t all have to be running an open procedure for photocopier paper, and that’s why we have had lots of centralisation for ordinary times, when Crown Commercial Service or, in the healthcare sector, NHS Supply Chain have put together these framework agreements that fundamentally do 90% of the procurement and all the contracting authority has to do in ordinary times is call off from them through a mini competition in the terms of those frameworks.

Lead 5: Do we observe that centralisation within the devolved administrations as well?

Professor Albert Sanchez-Graells: Yes, that also happens in the devolved administrations. I think that the two-tier centralisation for the general public sector and the healthcare sector that we see in England is also represented in the other devolved administrations.

Lead 5: Now, there then follows within your report quite a detailed section on the legal and policy framework focusing on evolving guidance.

I’d ask for Summary Box 16 in INQ000539153, it’s page 72, to be displayed, and then ask you to comment on it. It spans two pages.

So if we’ll start with the first, that would be very helpful. Would you share your reflections, your comments on this topic, “Legal and Policy Framework”?

Professor Albert Sanchez-Graells: Yes, so the UK approach to creating the legal framework has been to create legal requirements very sparse or very minimum, and to develop significant additional requirements through policy. That policy usually is encapsulated in Procurement Policy Notes, and those Procurement Policy Notes address lots of different issues from net zero, social value and other aspects.

In the time of the pandemic – in the run-up to the pandemic there was no guidance on emergency procurement because this was a rare event and also because, whenever rare emergency procurement happened, it was in a very discrete and contained setting.

So the first thing that the UK Government did, but also the European Commission did and then the Scottish Government also replicated, is to issue guidance on how to approach emergency procurement at an unprecedented scale, and that’s what I have termed here as a sort of “first wave of guidance” in March and April 2020.

And what this guidance did is clarify that that case-by-case analysis that we referred to for the use of extremely urgent procurement didn’t have to be a very cumbersome exercise because it was recognised that the pandemic allowed resort to the direct awards, and both the UK and the European Union guidance then reminded public buyers of the requirements that still remain. So even itself you could, without having to wait for any specific period of time, directly award contracts, it was very clearly said that you still had to keep adequate records, it was clearly said that you still had to publish transparency notices, it was also very clearly said that you had, to the extent possible, keep concern for value for money.

Now, in this first wave, I think the main value was that reminder because it was very clear there was an extremely urgent need but there was not a lot of guidance on how to do it, it was just strengthening that there was a permission to go and be more proactive than you would be usually, and in that the European Commission went even further than the UK Government, for example saying contracting authorities can engage in market matching exercises or they can deploy people in other jurisdictions trying to find things. So it was very much a facilitative first wave of guidance.

Lead 5: Would you have expected that guidance to have existed at an earlier stage?

Professor Albert Sanchez-Graells: It would have been desirable but I think I wouldn’t have expected it because it didn’t exist in any jurisdiction that I’m aware of because we had not been engaging in extremely urgent procurement at this scale.

Lead 5: So Regulation 32, you made clear earlier, is a rare thing; presumably its equivalents abroad equally rare?

Professor Albert Sanchez-Graells: Yes.

Lead 5: You mention that the system in the United Kingdom allows a high degree of discretion but, under Regulation 32 conditions, a very high degree of discretion; is that fair?

Professor Albert Sanchez-Graells: Yes, I think it’s almost an unlimited degree of discretion, provided that the basics are complied with. So due diligence has to be in place, adequate recordkeeping has to be in place, transparency has to be in place and value for money complied with to the extent possible. Other than that, there’s full discretion for the contracting authority to go out and get whatever is needed at the time.

Lead 5: When you touched on that balance between rigidity and discretion in ‘business as usual’ procurement, you referred also to the need for adequate staffing or the professionalism of those involved in procurement. What is the position in the UK in ‘business as usual’ circumstances and was the position during the Covid pandemic, so far as that matter is concerned?

Professor Albert Sanchez-Graells: So in terms of staffing, I think in business as usual, the contracting authority can gauge to what extent it’s capable of running the more discretion-based complicated procurement or not. So, for example, if they don’t have a very strong procurement team, they will not be running innovation partnerships, which are notoriously very complex, but it’s self-selected or there’s an adjustment between the capability and the complexity.

When we are in an emergency situation, it’s not an option. It’s going to be complicated procurement, it’s going to be messy, if I can put it in those terms. You need to have that capacity and, even if you don’t have it, you have to try to do as best as you can. What I think is complicated in that context is to try to think about how to ensure the capacity is there for when you need it, and that’s also another theme that I’m sure is going to come up later on.

But what you would want to do is look at where capacity lies, and put those highly skilled people doing the procurement, you don’t just and to bring anyone and then tell them, “Now, go and buy this very complicated thing in this very messy environment”, in particular you don’t want to put anyone that is not very familiar with the rules to do that because they would probably not even know that PPN120 exists or what it requires.

Lead 5: Thank you for that. I’ve taken you away from the display. I think you dealt with first wave guidance. Could I ask you now to move in to second favour guidance.

Professor Albert Sanchez-Graells: Yes, so there was a second wave of what guidance had came a little bit later. It would have been guidance not immediately obvious, touching upon emergency procurement, because it was about other things such as transitioning out of support schemes, or how to assess the reactivation of contracts as the pandemic evolved. But I think what is very important in that guidance is that there are very fundamental principles of integrity and responsibility, that are highlighted and that wave of guidance is all about ensuring contractors don’t take advantage of the public sector, there is a fair balance of obligations and support, that if contracts have become unnecessary or undeliverable because of the conditions of the pandemic, they need to be revised, and if needed, terminated. I think those are all principles that should have also been applied in relation to the emergency procurements.

So if two months after putting a contract in place, it is seen that the contract is no longer necessary, then it needs to be reviewed. If two months after putting it in place it’s clear that the contract is significantly disproportionate, particularly against the public interest, that needs reviewing and I think those principles would have been helpful, in allowing particularly contract implementation teams to make follow-up decisions on the rushed initial decisions of extremely urgent procurement.

Lead 5: So would you make a recommendation in relation to that?

Professor Albert Sanchez-Graells: So recommendation I would make is that those principles of responsible behaviour, the requirement of honesty and candour, almost an approach to open book contracting should be the baseline. So it should not be that we treat these transactions as very arm’s length, each party trying to get the better bargain they can. I think it’s about being a lot more open and collaborative because, in the end, the supplier of the public sector becomes part of the complex organisation of the delivery of public services.

Lead 5: Let’s move on to the third wave, which features at the bottom of the first part of your box 16.

Professor Albert Sanchez-Graells: Yes. The third wave in summary was a review of the first wave, and it was fundamentally a review to accommodate the recommendations of the National Audit Office had made. So it was a review that clarified specific points. In my view, it didn’t change the content of the first wave guidance, but it presented it in a different way. There were perhaps three main points that are salient in that third wave. The first one is that maybe the first wave gave the impression that direct awards are the first thing you should be thinking about if you’re in an emergency procurement, whereas in the revision, direct awards are presented as one or more clearly presented as one of the different things that contracting authorities can do. They can modify existing contracts, they can call off from those framework agreements. So whereas in the first wave direct awards were presented top of a list of five options, in the revised they are bottom of the five options.

And I think implicitly, this comes to say we need to deprioritise the emphasis on direct awards when we are reacting to an emergency.

Lead 5: Thank you, Professor. I want to move on and display your box 17, which is same INQ number, 000539153, at page 80. It fits within a single page. It’s entitled “Applicability of Key Requirements”, and you deal here – well, do you want to summarise what you are telling us within this summary box?

Professor Albert Sanchez-Graells: Yes. So I think, because of the absence of guidance at the beginning of the pandemic and also the way the guidance had appeared, there’s been debate and discussion about what requirements actually applied to procurement during the pandemic. So what I do in that box is summarise and clearly say which I think were the requirements that applied to that procurement. And it’s a bit of a long list but it’s probably worth going through them.

The first one is that there is no question in my mind that there was an obligation to try to secure value for money to the extent that the market conditions permitted. So this is to say that the guidance was clear that contracting authorities had to take whatever steps they could to try to avoid high prices, and when they were not able to do that, they had to keep a record of it so that it could be audited later on.

The second requirement is that they had to engage with emergency procurement to the minimum required extent, and this is as a result of the legal requirement that emergency procurement has to be strictly proportionate to the immediate need of the contracting authority.

So they could not buy things that were for later. They could not buy things that exceeded the immediate needs, and I think that that assessment of absolute need in the short term was another requirement in all procurement in –

Lead 5: Was that a common practice here in the UK, in terms of procurement, to advance buy?

Professor Albert Sanchez-Graells: It’s not, and I think – it depends a bit what we mean by advance buy, but when we are trying to put, for example, together a framework agreement on one of those highly commoditised issues for the next four years, maybe that could be thought as advance buying, or at least we are setting the conditions under which we will buy in the future, but there is no firm commitment.

So it could be that we put together, for example, a framework for whatever devise is the most technically advanced today, but if tomorrow something new comes in, that framework may just go unused because –

Lead 5: Did it happen much? Sorry, to clarify, did it happen much during the pandemic, advance purchasing?

Professor Albert Sanchez-Graells: Yes, during the pandemic there was advance purchasing as far as I can see, because the government was not buying what was required in the next two, four, six weeks; the government was buying what they thought would be required in several months’ time, and in my view, that exceeded the limit of this requirement.

Lead 5: And is it possible to use Regulation 32 when you are buying for a number of months in advance?

Professor Albert Sanchez-Graells: No, it’s not.

The guidance was very clear that Regulation 32 only allows for something that is going to be delivered immediately, and it has to be fundamentally a bridging solution. So an example I would say is, for example, if you have a cut in your kitchen, you can put a band-aid, but you’re not going to keep putting band-aids if that doesn’t solve the problem, you’re going to hospital to get a suture. So direct award is the band-aid, it’s not the suture.

Lead 5: Understood.

Let’s go back to box 17, please. You’ve taken us through the first few points.

Professor Albert Sanchez-Graells: Yes. So it was also required for contracting authorities to adequately manage risks of poor value for money and the potential risk of maladministration. In this case the maladministration because of buying too much or buying things that were not suitable. So I think what that required is, before entering into any further contract, to revise the existing contractual position and to have updated information on whether that contract has been or is likely to be fulfilled.

So, for example, as deliveries started to come in, it would be required to see what stock position we have now, how far do we go, are we still in an extremely urgent position or not.

The next requirement is that, linked to that issue of aggregate purchasing, when you have parallel entities or parallel cells buying the same thing, you need to have a very clear view, in realtime, that they are not, for example, by both entering into a very large contract on the same date, creating excessive purchase. And also you need to make sure that you’re not creating lots of costs that are going to come down the line. Because even if having more supply could be seen as desirable in the short term, you need to consider how costly it’s going to be to stock it, to keep it, and, eventually, to dispose of it. So I think there’s a requirement to look at value for money also in that broader context.

Lead 5: How is that achieved? Is that a data issue?

Professor Albert Sanchez-Graells: That’s a data issue and that will require whoever is authorising contracts to have realtime or as close to realtime data on what the specific position is at that moment.

Lead 5: All right. Thank you. Let’s move on within this box.

Professor Albert Sanchez-Graells: Then it’s also requirement to ensure the quality and the suitability of what you’re buying, and that goes to the issue of the requirement of effectiveness.

We said procurement first and foremost needs to ensure the public sector gets what it needs when it needs it in the conditions that it needs it. So getting something that is non-compliant is not effective.

So they would have had an obligation, to the extent possible, to assure that what they were buying was fit for purpose.

They would also have had an obligation to ensure that any shortcomings in quality or suitability of the supplies produced were followed up. It would not be possible simply for contracting authorities to receive something that isn’t suitable and let that rest. They will have to then look at what can they do under the contract, whether have it replaced, have it reimbursed or do whatever could be done in that situation.

I think they also had an obligation constantly to check that that case-by-case analysis was correct.

So this is two bullet points down from the one that was highlighted.

For every contract they need to ensure that at that moment, the conditions to engage in the extremely urgent procurement apply, they need to keep a clear record of it, and they need to ensure that the position is not changed because of how the other contracts are panning out.

So it’s not only about, for example, simply looking, “Is the pandemic still going and therefore we can use Regulation 32”, but it’s more about the detailed analysis of, given everything else we’ve put in place, do we still need this contract extremely urgently or has this become something that is urgent but not extremely urgent and, therefore, we need to move away from direct awards and we need to go to other mechanisms, such as competitive procedure with negotiations, for example.

Lead 5: Professor, you don’t identify a date, do you, when that change should have occurred?

Professor Albert Sanchez-Graells: No, I haven’t seen information that would allow me to make that call but I think what we can say is, from a matter of principle, is that purchases that we’re tying to create a stockpile for the second wave, for after the summer, would not have been covered by authorisation for direct awards because the need was not extremely urgent, it was for later. This most future buying in your terms, and that not permitted under Regulation 32.

Lead 5: All right. Moving on, if we may?

Professor Albert Sanchez-Graells: Then they would also have to ensure that contractual performance is being met on all sorts of things, not only on suitability but also on any other obligations and, in particular, they should not allow any legal contract modifications. In particular, there are illegal contract modifications where the balance of the contract tilts in favour of the supplier, and that’s something they should have had to look at, for example, not allowing part performance to trigger full payments, and things like this.

They would also have had a constant obligation to guard against conflicts of interest and to document any measures put in place to try to mitigate them, and I guess we can talk more about the extent of that obligation but it was comprehensive obligation. Conflicts of interest are a clear focus of attention in all procurement processes and it’s very, very important that there is no – not only no actual, but no potential conflicts of interest and we can discuss more what that means if that is of interest.

Lead 5: Do you want to explain what is meant by a conflict of interest in this context?

Professor Albert Sanchez-Graells: So a conflict of interest is any circumstance that is going to trigger a biased and non-objective decision in the award of a contract. It could be that there’s a conflict of interest for financial reasons, for example if somebody in the contracting authority stands to gain from the contract, or for personal reasons, if there’s, for example, any former colleague that stands to gain or a family member or relative or somebody that stands to gain. But also there’s conflicts of interest when issues that are not relevant to the procurement are taken into account in making a procurement decision.

So for example, if I am awarding a contract to a specific company because I am worried that otherwise they will go to the press and create public relations problems for me, that is a conflict of interest and it’s maybe what is better termed an organisational conflict of interest, rather than a personal conflict of interest, but it’s still a relevant conflict of interest that needs to be identified, mitigated or avoided.

Lead 5: Do you consider whether there was adequate guidance to those involved in those contracting decisions, in relation to conflict of interest?

Professor Albert Sanchez-Graells: Yes, there was a specific PPN from 2019, so very recent before the pandemic, and I think that was good guidance. It was quite comprehensive and it also referred back to further materials that could be taken into account, such as NAO documentation from previous down the line, and I also think conflict of interest is so central to the carrying out of procurement that any public official that carries out procurement will know about conflicts of interest. They will have been asked to disclose them, probably if they are civil servants they have broader obligations to disclose potential conflicts of interest. So this is not something that is esoteric or badly understood.

Lead 5: All right. You’ve next dealt with recordkeeping, which I think you’ve touched on sufficiently already.

Professor Albert Sanchez-Graells: Yes.

Lead 5: The last two bullets, is there anything you want to draw out from those before we move on?

Professor Albert Sanchez-Graells: So I think from the second from the bottom, it’s very important that there was a very stringent requirement on transparency. So it’s not only that recordkeeping had to be kept but there was an obligation to proactively publish transparent notices and basically the short of it was that within 20 days, at least until June 2021, within 20 days from the award of a contract, under this direct award mechanism, the contracting authority had to publish details of the contract and even a redacted version of the contract itself, so there was a stringent requirement for publication but it was – in my mind, there is no question that that had to be complied with.

And the issue that is not so clear in that period is to what extent a contracting authority that is engaging in direct awards has an obligation to keep a minimum of competition where possible. I think there is judicial authority that suggests that, but I think that that is incorrect, and I think that’s also judicial authority to the contrary, that says once the use of Regulation 32 is allowed, there is no obligation whatsoever to engage in any sort of comparison or mini competition.

Lead 5: All right, Professor, one final topic and one final box before we move on to your assessment, your analysis, of some of the events of the pandemic, so far as procurement is concerned: it’s box 18. It’s the same INQ number, INQ000539153. It’s already up on the screen, at least the first half of it is there. It’s your assessment of the applicable legal and policy framework. How did the applicable legal and policy framework stand up to the test of the pandemic?

Professor Albert Sanchez-Graells: So I think the legal and policy framework was adequate in that it foresaw the possibility for extremely urgent awards and it made clear what specific obligations had to be complied with. It’s true that we didn’t have guidance before the pandemic but it’s also true that guidance was produced relatively early on in the pandemic and, in that regard, I think the guidance was helpful and implementable.

What I think is perhaps the most important point I tried to make in that box is the one that crosses over to the next page at the top, which that the issues that have arisen and that are the object of this module are not triggered by having incorrect rules or insufficient policy: the issues are about staffing. The issues are about decision making. The issues are about what information is available, what data is available at the point of making difficult decisions in a messy environment.

And I think that’s the crucial issue because we will not get better emergency procurement in the future by drafting a rule in the legislation or by drafting a policy document that is more detailed. We’ll have better emergency procurement in the future, we’ll have better data, we’ll have better systems if we have a more professionalised identified workforce that can be deployed at scale.

Lead 5: Those presumably are recommendations you would make for the future?

Professor Albert Sanchez-Graells: I would make definitely those three recommendations. I think that the way that procurement data is collected and is shared needs revising and I don’t think that the Procurement Act goes far enough in that regard, and I can build on that. I don’t think that the systems are sufficiently developed and I think 20 years after e-procurement became mandatory, e-procurement is still not the absolute norm and doesn’t work seamlessly in the UK as it also doesn’t do in other jurisdictions, and I think that the level of training and capability development requires looking at – not only but also in relation to digital skills, so I think we need a significant upgrade.

Having said that, those are all complicated, expensive to deliver mechanisms. So it’s also not a matter of recommending something that’s going to be a magic bullet. Some of these things are just incremental and will take time to develop.

Lead 5: I will ask you to come on to that in a moment when we come to the next stage in your evidence, so to speak. Is there anything else you wish to say in relation to how the UK and its applicable legal and policy framework stood up to the challenge of the pandemic?

Professor Albert Sanchez-Graells: So I think the other important thing to say, which is further down the line in that box, is that one of the things that can help when you have a systemic emergency is to have a centralised mechanism to react to it and to have an entity that has the capability and has the expertise to try to go to market in those difficult circumstances.

In other countries, that centralisation had to be put in place when the pandemic hit but, in the UK, I would have thought the position was strong going into the pandemic because we had specialised entities for centralised procurement, for the healthcare centre in each of the devolved nations and, in particular, NHS Supply Chain had been put in place two years or three years before the pandemic hit as an entity tasked explicitly with creating framework agreements and commercial vehicles for healthcare supplies.

So I would have expected this was the centre of expertise, that this would have the staff with the knowledge to be able to deal with the pandemic when it hit. And I think the events have shown that NHS Supply Chain, in particular, collapsed really early on in the pandemic, and I think that that, to me, was quite surprising. I wouldn’t have expected a £250 million organisation tasked only with buying consumables for the healthcare sector to just fundamentally be unable to cope with the increase in demand, even if it was unforeseen.

I also would not have expected that that organisation could not be strengthened, and we would rather have to create completely separate organisational arrangements, rather than growing it or developing it.

Lead 5: But, again, those aren’t observations that relate to the robustness or adequacy of applicable legal and policy framework; they are observations that you make about the systemic or structural failures; is that right?

Professor Albert Sanchez-Graells: No, I think they have to do with policy, because the policy for the healthcare sector had been to centralise. The policy for the healthcare sector had been to resource this organisation. So in terms of policy, you would have expected that, if there is a healthcare crisis we would not expect everyone in the healthcare sector to have had to start figuring out, we would have had a single point of focus. So it’s not a matter of the failures that followed; it was a matter of the policy choices the UK had made.

And I think NHS Supply Chain was also heavily involved with the management of stockpiles, for example. So it should have been an organisation from a policy perspective expected to own the response and expected to guide the response, and this is a matter of the arrangements in place, it’s not a matter of how they didn’t work afterwards.

Lead 5: So what concrete recommendations would you make to avoid a repeat of that set of circumstances?

Professor Albert Sanchez-Graells: So I think the recommendations tie closely with what the Boardman – the second Boardman Review has said, and which this Inquiry has been told has happened, which is that a significant review of how NHS Supply Chain operates was required, and that a change of working processes, a change of IT systems, a change of how many layers of subcontracting exist in the NHS Supply Chain had to be taken a close look. Unfortunately, on the basis of the public information, I cannot come to a view as to whether that has been done properly or sufficiently, because I don’t know what it means, for example, that PPE procurement has been brought back in-house within NHS Supply Chain, because that’s all that’s been said.

I would need to know how many people, with which resources, what sort of stress testing they are conducting. I would need to know how they are trying to ensure security of supply, how they are trying to engage in diversification from markets other than China and other Far Eastern countries.

So there is a lot that would need to be done to check that what we have been told has been done has been done in the way that is correct.

So this is just to say, just because my recommendations we – fundamentally let’s do Boardman with a couple of more things, that doesn’t mean that those are irrelevant, because I’m not sure that we are far enough in the process of those references.

Lead 5: Thank you, Professor.

I want now – with all of that background, you were starting to touch on particular features of the pandemic so far as it relates to procurement in the UK in your last remarks, but I want to turn now more directly to two topics that you have explored through your consideration of some of the witness evidence that has been obtained by the Inquiry. You considered, did you not, a number of those witness statements that were provided to you from material providers?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Particularly DHSC, Cabinet Office, witness evidence, and other evidence; is that right?

Professor Albert Sanchez-Graells: Yes, they are listed in annex 2 of my report, yes.

Lead 5: You have an annex in which you list the material that you looked at.

Professor Albert Sanchez-Graells: Yes.

Lead 5: And you have sections within your report that deal essentially with two matters that arise out of that evidence. Firstly, the PPE Parallel Supply Chain, including the VIP Lane?

Professor Albert Sanchez-Graells: Yes.

Lead 5: And secondly, the Ventilator Challenge?

Professor Albert Sanchez-Graells: Correct.

Lead 5: And you have considered both of those matters, and you offered your reflections in a quite detailed set of sections within your report.

Professor Albert Sanchez-Graells: Yes.

Lead 5: Yes. And that’s what I want to move on to now. I want to hear your response to that evidence.

We will of course be hearing from some of the authors of those witness statements in due course.

Lady Hallett: Would you rather take the break now, Mr Wald? It’s up to you.

Mr Wald: It may well be convenient, my Lady, if that would suit you, yes.

Lady Hallett: I was just thinking the stenographer has probably had quite a morning.

Mr Wald: I’m sure that would be welcome, yes.

Lady Hallett: Very well. I shall return at 11.25.

(11.09 am)

(A short break)

(11.25 am)

Lady Hallett: Mr Wald.

Mr Wald: Thank you, my Lady. Just before we paused, Professor Sanchez-Graells referred to an annex at the back of his report detailing or listing the statements which he considered in the course of assessing those two or three subject matters, the PPE Parallel Supply Chain, the VIP Lane, as part of it, and the Ventilator Challenge. I wonder if we could just have that annex, it’s annex 2, put up on screen.

Is that the annex to which you were referring, Professor?

Professor Albert Sanchez-Graells: Yes, that’s the annex.

Lead 5: You have read and consider all of those statements for this purpose, have you?

Professor Albert Sanchez-Graells: Yes, I have.

Lead 5: We can see that they come from various sources and, of course, across the devolved administrations and then we can see that it goes on to a second page and equally the same applies to those listed in the second page?

Professor Albert Sanchez-Graells: That’s correct.

Lead 5: All right. Thank you very much, Professor. Can I then ask you to turn to page 120 of your report, it’s Box 19 of INQ000539153, again. This where we have the benefit of your reflections, having considered that evidence, first of all so far as it relates to the PPE Parallel Supply Chain including the VIP Lane, I want to start off with that?

Let’s take this slowly, it’s detailed stuff, and I would ask you to use the box in order to provide your oral evidence now, please.

Professor Albert Sanchez-Graells: Thank you. So, as we were saying, before the pandemic, there was a centralised mechanism for the procurement for the healthcare sector in the UK, which was the NHS Supply Chain. The NHS Supply Chain was fundamentally run out of an entity that’s called SCCL, which was an arm’s-length company owned by the Department of Health at the time, so that’s what SCCL refers to in the box and what I will refer to. So NHS Supply Chain or SCCL mean the same thing for these purposes.

And what is clear in the evidence is that, despite the Department instructing SCCL to significantly ramp up the procurement of PPE at the beginning of the pandemic, in short, SCCL was unable to do that. They were overwhelmed by the amount of PPE that was required, they had significant supply chain disruption in that some of the providers of the frameworks they had in place could not come through and could not fulfil orders, and they also were not able to accommodate a significant increase in their workforce. The way it’s presented is fundamentally because of IT constraints, so the IT systems that they used could not grow to the number of users that would have been required.

So when the collapse of NHS Supply Chain became obvious, the Department decide to step in, and they decided to step in by creating this Parallel Supply Chain, fundamentally for PPE.

Lead 5: When you say the Department, you mean –

Professor Albert Sanchez-Graells: By Department, I mean the Department of Health and Social Care.

Lead 5: Yes, fine.

Professor Albert Sanchez-Graells: It also is important to say that, although this was owned and led by DHSC, the implementation of the Parallel Supply Chain was done by Cabinet Office in significant ways. So it’s very much, in my view, a joint endeavour, even if the final formal responsibility for it lay with the Department of Health.

And this Parallel Supply Chain tried to reach different alternative providers for PPE, so one of the things that they did is, of course, continue engagement with existing providers to the NHS Supply Chain, but then they were trying to find new providers for PPE. They were also trying to more focusedly buy PPE from China, specifically, so they organised their activities according to the type of provider that they were seeking to tap into.

And the important change of policy at that point in time is that, up to the point of the creation of the Parallel Supply Chain, each NHS trust could decide to buy PPE on their own or buy it collaboratively with other NHS trusts or buy it through the NHS Supply Chain. So it emerged that we were in situation where there was also competition between buyers to try to get into the same sources. So at some point it was decided this Parallel Supply Chain for PPE would be the only buyer of PPE for the healthcare system.

So it created this single point of procurement.

Lead 5: Presumably, your view is that that was a sensible move?

Professor Albert Sanchez-Graells: That was a sensible move because you don’t want different parts of the same system trying to outbid each other in tying to get the same procurement, and it would also have been something relatively natural to do, given that PPE had already – and, like, every other healthcare procurement had already been progressively centralised, so it would not have been a massive departure from how things were done so it should have been relatively attainable, I think, in terms of policy and approach.

Lead 5: All right.

Professor Albert Sanchez-Graells: Now, the way that the Parallel Supply Chain was structured was in part built from scratch, but in part it absorbed the team that was trying to buy PPE for NHS Supply Chain within SCCL. And what in my report I identify is that, in my view, there is not joined up understanding of the interaction between the SCCL PPE team and the new organisation being put together.

In the accounts I have read, SCCL comes to say they ceased having responsibility for PPE procurement the moment that the Department of Health stepped in, and all that happened is that some of the subcontractors of SCCL, the so-called category tower service providers loaned some stuff to the new cell and the systems were used to facilitate some awards within frameworks which would be, in my view, a very distanced and arm’s-length understanding of the role during the pandemic, whereas in the accounts from Cabinet Office and the Department of Health, it’s the opposite.

It’s basically said the SCCL team was taken as was, and, yes, was formally included under the new organisation but they were tasked with independently trying to continue procuring from the known providers and they were tasked with exploring with those providers and their market knowledge which other providers could be identified within that remit, but they functioned fundamentally independently.

So I think that’s a first point of reflection: how joined up the existing structure and the new structure were, and also could it have been done differently? Because I would have imagined that, once the SCCL team is embedded in the brother organisation, their expertise could have been spread more widely. Rather than keeping it as an independent team, they could have kept some of that team and brought new workforce to the tasks that could be easy to delegate but then use some of that expertise to support the new bits of the new organisation.

Lead 5: Could that have been done without unduly reducing the staff that were made available?

Professor Albert Sanchez-Graells: So I think, to me, it’s not number of numbers. It’s a matter of the expertise because it’s probably easier for someone that doesn’t know much to be brought to say, “These are the existing suppliers, these are the existing products that we know. Have conversations with them about how far they can go”. I think that’s easier to delegate to someone than to keep all of that expertise in one silo and then try to bring people that will then have to learn which suppliers exist, what products are bought, what those products look like and have any historical understanding of these things.

So one thing that might have been done differently is not to keep the teams so separated, but to have the experts from SCCL support the PPE Buy Cell more broadly.

The other thing is that the way this is presented, the new organisation grew very, very quickly. So at its peak I think it had 508 members of staff, so there was a lot of people trying to buy PPE.

Of those staff, about 50 were coming from Cabinet Office, form different bits of Cabinet Office, other members of staff were coming from other government departments or were coming from NHS England or NHS Improvement but there was also significant reliance on external consultants. So the make-up of those two parts of the Parallel Supply Chain, the SCCL sort of existing team expect to be highly skilled and knowledgeable, was very different from the make-up of staff in the rest of the Parallel Supply Chain.

Despite this not being as integrated as it could have been, maybe, the accounts are that the procurement outcomes that were being achieved through these two tracks within the PPE Buy Cell were aggregated, so that on the daily dashboard that was being circulated, the procurement from SCCL was featured so when the rest of the PPE Buy Cell was buying, they were doing it in the knowledge of what could be provided by existing suppliers.

And the amounts came to be almost 50/50. So looking at the numbers, and there’s a bit of discrepancy in the numbers provided to the Inquiry, but looking at the numbers provided by the Department of Health, it would look like the SCCL PPE team managed to buy about 4.2 billion of PPE in the relevant period, then it goes up to 5.2 billion in the extended periods, out of the 8.6 billion that the PPE Buy Cell procured in total, so they managed to do about 50% of it.

So to me, that also makes it a little bit difficult to understand what did they mean by collapse of the supply chain in the early stages of the pandemic and, if that supply chain had collapsed, how could it still deliver 4.2 billion of PPE?

So I think there’s issues of timing of decisions and timing of reaction from the markets that to me have been very difficult to understand on the basis of the accounts, and that might be an issue the Inquiry might be able to go further than I have been. But this is to say the SCCL procurement of PPE was not insignificant, it was not minor. It was very large.

Now, moving on to how the new bit of the organisation, the PPE Buy Cell, was organised. It was created on 21 March 2020, and it was initially comprised by a very small group of senior civil servants that then grew up to that very significant organisation of 500 staff. And the way it sought to organise itself was through the sequence of procurement that I think you also described yesterday in your opening submissions. They understood that the team would work on the basis of receiving and screening for opportunities, engaging with technical assurance, and then closing or setting the commercial deals.

So it’s described as a very linear process and it’s also described as a very segmented process, in that each of those tasks would be carried out by a different team, and that would be very important when we come to the VIP Lane.

Now, this structuring was always meant to create a closing package that would be sent to the Department of Health for final approval and award. Now, this is very important because, from the accounts I have been able to read, even if there were different tracks for the procurement of PPE, even if there were numerous Opportunities teams and they were loads of staff involved, in the end, the decisions on the award of contracts were made by a small number of very senior civil servants who should have had as full documentation as they could have.

So, for example, in relation to complying with transparency requirements, it would not have been difficult to use that focus point for the collection of the relevant information.

Right? So I think it’s important in that it was a very devolved organisation that funnelled into a very single point of decision making and that single point of decision making is going to be of particular interest to the Inquiry, I think.

Talking about that decision point, until 5 May 2020, disclosing packs or deals were sent for approval to the Department and the approval was done on the basis of delegated authority, as you also explained yesterday, but from 5 May, probably trying to make this process more robust, a Clearance Board was created, and that Clearance Board was given one to two-page summaries of the closing deals to try to provide additional scrutiny of those deals. At least that’s the way it’s described in the submissions.

Lead 5: Did it bring advantages, this change in procedure?

Professor Albert Sanchez-Graells: So I think it probably would have brought some advantages in that it would have avoided single decision makers and the significant pressure making very high stakes decisions. It should have created a space where you could have a more critical, a bit more distanced, analysis of the deals. And also, the threshold, even if it’s £5 million, at that time that was probably a relatively low threshold at which to scrutinise deals, given that other deals were quite large.

And I think this would also have had the advantage that it would have created more requirements for documentation, because in addition to the closing pack, you also had to create that summary.

What I was a bit disappointed if not surprised to find out in the evidence is that those deal packs then sometimes were put together after the Clearance Board had looked at the summary.

And that makes some intuitive sense, because when you have little resource you don’t want to put together a comprehensive deal pack if the Clearance Board is not going to endorse the deal. But I don’t understand how you can create a summary of documents that have not been compiled. So in terms of advantages, it may actually have created the disadvantage of having the scrutiny of deals on the basis of really high-level, very succinct information, rather than fuller closure packs.

But that’s not been something I’ve been able to test in reality because I’ve not seen those documents.

Lead 5: So the full pack was assembled after a positive decision?

Professor Albert Sanchez-Graells: At least in some occasions.

Lead 5: And the positive decision was based on a high-level summary only?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Understood.

Professor Albert Sanchez-Graells: One or two pages, which of course would not have provided lots of detail on the specifics or the contractual requirements in that award.

Until that point it’s also important to bear out that according to the government’s own internal audit, the track record of due diligence and the recordkeeping until the Clearance Board was created was inconsistent and sometimes no records were kept of awards made before the Clearance Board was put in place.

So, to me, that would also be a significant issue because, as we said throughout this morning, there’s an obligation of recordkeeping, there’s an obligation of transparency. If records are not created and are not kept, we cannot possibly scrutinise what’s happened.

So there are some awards that apparently even it might be impossible for this Inquiry to look into because there’s no records for them. And that would be a matter of concern to me.

Now, this is to say the Buy Cell was designed to operate in the sequential opportunities, technical assurance closing, with increasing elements, if you want, of oversight through this clearing board. The other thing that changed through time is that when the backlog through the PPE Cell started to grow, one mechanism to try to accelerate the award of contracts was putting together rapid response teams. This seems to have happened from 24 April, so about a month into the working of the PPE Buy Cell.

Those rapid response teams would have had a member of staff from Opportunities, a member of staff from Technical Assurance, a member of staff from Closing, and they were trying to put deals together in one or two days. If they saw that they would not be able to do that, they would send the opportunity back to the standard non-rapid response Opportunities team to progress.

What I think this also shows is that the segmentation of activities was not always happening. We had teams that were doing all of the activities at the same time. And I think that is an important point to bear in mind when the Inquiry will hear that the teams were insulated from each other, for example the Technical Assurance could not possibly be influenced by whatever was happening at Opportunities when you had rapid response teams that integrated all members of staff.

And I think – we’ve been given some numbers. I think 21 contracts were awarded through these rapid response teams, but I’ve not been able to see how many of those, for example, were from the VIP Lane and which ones were not.

Lead 5: I was going to ask, is the rapid response team distinct from the VIP Lane?

Professor Albert Sanchez-Graells: (The witness nodded)

Lead 5: Or there may be some overlap between the two?

Professor Albert Sanchez-Graells: I think there may be some overlap in that some VIP Lane opportunities were dealt by rapid response teams and some of the VIP Lane members of staff participated in rapid response teams as the Opportunities person for that opportunity. But as a matter of design, if you want, they are separate things.

Lead 5: So you wouldn’t necessarily require a VIP referral into a rapid response team determination whereas you would into the High Priority Lane or the VIP Lane?

Professor Albert Sanchez-Graells: That’s my best understanding of the evidence.

Lead 5: All right. I know you’re coming on to the VIP Lane in a moment but I wanted to ask that question in relation to the two.

Professor Albert Sanchez-Graells: Yes.

Lead 5: All right.

Professor Albert Sanchez-Graells: Also because the rapid response team was only created from 24 April, there would have been VIP and non-VIP contracts progressed before the rapid response teams even existed, so –

Lead 5: Because the VIP Lane was established on which date?

Professor Albert Sanchez-Graells: That’s further down the box but I think –

Lead 5: It predated, in any event –

Professor Albert Sanchez-Graells: It predates the rapid response teams in any event. I’m not exactly sure. I think it was 2 April but I would need to double check that report.

Lead 5: All right, we can check that, yes. All right.

Professor Albert Sanchez-Graells: So, within this PPE Buy Cell there were four routes to contract, and here is where the account from Cabinet Office and the account from Department of Health slightly varies, because the Department of Health includes the make route within the PPE brother cell, the way to describe it, but for the purpose of this account I rely on the Cabinet Office’s description of it.

What’s been described to the Inquiry is that the PPE Buy Cell run four routes. Route 1 would be the NHS Supply Chain route, where the existing PPE team was trying to buy from existing suppliers.

They would run an “open source” route or maybe the “call to arms” route, which was any offer being sent for PPE through a varying approach to web forums and SurveyMonkeys, and we can talk about that later.

There was the third route, which was the VIP Lane, which was only for offers referred by an MP, a minister, or a senior official.

And a fourth route, which was the China Buy route, which was fundamentally distinct in that it was run with a lot more involvement from the FCDO.

So for the purpose of this report, setting for now aside the issue of how the NHS Supply Chain fed into all this, the two routes that are important are route 2 and route 3, so basically the “open to anyone” route and the “referrer only” route 3, VIP Lane.

And I think it’s important to get to the bottom of why and how the VIP Lane came to exist.

And I think there is a mixture of reasons for it. The first issue that is quite clear in the evidence is that there was a big concern about PPE. Everybody knew there was a shortage. So companies that could provide it and any other third parties were sending their offers for help to all sorts of people, senior civil servants, ministers. So there was information already being sent to the system, and the initial approach was to collect those offers for help and route them through NHS Supply Chain and, within that, through a subcontractor.

But that amount of information significantly grew to the point where there was the impression, and I think the impression is borne by the numbers, that this is not a very reactive mechanism. So people were sending offers for help and were not hearing back. So we have a first issue with information not being treated in a timely way.

What would happen then is that those with political connections or those with access to an MP would escalate that and say, in simple terms: “I have offered whatever many masks, I haven’t heard back, can you chase?”

Lead 5: Just pausing there for a moment, to be clear, offers made outside the High Priority Lane, or the VIP Lane, was there an expectation or a practice of those making the offers – they weren’t referrers in that context, so those making the offers, hearing back in the way you describe? Did that happen outside the VIP Lane?

Professor Albert Sanchez-Graells: No. So for anyone making an offer, they would basically fill in a SurveyMonkey or more structured web form down the line. They would receive an automated response saying, “Please bear with us”, and they would have to wait until something was pursued.

Lead 5: Did that even apply to the rapid response teams that weren’t dealing with, when the time came, High Priority Lane or VIP Lane offers?

Professor Albert Sanchez-Graells: So I think there is a timing issue there. So in principle yes, but I am not sure if, by the time the rapid response teams were created, all these open source offers would already have been triaged through the separate call centre that was put in place.

So it could be there was some engagement before a rapid response team was ever involved but, fundamentally, any offer that was not referred was sitting and people had to wait until an Opportunities team, or the call centre that was put in place later, looked at it and established first contact to verify is the offer still valid and get some more details. But there was no way they could ask for updates on what’s happening with my offer.

Lead 5: All right. You were telling us about the requests or the demands for updates within the VIP Lane?

Professor Albert Sanchez-Graells: Yes. So what happened then is that those that had made an offer and had not heard back would be seeking for their MP or a member of the Government at the time to chase, and those chases were sent to the PPE Buy Cell. In the accounts that have been provided to the Inquiry, it’s clear that that was a significant volume of communications, that it was a significant draining on the resource of the PPE Buy Cell because the Opportunities teams were spending a lot of time replying to those chasers and, therefore, they were not having all the time to look at the offers that they had received.

Lead 5: No automated responses?

Professor Albert Sanchez-Graells: Not as far as I know. I think there was an attempt at some point by some civil servants to put an automated response saying, “We have received this, we will be in touch”, and that was also very quickly escalated.

So, basically, those chasing were not willing to take an automated response or a “Please wait and let me do my job” answer. They wanted to know specifically what was going on with the specific offer that they were interested in at that specific point in time.

Lead 5: All right.

Professor Albert Sanchez-Graells: So faced with that challenge, instead of seeking to educate those sending chasers on the importance of freeing time for the civil servants to do their job, instead of sending out basically a general communication saying, “We’re going as quickly as we can, we need to use all of our time to that, so please don’t chase, and also don’t chase because chasers from senior government people or MPs put pressure on these teams that are already very pressured”. Instead of taking that approach, instead of the senior leadership of the PPE Buy Cell, when they received those escalations saying, “What does it mean when I got an Out Of Office, what’s happening with my offer”, instead of going back and saying, “That’s the absolutely appropriate response, you don’t need to hear more about this now”, instead of them maybe organising some communication about how this PPE Buy Cell was put in place, how it was operating, so that general assurance was given that opportunities were being looked at, rather than specific assurance about specific opportunities, they decided to do the latter.

So they decided to create a specific dedicated email address that would – and of course, a dedicated Opportunities team to work on the basis of that, that would only look at the opportunities that had been referred by ministers, MPs or senior civil servants.

And to me, that doesn’t make any sense and it’s not in line with the principles of procurement we were talking about.

One of the key worries in trying to avoid corruption in procurement is to pay very detailed attention to what politically exposed persons do. We know that somebody in a position of power can influence procurement decision making. So creating a dedicated communication channel for politically exposed people to chase opportunities and potentially pressurise procurement decision making, is just completely contrary to the principles of public procurement.

In my view, although this Inquiry has been told this was a legitimate operational requirement because we needed the free time from the frontline civil servants that were looking at the opportunities, to me, that’s the wrong end of the stick. The legitimate operational requirement was to get the MPs and to get the ministers to wait like everybody else.

So they addressed a challenge in the worst possible way in a procurement context, in my view.

And this Inquiry has also been told it didn’t really matter in the end because it was only the entry point. It was only about getting that feedback that was more timely.

But I think the evidence is very clear that there were significant differences of treatment. It’s not only that there is already a judicial finding of illegality of the VIP Lane because it didn’t provide equal treatment but it’s that it’s foreseeable at the time that, if you have not particularly experienced members of staff with a new challenge in a very complicated high-pressure area, having repeated chasers, knowing that at the other side of an opportunity there’s not only a company but there’s also a political figure, would have necessarily changed the way they approached things.

And this Inquiry has been told this was an opportunity stage issue only, but then VIP offers were sent for technical assurance like any others, but the evidence shows that technical assurance ended up appointing a specific person to deal only with VIP offers.

So it’s not accurate to say all offers were treated the same from a technical assurance perspective because technical assurance was taking time and having a dedicated person for technical assurance of VIP offers would have accelerated things.

The Inquiry has also been told that acceleration didn’t actually happen. In the end, the processing times of VIP offers and other offers ended up being roughly the same but that’s not something that those creating the VIP Lane could have known at the time.

And, if anything, the intent behind creating the VIP Lane was precisely to create speed: speed in reacting to the opportunity, speed in getting the opportunity to contract.

So the explanations given in terms of mitigating or contextualising the impact of the VIP Lane are, in my view, not persuasive at all.

Lead 5: We’ll come on to the relative speeds of processing within the VIP Lane and outside it in due course, but you’ve mentioned one of the High Court judgments, the PestFix judicial review claim, in which a finding of unequal treatment was based on a difference in relative speeds of processing between VIP Lane and non-VIP Lane.

What advantage, if any, does speed of processing offer in the context of pandemic procurement?

Professor Albert Sanchez-Graells: So in the context of the pandemic procurement we are back into extremely urgent procurement and we already said this morning one of the key requirements in extremely urgent procurement is that it can only comprise what is strictly needed for the satisfaction of the immediate needs. So this was not an exercise meant to screen all possible opportunities without end. This was, by necessity, a time-limited exercise where, at some point, if things went well, the UK Government should have taken the view, “We now have enough PPE for our immediate needs, we now to move competitive procurement”.

So there was an uncertain but, by legal requirement, proximate endpoint to the emergency award of contracts. In other words, at some point it would not be possible to get a direct award any more. And that could make the entire difference. If you had been processed quickly, you would be in the initial awardings of contracts; if you were taking longer, you might miss out because the cut-off for the direct award would have run out.

Now, in the event, because the UK Government ended up buying so much PPE for such a long time, it could be that, in the end, all opportunities were looked at, but that was not what was required at the time. That was not what was permissible at the time. What was required is to buy the PPE we need right now in the best possible way we can, and then transition out of this emergency procurement.

And I think that’s what the time advantage goes to. It’s a matter of time advantage in principle. In an emergency situation, by definition, being considered first is an advantage.

Lead 5: Leaving the rate or the speed of processing of offers inside and out of the VIP Lane to one side for a moment, what is said in some of the witness evidence, including some of that which you considered and features in your schedule, is that the offers that came in through the VIP Lane, that were referred in, were inherently more credible or better offers. Have you had an opportunity to consider that point?

Professor Albert Sanchez-Graells: So I have considered that point and I think there is also significant evidence to the contrary. I think there is evidence in front of this Inquiry that, at the time of creating the VIP Lane, those in charge of the VIP Lane were expecting to operate like a sewer, I think, in that the role was mainly to take noisy offers out of the system. So the expectation was not that the VIP Lane necessarily would bring those better offers.

The other thing is that it’s clear that there was a big disparity in the types of offers that went through the VIP Lane, and there was also confusion about whether VIP or High Priority actually meant political referral or high operational need.

So the other thing I have also not been particularly clear on, after reading all the evidence, is whether some high-quality offers ended up in the VIP Lane by mistake, if you want. So they would not have been referred by a politician, but they were forwarded to that team because it was understood to be a high operational priority team and then they progressed them.

I think there is evidence in front of this Inquiry that the VIP Lane on occasion processed offers that came from Route 2, and what I’ve not been able to see is how many of those cases we had.

So I think the people making these decisions didn’t really have the expectations that VIP Lane offers would be particularly credible or better. They were concerned about managing the pressure exercised. And I think that’s what’s really crucial. Because what is relevant in understanding decision making is what information is available to those making the decisions, how reasonably we can expect them to anticipate problems in making those decisions, not necessarily what happened after the fact.

Lead 5: What advantage, if any, did processing through the VIP Lane confer on a supplier or an individual offer? I draw a distinction between those two because, as you will know, some suppliers secured multiple contracts pursuant to multiple offers.

Professor Albert Sanchez-Graells: Yes.

Lead 5: So are you able to provide the Inquiry with answers to both aspects of that question?

Professor Albert Sanchez-Graells: So I think in terms of a supplier, I think the advantages to a supplier were that they had an immediate way of first putting weight on their offer, because the fact that they were referred meant the offer was being progressed, even if their offer might not have been progressed on the basis of the other triage criteria.

For example, the Department of Health has explained that in the open route, the initial sifting at the early stages of the pandemic was carried out by size of the company, size of the offer. So, for example, a very small or newly created offeror, supplier, that had a political connection, probably jumped over the first hurdle. But they wouldn’t have in ordinary triage because, if you had a balance sheet of £10, triage would not have progressed you. But if you had a balance sheet of £10 and were referred by a senior minister, you were followed.

So that’s a significant change.

Then it also allowed for a channel to continuously push for the processing to be moved forward. It’s not true that the VIP Lane only engaged at the opportunities stage; the VIP Lane could provide updates once the offer was sent to Technical Assurance, once it was with the other phases of the procurement lane because each of those teams had a dedicated person that the VIP Lane staff could ask for updates about. So the other advantage as a company, is that you had a lever to keep pushing, pushing, pushing for your offer to be taken to deal, whereas other companies didn’t have that.

Lead 5: In terms of that pushing, one consequence is rate of processing. Did that pushing enable adjustments to be made to the offer, or an iterative process?

Professor Albert Sanchez-Graells: I haven’t seen evidence to that. I don’t know.

Lead 5: All right. That’s very fair. Thank you.

In terms of the outcome, though, what were the prospects, improved or otherwise, of an HPL offer, compared to a non-HPL offer, or the prospects for an HPL supplier, compared to a non-HPL supplier?

Professor Albert Sanchez-Graells: So at the supplier level, I think we had lots of individuals making very difficult calls on very limited information, and probably nobody wanted to be the one that missed out on a good opportunity for being too strict on specific things. So I think that significantly changed the likelihood of HPL contracts being awarded to suppliers because, when information indicated, for example, a borderline situation, I would have expected individuals to make that decision to think twice before saying no because they could expect follow-ups. I think this is human nature.

So I think – I haven’t seen detail of it, but I think there’s a very strong indication that in close calls VIP had an advantage because of the pressure on the decision maker.

Lead 5: Well, you’ve included in one of your bullets, this is on the second page, three down, 10:1 –

Professor Albert Sanchez-Graells: Yes.

Lead 5: – improved rate of success per supplier.

Professor Albert Sanchez-Graells: That’s the outcome.

Lead 5: That’s the outcome?

Professor Albert Sanchez-Graells: Right? So what resulted, as probably an effect of this systemic pressure, to get VIP deals concluded, is that VIP suppliers were ten times more successful on the basis of the evidence I’ve been able to see. I know you showed yesterday data that says it’s actually 17 times more successful.

Lead 5: Well, that’s if you look at offers rather than suppliers.

Professor Albert Sanchez-Graells: Okay. So the distinction between suppliers and offers is also something I cannot fully appraise because I’ve not seen a breakdown of suppliers and contracts, or offers. But what I would have imagined is that, under the VIP Lane, because this was about supplier being referred, everything a supplier had to offer probably was progressed quickly. So say a supplier was offering FFP3 masks and gloves, probably they were both looked at the same time, whether the priority that day was to buy gloves but maybe not an FFP3 mask. That’s what I imagined might have happened, and that’s what probably shows that, by offers, the success rate is even higher than by suppliers. That’s how I would understand the evidence.

Lead 5: All right. Let’s stay with the 10:1 figure you included in your report then.

Professor Albert Sanchez-Graells: Yes.

Lead 5: You may have touched on this, but I want to be absolutely certain of your evidence, if I may. If it is said – and it is said in some of the evidence – that that 10:1 comparison simply shows how helpful, how useful, how effective the HPL was, what is your response to that?

Professor Albert Sanchez-Graells: So I think that would only make sense if the evidence at the time showed that, fundamentally, all of the VIP Lane offers were significantly better, and all of the open source offers were really bad. But that’s not what the contemporaneous evidence shows. The contemporaneous evidence shows that the VIP Lane brought a mixed bag of offers and that’s why a 10:1 ratio is really surprising. You could expect some variation but not ten times fold.

The other thing that I think is also really interesting in that, is that 10:1 in terms of supplier by headcount, if you want, is also something that needs to be looked at more broadly. In the end, about 50% of the value produced by the PPE Buy Cell went to VIP Lane contracts, so VIP suppliers, and that’s even more stark.

So I think it doesn’t come naturally to say, because VIP offers were better, they fundamentally made up 90% of the awards, which is what 10:1 means.

Lead 5: Understood.

Lady Hallett: Can I just ask a question – sorry to interrupt.

Mr Wald: Of course.

Lady Hallett: When you say the contemporaneous evidence shows the VIP Lane brought a mixed bag of offers, what is the evidence that they’re relying on, just for my notes?

Professor Albert Sanchez-Graells: So, in witness statements, you have been told that there were lots of very noisy offers that didn’t fall through, that lots of the offers through the VIP Lane were actually contacts that never borne anything. So you will have statements by I think particularly the PPE lead cell that shows that they were not getting particularly better offers.

Lady Hallett: Thank you.

Mr Wald: Unless you wanted to say more on that particular point, I was going to take you to the bullet point below, the one that starts “The ‘VIP Lane’”.

Professor Albert Sanchez-Graells: Yes.

Lead 5: You indicated earlier one particular principle that is offended by the VIP Lane, and that was the involvement of ministers, but here at this bullet you say that it did not meet most of the requirements applicable to procurement during the pandemic. Which of the other ones arise, or are offended?

Professor Albert Sanchez-Graells: So what we said is that in extremely urgent procurement the obligations are to keep records, to proactively publish transparency of contract awards, and to screen for conflicts of interest. All of those are offended by the VIP Lane. First – and the PPE Buy Cell more broadly, because there were no adequate records kept, especially in the initial stages of the functioning of the cell.

And I think this is particularly shocking to me because, when the process for the procurement in those eight stages that you described yesterday was designed, according to evidence submitted by the Department of Health – and I think this is in figure 9 of the submission – in stage 7, there’s an explicit reference to Reg 84 report. Reg 84 is basically the obligation under the rules applicable at the time to have a full record of decision making and to have the specific information that is going to be required to publish a transparency notice.

So when the cell was being created there was an awareness that this had to be compiled and kept but didn’t happen. And there’s plenty evidence that records were patchy or didn’t exist, and this has been criticised in the government’s internal audits and also by other oversight rules. So I think that’s incontrovertible.

So there was insufficient or non-compliance with the obligation to keep records.

There was also massively delayed and until today, to the best of my knowledge, still partial non-compliance with the obligation to publish contract award notices and contract details. It’s been recognised that – I think it’s 94% of the contracts awarded through the PPE Buy Cell were late in publishing transparency notices.

So that’s also a breach of that requirement.

Lead 5: Is that a problem in practical terms? If they’re published, albeit late, does that create problems of transparency?

Professor Albert Sanchez-Graells: It creates very big problems of transparency.

Lead 5: Very big?

Professor Albert Sanchez-Graells: Very big. We need to think about what is the purpose of those notices. The purpose of those notices is to disclose to the public how, under extreme urgency and pressure, government is making decisions. I don’t think it’s outside the realm of possibility that if some of those extremely high-value awards to extremely inexperienced suppliers had been put in the public domain in a timely fashion, there would have been some mechanisms to maybe even prevent those contracts from ever being implemented.

So it’s extremely important in a situation where there is no forewarning, there’s no planning of what’s going to happen, when things are presented as a fait accompli to society, that that happens as quickly as possible.

And I think there was an awareness, at least in some of the evidence I have seen, that transparency would have triggered criticism in public opinion, and therefore it’s almost justified in some of the witnesses’ evidence to not have provided that transparency, to avoid that public scrutiny at the time. And I think, again, that’s a very significant violation not only of the requirements under the law but also the spirit of the law.

Lead 5: Understood. And you deal in – it’s not your penultimate, it’s your antepenultimate, because there’s another bullet point over the page, but you deal, the penultimate one on this page, again, with the High Court decision –

Professor Albert Sanchez-Graells: Yes.

Lead 5: – on the VIP Lane, that it was unlawful on grounds on unequal treatment?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Due to the speed of processing?

Professor Albert Sanchez-Graells: But also not only due to the speed but due to the fact that, for spurious reason, it had nothing to do with the content of the contract to be awarded. There was a triaging of those offers through the VIP route. So what the court says, and it needs more recognition, is that preferring an offer simply because it’s been referred by a politically exposed person is not a legitimate ground, in the context of procurement decision making.

Lead 5: Yes, although it’s right to point out that, in that case, the contracts under consideration were found to have been ones that would have resulted in grants of contracts in any event, the offers would have resulted in awards?

Professor Albert Sanchez-Graells: That’s fair but that goes only to the point of remedies.

Lead 5: It does.

Professor Albert Sanchez-Graells: And I think that’s important to say. The issue of remedies in procurement is a difficult one, because once a contract has been awarded and basically fulfilled, there’s nothing the court can do but eventually grant damages. And in the specific context of that litigation, damages was not a great remedy to give, because of the type of claimant that we had but also because it maybe would have been seen by the court to add offence to injury.

So I think that’s important to put in context.

The other thing that is important is that I think this Inquiry has been given evidence that in other case contracts, the decision probably would not have been to, in any way, award the contract through the VIP Lane.

So I think the richer and broader evidence in front of this Inquiry will allow for a more nuanced and more comprehensive analysis than the court could do at the time with the evidence in front of them.

Lead 5: Of course. The court is focused on the limited parameters of the claim that is brought before it. Yes, that’s quite right.

The bottom bullet on this page tell us what perhaps may be already apparent from your evidence, which is that you are unpersuaded by the rationale or the reasons for the creation of the VIP Lane or its justification.

But I want to ask you this: to those who say that the government faced a Herculean challenge to acquire, at speed, vitally required PPE and other procurement materials, it was deluged with offers, it needed to enact some system of prioritisation, what do you suggest as an alternative method of coping with that that would not offend the principles to which you have referred?

Professor Albert Sanchez-Graells: The alternative method was inside the PPE Buy Cell itself. The criteria for prioritisation for route 2 were fundamentally looking at the credibility of the offer and the content of the offer. And that would have been appropriate.

So, in a context where the government receives more offers than it needs or that it can process, it should prioritise on the basis of which ones are more likely to lead to a contract. That’s the relevant criterion to look at.

And it can be difficult to implement, but in that case, it is legitimate. So, for example, it could have been that the government decided: we don’t engage with any company with less than three years’ experience of PPE because we don’t know if they’re going to be able to source it or not. Or: we don’t engage with offers for less than 1 million-items because it’s not going to be worth it in terms of logistics.

Anything that is operational or goes to the likelihood of this being an offer that is going to be effective would have been legitimate.

So the criticism is not of creating a priority lane or a priority approach, the criticism is to create a priority for offers that have been referred by politically exposed persons, which is operationally relevant and breeds risks of corruption.

And on that, I would also like to comment that some of the evidence in front of the Inquiry puts a lot of emphasis on the perception of corruption as if almost it was an issue of managing public reaction to what was being done. And I think that misses the point of the actual vulnerability of the PPE Buy Cell to corruption the way it was created.

And to me, that’s a key point that needs addressing. It’s not about whether suspicious journalists are going to say this thing or the other; it’s about putting processes that are as robust as possible to prevent corruption in a situation where things are done quickly and probably not with the transparency and reflection time that would be available in normal times.

Lead 5: In the proposed alternative system that you have shared with us, where, say, a company without at least three years’ experience is excluded from consideration or one that is unable to provide at least 1 million items, would there then be the same need for feedback, for follow-up, that iterative process that went on with the VIP Lane, or is there some other system that might obviate the need for all of that?

Professor Albert Sanchez-Graells: I think if the parameters were clear, then it wouldn’t require feedback because the Government could simply say, “As of today, for example, we only engage with companies with more than three years’ experience. If we don’t get enough with those companies, we will come back to you”. That would be obvious to anyone, and so any objective threshold would prevent the need for follow-ups.

The other thing that would allow is for a much more structured response, where the specific reason why something is or is not taken forward is almost pre-determined because there is a clear threshold.

When things are done in a very unstructured way, then every decision needs explaining, so, even in the context of an MP chasing, it would be much easier to say, “The company you referred doesn’t have three years experience, therefore it’s not progressed”, than having to justify why, under fast-moving approaches to prioritisation, that specific company is not being taken forward.

Lead 5: We’ve touched on data and it’s SMART use in this context. Could that play a part in managing a system to consider a range of offers under great time pressure and changing demands?

Professor Albert Sanchez-Graells: It would. So I think one of the key operational problems that the PPE Buy Cell had was that it had insufficient and very unstructured data. So every time they wanted to find out more about a specific offer, they had to go back to the offeror and ask for more details. They also didn’t have a way of, on the click of a button, comparing different offers.

This is not science fiction. In procurement that engages with large numbers of suppliers, such as framework agreements or Dynamic Purchasing Systems, there are established approaches to collecting structured data and creating electronic catalogues, which basically would allow someone who is told, “Today we are really looking after visors”, to simply prioritise in relation to visors, and also not any visors but specific types of visors.

I think the other problems with the data, as far as I have been able to see it, is that it was at category level, so gowns. But gowns come in all sizes. So it would also be difficult within the category of gowns to find the specific gowns we need.

So I think there was a poor approach at the beginning, because there was a rush, to thinking about how detailed the information we need is going to be and I think that maybe would have been mitigated if experts from NHS Supply Chain would have informed that, for example saying, “This is how we structured the information for the gowns that we buy”.

I don’t know information that happened, I haven’t seen the evidence, but the indication is that that didn’t happen because NHS Supply Chain was doing its thing and PPE Buy Cell was doing a different thing.

But also, once there is a review of these issues because the PPE Buy Cell is so overwhelmed, once they developed a Mendix database, fundamentally a new way of trying to structure the information, that structuring is process based. They are concerned about can we record when we call suppliers? Can we record when there’s been a handover from the Opportunities team to the Technical Assurance team? There is no thinking about the structuring of the data on a product line basis, which is what would have been really needed for people having to change priority quickly or comparing issues by volume, for example.

Lead 5: Do you want to just explain what Mendix is?

Professor Albert Sanchez-Graells: So the understanding I have is that Mendix is a low code database platform and what happened in this context is that the PPE Buy Cell started receiving information in a very unstructured way through a SurveyMonkey, then they create a web form that would feed into an Excel spreadsheet but they had problems ensuring the integrity of the data, so then on a specific weekend of March they bought in a team from the data pool from Cabinet Office to develop a new database and that database was coded in this Mendix language, so to speak.

And that became, through a process of iteration, the data platform for the PPE Buy Cell. But what is also not clear to me in the evidence I’ve seen is how these things were transitioned, how data in one format was then migrated into Mendix, and what the filtering functionality by line item in Mendix was. But, to the extent that I’ve seen it, it was not particularly advanced and I think the Government’s Chief Commercial Officer has recognised in the evidence that it was something rough and ready and relatively pedestrian, put in place quickly. So I wouldn’t expect it to be particularly good at filtering the data.

Lead 5: But it could be better?

Professor Albert Sanchez-Graells: It could be much better.

Lead 5: Offerors could be provided to require information that would feed directly into Mendix or whichever system replaced Mendix?

Professor Albert Sanchez-Graells: Yes, so the other thing that I was surprised to see in the evidence is that, once Mendix is developed, there is no systematic approach to going back to every offer and saying, “We are now using Mendix, this is the template you need to fill in in relation to your offer, if you still want it to be considered”. These were still being done through specific caseworkers that were contacting the offerors. So instead of the public sector offloading the requirement of putting the data in a specific context on each of the offerors, which would be a small burden upon each of them, took it upon itself to put all of the data in that context, as far as I’ve been able to see.

Lead 5: All right, Professor, I want to move you on to the Ventilator Challenge but I don’t want your last bullet point to be forgotten and I don’t want you to be deprived of the opportunity to say anything further if you wanted to on the Parallel Supply Chain including the VIP Lane. So let’s just start with that final bullet point where you make a simple observation but an important one.

Professor Albert Sanchez-Graells: Yes.

Lead 5: Do you want to just share that with the Inquiry, please?

Professor Albert Sanchez-Graells: So I think the observation is that, once everything is counted, the volume in pounds of the contracts awarded through the VIP Lane make up 50% of all of the contracts awarded through the PPE Buy Cell and I think that’s stark and, to me, potentially very problematic, in the context of officials fundamentally downplaying the impact that the VIP Lane had or seeking to justify it. I think that the fact that half of the value spent was through an unlawful route should give us time to pause and reconsider.

Lead 5: So it’s stark for you because it’s unlawful, rather than because the HPL offers represented a small minority of overall offers?

Professor Albert Sanchez-Graells: So for both.

Lead 5: For both reasons?

Professor Albert Sanchez-Graells: So the issue that they represented a small amount is what I had raised earlier, that it was 10:1 by supplier chance, but the fact that, this time later, those involved don’t really recognise that billions of pounds were spent unlawfully and that that is a big problem, to me, speaks to a dysfunctional culture of lesson learning.

Lead 5: Anything else you want to say on the Parallel Supply –

No. So in that case, let’s move on, if we may, to the Ventilator Challenge.

It’s Box 20, it’s page 131, same document, INQ000539153. It’s fair to say you have some concerns also about this aspect of the government procurement during the pandemic?

Professor Albert Sanchez-Graells: Yes.

Lead 5: Yes, so once again, if you’d like to speak to Box 20, please.

Professor Albert Sanchez-Graells: Yes. So ventilators were another of the items that were in high projected demand, in the early stages of the pandemic. There was an insufficiency within the NHS system, so the Government also set out to buy ventilators to increase capacity. They structured this through a two-prong approach, one approach was to try to buy ventilators that were already licensed for use in the UK from existing suppliers and the Department of Health led on that effort, and then Cabinet Office created the so-called Ventilator Challenge to try to explore the possibility of adapting or developing new ventilators and prototypes.

The reasons why the Ventilator Challenge was created are also important, as in the VIP Lane, I think, because I would have imagined that the second-best option to buying ventilators that are licensed and produced by the manufacturer would be to obtain a licence, so that somebody else can manufacture the same safe-to-use ventilators, rather than trying to develop new ventilators. The evidence in front of the Inquiry shows that, typically, it can take years to develop a new ventilator. So I am at pains to understand how an approach to emergency procurement would have been extended to the development of new prototypes, that would definitely not be available in the short-term and that was also a high-risk endeavour in terms of the expenditure of public funds because, like all research and development, it’s not necessarily going to be successful.

So the first thing to say is that the reasons why the government has explained to the Inquiry they didn’t really pursue more than briefly the possibility of licences are, to me, not fully satisfactory because the Government Chief Commercial Officer has submitted that, when they approached manufacturers asking for licences, all but one refused. And they imagined that the reasons for that refusal would be that they were really busy trying to scale up their own production, that they would be worried about the availability of components and that they would be worried about liability if, for example, there was injury or death as a result of an improperly manufactured licensed ventilator.

But in the evidence in front of the Inquiry, within the context of the Ventilator Challenge, it’s clear that Cabinet Office directly engaged with the issue of supply chain for components, to the point of directly approaching producers for components. They also funded a very large number of consultants to support the technical development of the new prototypes so they could probably also have provided consultants to train on the production of licenced models, and they also provided immunities from damage but also from intellectual property infringements to third parties.

So one of the things that I would think are of interest to the Inquiry is to try to understand in more detail why a government that is willing to step in to support supply chains, that is willing to engage a significant number of private consultants and is willing to provide indemnities would not, as a first approach, try to do that by follow up with existing manufacturers, and would rather try to facilitate the development of new prototypes.

Also, because that approach immediately means that the award of those contracts was in breach of the extremely urgent procurement authorisation, Regulation 32, because, as we said through the morning, you can only award contracts for what you immediately need, you need to be sure that you will get the supplies quicker than if you’d run a competitive procedure.

Lead 5: Is that, Professor, why the point you make is a procurement point rather than just a commercial point?

Professor Albert Sanchez-Graells: Yes, because commercially I don’t know whether it would have been possible or not to persuade the suppliers. But from a procurement perspective, that was not a legally permissible approach to take.

Lead 5: All right. So what was the better approach?

Professor Albert Sanchez-Graells: So the better approach would have been to carry out, at the very least, a competitive procedure with negotiations, which would only have required the government to comply with a very quick, accelerated time period, and would have ensured that the terms and conditions that they were agreeing with those looking to develop the prototypes were market tested. And it would also have allowed the government to have a much more, from the beginning, structured disclosure of what they were doing. It could also have brought other potential innovators to the table on the basis of advertising the opportunity.

By simply issuing that specific call to arms and calls with industry and creating specific teams, the Government not necessarily would have guarantees that everyone that could have developed new ventilators was included, whereas a competitive procedure would have allowed those companies to come forward.

I think it would also have been possible to meet all of the reasons why the government thinks they needed to engage in direct awards through that approach. So the government would have been able to pay the innovators for their participation in the competitive procedure of negotiations. They would have been able to retain ownership of intellectual property created under the contract. They would have been able to address all of the reasons why they now explain they did – or they engaged in this decision for.

Lead 5: All right. You say at the bottom of this box that there were some aspects of the Ventilator Challenge that show the UK Government’s willingness to use it for industrial policy purposes. What do you mean by that?

Professor Albert Sanchez-Graells: What I mean by that is that the evidence in front of this Inquiry shows that, at the beginning of the Ventilator Challenge, there was keenness from the Prime Minister and other senior ministers to have a group of homegrown companies do their effort to deal with the ventilator shortage. And I think that “homegrown” already indicates an engagement with UK industry that to me is not necessarily reflective of the needs.

A government in dire need for ventilators would not necessarily care whether an innovator is based in the UK or based in Singapore; they would want a new ventilator available.

Lady Hallett: Surely if you have people who can manufacture here in the UK, I appreciate they have to get supplies and the equipment they need to produce the ventilator, but surely isn’t it better to have it produced onshore?

Professor Albert Sanchez-Graells: I fully agree on the production onshore, but at this stage it was not about production; it was about design. So what they were trying is to get companies to either adapt ventilators that existed or come up with a new one, and that could have been done abroad but then manufactured in the UK.

Lady Hallett: Sorry, I hadn’t followed the point you made.

Professor Albert Sanchez-Graells: Apologies if I wasn’t clear on that.

Lady Hallett: No, it was probably me.

Professor Albert Sanchez-Graells: But it’s also not at that general level of referring to homegrown companies, but from the beginning it is clear that some companies are involved in the Ventilator Challenge on grounds that don’t have actually to do with their ability to develop a ventilator in a very short period of time.

And it’s also clear in the evidence that is in front of this Inquiry that, in particular in relation to Dyson, there was preferential treatment, and there was preferential treatment for political reasons, and preferential treatment wasn’t only impermissible under the procurement rules but was more generally impermissible in matters dealing with public interest. Because there were key decision makers considering what Dyson wanted or what Dyson would get out of an award of a direct contract rather than what the public sector would get from Dyson under that contract.

Mr Wald: All right. Well, I think we can leave it there because we’re going to be hearing a little bit more about that tomorrow.

Let’s just turn to the last bullet in this box, if we may, Professor, where you draw the threads together.

Professor Albert Sanchez-Graells: So the last bullet comes to say, by having senior ministers instruct civil servants to award a contract to a company, even if it’s a contingency contract, on the basis of the interests of that company or how that company is going to be able to market its product elsewhere, is impermissible. It’s impermissible within the procurement rules.

And here it’s no excuse to say this was a direct award, and therefore most of the procurement rules don’t apply because the decision itself to engage with direct awards was not in line with the rules. So the fact that this did not happen within the context of a competitive procedure, for example, doesn’t detract from the fact that that instruction to award a contract was just impermissible.

Lead 5: Understood, thank you, Professor.

We’ve dealt now with procurement pre-pandemic, we’ve dealt with procurement during the pandemic. I want to turn relatively briefly now to that third phase, that third period of time that you address in your expert report, the post-pandemic period.

It would be helpful if we could have summary box 22 brought up. It’s on page 140, obviously the same Inquiry document, INQ000539153.

And you start with a reference to the Boardman Review.

Just for those who are not familiar with it and its consequences, if you’d like to introduce this box by explaining briefly those matters.

Professor Albert Sanchez-Graells: Yes. So at the later stage of the pandemic, the government itself asked Sir Nigel Boardman to engage with two reviews of how procurement had taken place, and the one that is referred to is the second review.

And in that second review there were findings of operational challenges and difficulties in implementing the reaction to the pandemic from a procurement perspective, and there was a long list of recommendations made.

In my view, those recommendations are adequate. I think there are also some more recommendations that could have been made on the basis of the analysis in the Boardman Review, for example about IT systems. But the position at this moment is that the government has formally accepted all recommendations, and the evidencing in front of the Inquiry is that the recommendations have been implemented.

But all accounts of the implementation of those recommendations on revising how NHS Supply Chain operates or revising issues of staffing or revising issues of data, are process-based accounts that simply say: on this date this committee said this, on that date we considered the recommendation was implemented. But there is no detail whatsoever of what specific measures were adopted, what specific changes have been implemented. Which means that there is no external possibility by civil society or this Inquiry, unless it’s given more evidence, to make a judgement on whether any of the specific recommendations have been sufficiently or properly implemented.

And to me, that basically means we need a more open approach to explaining what was changed. So if Crown Commercial Service and the rest of the Government Commercial Function was not working in a particularly joined-up way, like the Boardman Review fleshed out, what’s been done to make sure that it works in a more joined-up way, rather than simply saying, “We have made them work in a more joined-up way”? We need more detail on the standard.

And this is important because probably the Inquiry will want to make recommendations along the same lines of what the Boardman Review said, and it would not be good enough for the response to be: we already implemented this in the context of Boardman. And that’s why we need more detail.

Lead 5: Does the enactment of the Procurement Act 2023, just last week, have any bearing on this at all?

Professor Albert Sanchez-Graells: So it has a bearing in that, at the time of the Boardman Review there was a proposal for new legislation but there was no Bill at the time, there was only a process of reforming, and there was an expectation or a hope in the Boardman Review that the Procurement Act would fix some of the issues that were identified in that analysis.

In my view, that’s not been the case. So in my view, the Procurement Act has not meaningfully changed any of the issues that arose from systemic non-compliance with requirements for emergency procurement, and the new regime doesn’t create adequate enforceable safeguards.

So in that regard, I think that’s the bearing it has, that there was an expectation that some of the issues identified in the report would carry through to legislation. In my view that has not happened.

Lead 5: All right, thank you for that.

You make a particular point – yes, that’s fine. Thank you for that.

You, if I may say so, are a valuable source of international comparisons. You deal with a comparison of approaches in the next section of your report. You look at it both across the devolved administrations and then internationally. I wonder if you could pick up those points, starting with the devolved administrations, offer your comments, your reflections on that comparison to be made, and then move on to the international comparisons, please.

Professor Albert Sanchez-Graells: Yes. So the short of the comparison is that the general approach to reacting to the pandemic was very comparable in the UK and other jurisdictions internationally, but also within the four nations of the UK, except for the VIP Lane.

So the VIP Lane is clearly an outlier. There was no equivalent in the devolved administrations as far as I could see. There is no equivalent in any international jurisdiction as far as I’ve been able to assess. So that’s the main difference.

The other issues that in other jurisdictions that had had a more restrictive approach to emergency procurement, for example by enacting requirements of minimum offers, like was the case in Italy or in Romania, at the beginning of the pandemic, those requirements were overridden or suspended.

Lead 5: Minimum number of offers, how does that work?

Professor Albert Sanchez-Graells: So that would work – in those jurisdictions, before you can engage in a direct award, you need to ask for offers from a minimum number of potential suppliers.

Lead 5: I see.

Professor Albert Sanchez-Graells: So rather than choosing supplier 1 and contracting, you need to approach suppliers 1, 2 and 3, and then, on the basis of those three offers, provide a contract. That was suspended or withdrawn because it was not practicable.

So this is to say that the UK’s flexible permissive approach to direct awards was in line with what happened in all jurisdictions, either because of prior legislation or changes brought in because of the pandemic.

Lead 5: So you refer to Germany’s ‘take it or leave it’ market engagement. Do you want to explain how that worked?

Professor Albert Sanchez-Graells: Yes. So in Germany, at the outset of the pandemic, the relevant authorities published a set of contractual conditions for different products and basically said: anyone that wants to provide these specific products in this specific condition is going to get a contract.

So this is an approach where the contracting authorities go to the market with their maximum price, for example, or maximum tolerance, with a specific technical requirement, and whoever can meet it comes forward. There is no need for negotiation, there is no need for triaging.

And although it’s been commented that after the fact that approach was not necessarily fully successful, because some of the contracts were also problematic, what I say in the report is that that is a completely different approach to the market. Instead of completely unstructuredly going to the market and seeing what comes in, which can overwhelm a system, going out with a specific set of conditions both prevents corruption and maladministration in the sense that the conditions are set, they are not open to negotiation, but also, very much reduces the bureaucratic task, in that the offers will or will not match the requirements. That’s it.

So my point there is that that would have been a more procurement-informed and likely to be successful approach, to go to markets saying, “We need this specific type of PPE, this is the price we’re ready to pay”, or, even if the price was negotiable, there is a ceiling of price or something like that, than trying to just try to see what the market can offer.

Lead 5: All right.

You make your observation in your section on the devolved administrations that there was no equivalent of the High Priority Lane in Wales, Scotland or Northern Ireland. You make a similar observation in relation to your international comparison, that as far as you know there is no equivalent of the High Priority Lane abroad.

If you are able to comment, then please do. To what do you attribute the uniqueness of the High Priority Lane, the VIP Lane, within England?

Professor Albert Sanchez-Graells: So I think, in my opinion, it comes from the approach to deference to ministers and MPs that is embedded in the way the English Civil Service operates.

There is usually a level of ministerial access to the activities of the Civil Service that I don’t think exists in other restrictions, not only in procurement, but generally. So because of the specific way in which, for example, constituency work is done, MPs sometimes legitimately follow up with Civil Service. There is no hard and fast division between what is appropriate and what is inappropriate engagement. It’s a much more loose context than in other jurisdictions. And I think that that tradition in approach to ministerial deference in this case created a very significant problem, because I think where you have more ministerial involvement it’s more difficult to draw the line of what is allowable or not for a politically exposed person to do.

And I think that in the same way, for example, we will not think it permissible on the basis of convention for an MP to be asking Ofcom what is happening with his licence, for example, the same thing should happen in procurement, but for some reason that sort of innate impermissibility of the level of engagement did not work here.

Lady Hallett: But isn’t there a similar level of engagement between ministers and officials in the devolved nations, for example, in Scotland?

Professor Albert Sanchez-Graells: So I don’t know if that happens as a matter of general course but, on the evidence I’ve seen, there was no involvement of ministers in the way offers were triaged or –

Lady Hallett: No, no, but not in – sorry, I’m not – I’m just talking about generally. I thought you were saying that one of the reasons that the VIP Lane may have been possible is because there’s a close engagement between ministers and officials. But I’m asking whether that principle doesn’t also apply to Scotland and possibly Wales. I can’t remember about Northern Ireland because they act a bit more in silos. But I’m suspecting that the level of engagement applies throughout the UK, and therefore why is it that only England gets the VIP Lane?

Professor Albert Sanchez-Graells: So I think, without disagreeing, and with all respect, it’s not actually true that only England gets a VIP Lane, in the sense that the VIP Lane was for the four nations. So I think in this specific case what happened was that the aggregate buying of PPE at that scale was carried out in England, but it was basically for everyone.

Lady Hallett: Oh, I see. Thank you.

Professor Albert Sanchez-Graells: So I think that could have been a distinctive factor.

Mr Wald: All right, I think finally now, Professor, you have offered reflections, possible recommendations, as we’ve gone along, but your box 26, your final box, which is at page 161, INQ000539153, which fits on to a single page, is where you address the current state and the future of emergency procurement.

Some of this we have dealt with already, but would you kindly just draw out anything that remains to be said, particularly in relation to the third-from-last bullet, where you have included a number of the recommendations that feature in this section of your report at paragraph 393.

Professor Albert Sanchez-Graells: Yes. But before we get to that one, if I may, I would like to talk about the fourth bullet from the top, which I think is fundamental criticism of the changes brought forward by the Procurement Act 23, which is to say that the Procurement Act has not changed the mechanisms for enforcement of procurement law in the applicable jurisdictions. And the same way that under the PCR we were expecting contracting authorities to publish a transparency notice and, if they didn’t, there were limited routes to challenge the decision, the Procurement Act 23 very much continues in the same way. And there may be some discussion brought forward to the Inquiry on the creation, for example, of the Procurement Review Unit or other mechanisms of oversight, in my view they will not significantly make a difference. We will still have the fundamental problem that if a direct award is given without complying with transparency obligations, it’s very hard to know about it, it’s very hard to do anything about it.

So that’s something I would like to highlight, that by not changing the review or remedies regime, the Procurement Act has not made a difference in the enforceability of the requirements, and what my report has shown is that the requirements were there, they were just not complied with. So we could have a repeat, with the requirements being in the Procurement Act but there not being a mechanism to enforce them.

Lead 5: What sort of mechanism did you imagine might have provided the teeth to the new Act that presumably you regard as now missing?

Professor Albert Sanchez-Graells: Yes, so an administrative review body, which was included as a possibility in the initial December 2020 transforming public procurement Green Paper would have been in my view the best way forward, so having a review body that is established and that could have, if necessary, standby specific powers, for situations of systematic emergency, would be the best way to go. And I’m not the only one thinking that. I think there is a consensus in the practitioner community that there was a very big missed opportunity in this ether, to create in the Procurement Act in not creating an administrative-based system of review procurement decisions.

Lead 5: Thank you, Professor. You’ve set out a set of recommendations at 393. They feature in this box.

Professor Albert Sanchez-Graells: Yes.

Lead 5: Would you just touch on those that have not already been addressed?

Professor Albert Sanchez-Graells: Yes, so that’s the third bullet from the bottom that you were pointing me to earlier.

Lead 5: Yes.

Professor Albert Sanchez-Graells: I think that if there is to be a meaningful change in the way rules are going to be followed but also in how emergency procurement will be carried out better in the future, there is a quite long list of complicated interventions that need to take place.

I think the first thing is that we still don’t have a fully integrated electronic procurement system that applies across the UK and I think that needs addressing as soon as possible. There are models like the Pepol(?) model, and I didn’t go as far as recommending a specific approach but I think what would be required is for the government to have a very structured approach to ensuring that there is e-procurement fully rolled out, it’s fully interoperable and it feeds into data and that would require funding and a dedicated change management plan, way beyond what’s been put in place, for example, for the Procurement Act.

I think there is also significant investment that needs to be made in professionalisation in capacity building and I think the Procurement Act, for example, has shown that the approach to training in the transition from this – the (unclear) rules to the new rules in the UK, which are supposed to carry a significant cultural shift, has basically sent that the standard civil servant has been given 10 hours of self-directed e-learning as training. I just think that sort of scale of training and professionalisation is not going to improve things significantly. I think we need a lot more done in that regard.

I think we need more co-ordination across procuring organisations. For example, I would like to know that there is a set co-ordination mechanism between the centralised healthcare organisation in each of the nations, so that we don’t have to put those systems in place when we need them and, more generally, there should be clear standby or ‘break-glass’ arrangements to ramp up capacity so if at some point we again face the need to buy much more than we were buying of something, who are we drawing from? Can we have those people pre-identified? Can we have them forewarned that they may be called? Can we stress test those systems as we go?

I think we would also need to have pre-established spend control and due diligence mechanisms in place because I think what the evidence in front of this Inquiry shows is that this was a movable feast, thresholds were raised, delegated authority was significantly increased, the conditions were maybe not always clearly set or clearly understood or clearly adhered to, and I think we need a significant, more structured, pre-defined approach to this issue.

And I think we need to have a significant improvement in procurement data. This has come across many times this morning but, even with the Procurement Act’s central digital platform, as of today there is no search and as of today there is no dashboard. So it could be that the data is collected but nobody can access it, nobody can use it in a meaningful way and I think we need a lot more to do in terms of making sure that the data is open, that data can be exported and used by different re-users in ways that can just not be possible today.

In terms of re-use, I think it’s also important to think about looking back on data. So I think there was some effort to try to identify who has historically been providing PPE, if they are not current providers, but that was done on the basis of very patchy sometimes outdated information. I think it would make sense to recommend the creation of Dynamic Purchasing Systems, or now called dynamic markets, for items that are likely to be needed rather than just-in-time contracts, so that when the need arises, at the click of a button, all those registered in the dynamic market can get a notice to say, “We think we need lots of PPE, can you please tell us what is your position now? Can you provide?” And we have that pre-set, and I think it would be a low-cost very significant intervention.

And I think this is more difficult but I think we need structured mechanisms of risk mitigation and, by that, what I mean is that we need to have sort of suspended but susceptible of deployment mechanisms to look at those risks that we are taking, and that has to do with decision making, for example. It cannot be that all of a sudden we are trying to come up with new ways of identifying risk or mitigate for it. We should have a structured approach to doing that and we should have people trained to do that and, for example, using standard contract clauses could go some way to that, having a lot more detailed and prescriptive standard contract clauses for emergency contracts, for example, than we had at the beginning of the pandemic.

And the final one, which is probably the most difficult one but probably a very important one, is that I think there should be a culture of integrity and committing to zero tolerance of conflicts of interest in procurement. If something potentially looks like a conflict of interest, it needs to be acted on rather than the relatively high threshold I think we operate under or we definitely operated under during the pandemic.

Mr Wald: Professor, thank you. Subject to any further questions from the Chair –

Lady Hallett: I have one more.

Questions From the Chair

Lady Hallett: Going back to the Boardman Review, sorry to take you back, Professor, I found online a Government response to the Boardman Review, dated 7 May 2021. I think that was when they said that the majority of his recommendations had already been implemented but, in any event, they were accepting them all and they keep the Public Accounts Committee updated.

Professor Albert Sanchez-Graells: Yes, that’s correct.

Lady Hallett: Did anything happen? Did you hear anything after that?

Professor Albert Sanchez-Graells: So I haven’t heard anything. That was also a piece of evidence I couldn’t rely on because of Parliamentary privilege. But that is the sort of explanation to say, “We have implemented them”, but I haven’t seen any follow-up reports or more detailed accounts. It could be that the pack has them but they’ve not been published.

Lady Hallett: Thank you.

Mr Wald: In that case, my Lady, Professor, thank you for your written and now oral evidence. That concludes both of them, and thank you very much.

Lady Hallett: I’m really grateful to you, Professor, for all the help you’ve given. I appreciate that it’s so much your specialty that you may have quite enjoyed getting all this together but it’s been extremely helpful and I’m very grateful to you for your written report and, of course, your evidence this morning. Thank you very much indeed.

The Witness: Thank you.

Lady Hallett: Safe journey back to Bristol. Is that where you’re going?

The Witness: Yes, that’s right. Thank you.

Lady Hallett: Very well, I shall return at 2.00.

(12.58 pm)

(The Short Adjournment)

(2.00 pm)

Lady Hallett: Mr Sharma.

Mr Sharma: My Lady, the next witness is Daniel Bruce.

Mr Daniel Bruce

MR DANIEL BRUCE (sworn).

Questions From Counsel to the Inquiry

Lady Hallett: I hope we haven’t kept you waiting, Mr Bruce.

Mr Daniel Bruce: Not at all.

Mr Sharma: Could we please start with your full name, please?

Mr Daniel Bruce: Daniel John Bruce.

Counsel Inquiry: Mr Bruce, you have provided a witness statement to the Inquiry, adopting the evidence of a prior witness, Mr Munro. My Lady has previously given permission for witness statements to be published, the INQ numbers for those are INQ000527634, INQ000574178.

For your witness statement, Mr Bruce, would you please confirm it’s true to the best of your knowledge and belief?

Mr Daniel Bruce: Yes.

Counsel Inquiry: Mr Bruce, you are the Chief Executive of Transparency International UK and you’ve held that position since October 2019?

Mr Daniel Bruce: That’s correct.

Counsel Inquiry: Transparency International UK is part of the UK Anti-Corruption Coalition. Could I start, please, by asking you to tell us a little bit the UK Anti-Corruption Coalition?

Mr Daniel Bruce: Yes, thank you. So the UK Anti-Corruption Coalition is an informal collaboration of civil society organisations, academia and independent experts made up of around 16 full members, and up to 30 when we include our affiliate members, broadly aligned around principles of transparency and public life, the prevention of corruption, the promotion of integrity and effective enforcement of regimes around those areas.

For the purposes of the Inquiry and our work more broadly in this area, the Coalition established a Procurement Working Group, which is made up of the organisation that I lead, Transparency International UK along with the Open Contracting Partnership, Spotlight on Corruption, the Centre for Health and Public Interest, and two independent experts: Russell Scott and Chris Smith.

Counsel Inquiry: As part of your work with the UKACC in relation to public procurement, you’ve conducted number of investigations and published a number of reports, haven’t you?

Mr Daniel Bruce: That’s correct. So at Transparency International UK, we produced a forensic investigation into the UK Government’s first 1,000 Covid-19 contracts and our assessment of corruption risks therein. That was published in April 2021. Subsequently, we published a more extensive analysis of 5,000 contracts with a sample going out into 2023, a report entitled Behind the Masks which we published in September of last year.

Similarly, Spotlight on Corruption, using Freedom of Information Requests and other means has conducted various investigations, for example, into waste and loss associated with contracts that went through the High Priority Lane, and our colleagues in Open Contracting Partnership have produced a lot of analysis drawing upon data sources such as the European Union’s Tenders Electronic Daily and the UK’s Contracts Finder to analyse procurement turns during the pandemic, and both Chris Smith and Russell Scott have extensively used the Freedom of Information regime to seek to ascertain information about individual contracts or batches of contracts or spending that, at the point they submitted them, was not in the public domain.

Counsel Inquiry: We’re going to come on to some of that analysis during the course of your evidence, but could I first ask you some questions about the principles around public procurement. We’ve heard this morning from Professor Sanchez-Graells about issues with governance, accountability and transparency. Why should this Inquiry be concerned with those principles during the course of an emergency such as the pandemic?

Mr Daniel Bruce: Well, as I hope our written submissions shows, and the evidence that we will discuss, there was a significant collapse in the transparency regime around public contracting during the Covid-19 pandemic in the UK, and this stood out in the UK context, relative to some of its peer countries, and I know we’ll come on to that later.

But I guess the fundamental question is: is transparency a nice to have in an emergency of this nature or is it a necessity? And we would certainly align ourselves with the latter, for a variety of reasons, perhaps foremost among which is that we would contend it leads to better procurement outcomes, and therefore it leads to a better response to the pandemic. More transparency around public spending ensures that buyers and suppliers are better connected, that there is transparency around how much things cost and, therefore, government is able to spent its money faster and better with a better transparency regime.

But the second consideration, which is equally important, really, is that, when a pandemic response like the UK’s slips into a void of opacity around public spending and the associated mechanisms around it, there is a significant decline in public trust, and there are multiple points of data and evidence, both in our own work and that which is already in the public domain which show how the perception of corruption of public money, the perception of waste or maladministration, if not the reality, leads to declining levels of public trust in government and its response.

This is very marked if you look at something like in Transparency International’s Corruption Perceptions Index and the data which cover the period affected by the pandemic and that’s a composite indicator made up of global expert surveys of business leaders and data from the World Bank, World Economic Forum, and so on. The UK fell to its lowest level on the CPI, just over a year ago, and remains there at the moment, 71 out of 100, and the underlying data in that global dataset point to increasing levels of concern among global business leaders about the way in which public money was spent during the pandemic and a perception – and it is perception – that corrupt practice was fuelling diversion of public money, and I would argue that, again, that opacity, that lack of transparency, is one of the things that fuels that.

Counsel Inquiry: You’ve identified in your evidence that there were shortcomings in the governance and the accountability of public contracting. What do you mean by that?

Mr Daniel Bruce: So the – I mean, perhaps if I sort of talk to the guardrails that we would identify at two different levels, if you look at the statutory and common law frameworks, the relevant areas that we would have an interest in would be legislation around fraud, the Bribery Act, they are the common law offence of misconduct in public office. And then perhaps most relevant on the day-to-day basis and the pandemic response would be that the guardrails around maladministration, therefore at the time the public contracting recommendations, the codes applicable to ministers and civil servants and, more recently, the nascent work of the Covid Anti-Corruption Commissioner, but during the period of the pandemic when the public contracting regulations still applied in their form then, you could see that there was a – again, there was – against those regulations, there was a collapse in the transparency requirements around the publication of contract notices within 30 days, and there was this immense strain on the management of conflicts of interest.

And I think, if I may refer to paragraph 34 of our evidence, there’s an interesting nuance in the Cabinet Office’s first public procurement note in 2020, which is that which authorised the exceptional use of direct wards in the context of the emergency but, importantly, whilst those rules on the procurement process were relaxed, the rules on handling conflicts of interest should still have applied. But, in practice, I think when we take our evidence in the round, you can see how they were immensely strained and how the – again, the transparency regime saw this significant collapse with no consequence, really. And that’s one of those deficiencies: is that the enforceability of it is very weak.

Lady Hallett: Can I just interrupt, I’m sorry, Mr Sharma.

For those that are not familiar with transparency notices, is there much involved in preparing for publication a transparency notice about a contract that’s been awarded?

Mr Daniel Bruce: Thank you, my Lady. I confess to never having prepared one myself in my line of work, so I can’t comment authoritatively perhaps on the level of effort. So if I could perhaps observe – offer some systems observations that come out of our research and our submission, which is that, in going into the pandemic, essentially the UK still had quite an analogue system that was very vulnerable to human error, and misapplication of information, and we may come on to that later, it’s a slightly separate issue. But we didn’t have a centralised digital common data standards system that allowed for those contract notices to be published rapidly in an easily readable, transparent way.

So I think my contention would be that it’s as much about the mechanisms that government did or did not have in place to allow those contracts to be published rapidly, as much as it was about the time involved.

There is data, however, in our submission, which is quite telling, though, which is that Covid-related contract notices were subject to a materially much longer delay than all other public contracting notices during the period, and it’s a very statistically significant variation, and we think it’s important to get to the bottom of why that was the case.

Mr Sharma: What would you say to the suggestion that, during the course of an emergency such as the pandemic was, that the priority was to get PPE and other equipment out to the frontline, and that the preparation and publication of transparency notices and the like had to play second fiddle to it?

Mr Daniel Bruce: I think I’ll refer to my previous answer, in that if we had a system in place that made publication of transparency notices easier, centralised, more digitised, it shouldn’t even have been an issue that the UK found itself in this situation. More broadly, I would suggest that all of our evidence, and much of that already in the public domain, really challenges the narrative that all of the things that we contend went wrong with procurement and the UK’s pandemic response were because Government had to act at speed and essentially it had to cut corners.

One of the reasons I contest that narrative is that so much what we found between us spanned months and months and months and well into 2022, with the tail end of data going into 2023, and compared to our peer countries, on matters of transparency, on matters of spend, on matters of how long emergency direct procurement was being used, the UK found itself as an outlier.

Counsel Inquiry: So is your point that, that the emergency was deemed to last longer than it in fact did?

Mr Daniel Bruce: I think it is a matter of fact that emergency procurement exemptions were used for a considerably long period of time, particularly the direct award of contracts, and then those are intertwined with some of the other corruption risk factors that we identify in Transparency International’s Behind the Masks research, but moreover, one of the checks and balances, one of the safeguards against misuse or maladministration of the emergency procurement mechanisms is the transparency regime. And again, the failure to publish contracts was a sustained problem for the entirety of our sample period. And to this day, there remain £5 billion of unpublished contracts for PPE and other supplies, you know, five years after the pandemic struck.

Counsel Inquiry: Turning to another subject, please, corruption red flags and the 135 contracts which have been subject to examination by the UKACC.

First of all, what are the corruption red flags and why do they matter?

Mr Daniel Bruce: Thank you. So this is the work conducted in Transparency International’s Behind The Masks research, and it’s for a Track and Trace publication from April 2021.

We developed, drawing upon international procurement best practice from the likes of the Organisation for Economic Co-operation and Development, a list of 14 different red flags against which to sift all of the government contracting data that we could find for our sample.

We’ve grouped them, perhaps if that’s a more expeditious response, into themes rather than me listing all 14, if that’s the appropriate way to navigate it, around risks in the procurement process, risks in the supplier profile, poor contract outcomes, so concerns around failure to deliver or past record of suppliers, and then the 14th red flag would be an additional red flag if we found contracts that had risks in all of those areas.

So some of the nuances that we would be looking for in those themes would be politically connected companies, they would be newly formed companies, less than 100 days old, so called micro-suppliers, with balance sheets under 600 – or turnover under £600,000 with no prior track record. Those – and then those contracts in addition to those factors that were channelled through the so-called high priority or VIP Lane for triaging of offers.

Counsel Inquiry: And those red flags, I understand it, affected 135 contracts. What was the total value of those contracts?

Mr Daniel Bruce: Yes, so for context, the contract sample size was 5,000 contracts that amounted to a total of £45 billion of spending, largely on PPE and testing, and a few other areas as well. So 135 of the 5,000 as a sample is relatively small, but as a volume of spend it’s very material because the 135 constitute £15 billion, so broadly a third of the sample.

I can’t stress enough that this is the most comprehensive dataset of its kind that puts all of these contracts through the corruption risk red flag filter. It’s more comprehensive dataset than the government has available to itself on this area.

Counsel Inquiry: Of the red flags that UKACC have identified, you have described the company being relatively new, contracts being awarded without competition, the supplier being a small entity, the company being politically connected. Given the systems that were in place at the time to look at these issues, what are the kinds of guardrails that you and UKACC would have expected to be in place in the contract progress and award system?

Mr Daniel Bruce: Yes, the – probably the most relevant test that we believe should have been being applied was the eight-step due diligence process that has been referred to in previous reports, I think from government, and is referenced in our research on this area, that, in theory, should have picked up some of the types of red flags that we’ve identified in our research, along with the landscape of the public contract and regulations at the time, and, for example, its obligations on effective management of conflicts of interest where they’re deemed to exist.

I think what the data show is that there are a – I mean, there is a very high number in volume of contracts that had a significant number of red flags, and it’s perhaps worth stressing that, you know, the list of 135 is the three or more threshold. The top couple of dozen of contracts had up to eight red flags.

And those are – I don’t think it’s constructive to name those companies in this context because I don’t want to prejudice any other ongoing proceedings which may involve them, but there should have been multiple opportunities, using that due diligence process, using the obligations upon civil servants and indeed the politicians who were involved, as we now know, in referrals, to identify some of these red flags that should have probably caused a contract to stop. You know, examples being – you know, it’s something with an opaque ownership structure, that’s non-competitively awarded, that’s clearly brand new, there’s no former track record and it would appear that that contract is only being placed on the desk of a civil servant because it’s come through the High Priority Lane.

There are multiple examples in the underlying dataset where those things should have been stopped. It’s not clear to us and we haven’t been able to establish why they weren’t.

Counsel Inquiry: You, via UKACC, have conducted a large volume of research on Contracts Finder. Could you please help us with what Contracts Finder is?

Mr Daniel Bruce: So Contracts Finder is one of the UK Government’s publication tools and, in the context of the pandemic, it should be looked at alongside TED which is Tenders Electronic Daily, which was the centralised EU contracts publication platform. In both cases, the data are rarely beautifully complete, so the analysis that we’ve produced through TI, through Open Contracting Partnership and our coalition, needs to be understood with that cautionary note. One of the challenges that we saw in analysing data from Contracts Finder and Tenders Electronic Daily in this crossover coming out of the EU period was a lot of contract duplication which was then further exacerbated by a lot of human error that I’ve referred to, in terms of the contract information that was put into Contracts Finder.

Taken together, when we looked at our sample of 5,000, if we’d just added all of those together and not manually sifted out all of the duplication, it actually looks like government spent £30 billion more than it had on the pandemic response, so that’s perhaps a separate point around the sort of cleanliness of data and how we action that going forward, but it’s important in the context of understanding how fragmented and chaotic pandemic-related procurement data is on Contracts Finder and elsewhere.

Counsel Inquiry: So UKACC found inflated contract values, missing data, misspelt contractor names and other inaccuracies. Has that made your analysis of the contract data more difficult?

Mr Daniel Bruce: Oh, yes, undoubtedly. And when we talk about inflated contract values, sometimes the differences that we’re talking about are an official typing millions when the contract was actually billions, or vice versa and, again, we assume human error. The Ministry of Defence had three or four different departmental identifiers in the dataset, sometimes it’s just a spelling error, swapping out the “C” for an “S”, or something like that. These might seem like slightly geeky, technical points to be raising but they’re incredibly important when it comes to us having a public spending transparency repository of information that we can rely upon that builds trust and, again, coming back to my earlier point, is usable for government and suppliers.

Counsel Inquiry: Can I turn, please, to some international comparisons which the UKACC has done with the Open Contracting Partnership. We heard evidence from Professor Sanchez-Graells this morning that he hadn’t been able to find another country with a High Priority Lane or a High Priority Lane-like system. Have you been able to find anything like that in your research?

Mr Daniel Bruce: No. We come to the same conclusion as the professor. We crosschecked peer countries, we consulted with Transparency International chapters in around 100 other countries, Open Contracting Partnership consulted with its network in 30 countries and it appears that the High Priority Lane, so-called VIP Lane was a completely unique feature to the UK’s pandemic response.

Counsel Inquiry: You refer in your witness statement to a World Bank survey of 103 countries and an assessment of the accountability and transparency standards in those countries. How does the UK compare to those 103 countries?

Mr Daniel Bruce: I think almost exclusively in the World Bank survey, all countries experienced degrees of challenges with their pandemic procurement, in what was an incredibly hot market. There were pockets of corruption scandal in other peer countries, Germany, for example, various sort of political scandals around contracts awarded to those connected to government, particularly again in those earlier weeks and months of the crisis.

Where the UK stands out is the length of time, as I’ve laboured before, that many of the measures that were being used, many of the affronts to the transparency regime and the spirit of the public contracting regulations were sustained for, but also the manner in which, relative to its European peers, the UK procured an extraordinarily larger amount of PPE and other supplies and, again, relied very, very heavily by contract volume on the use of direct awards in a way that was only replicated in terms of the European peers in places like Cyprus and Luxembourg. So much smaller nations with a collective population of only around 2 million.

The other thing that the UK seemed to fail to do, relative to other peer countries – or similar comparable countries – was to stop and learn as it went. Lithuania, for example, was having difficulties with its procurement, was struggling with price inflation, was struggling to keep on top of its transparency obligations, and around about the middle of 2020 did a sort of stop and review exercise to make some adjustments to the public transparency regime to stocktake on pricing data, and so on, whereas the UK at that point, when you look at the data which speak for themselves in our assessment, still look like a runaway train of spending and opacity.

Counsel Inquiry: Can I just pick up on two points which you’ve made, perhaps with the assistance of some graphics. Could we have up, please, INQ000474994, and the bottom of page 4. Thank you.

If we can just zoom into that graphic at the bottom, this is a chart about the proportion of direct Covid contract award notices by country, 2020 to 2021. The countries are listed on the bottom: Germany, Spain, France, Italy, Netherlands, Poland and then the UK on the right-hand side. In terms of direct contract award notices, the UK seems to award, by direct contract award, about double that of Germany, doesn’t it?

Mr Daniel Bruce: Yes, that’s absolutely correct. The – perhaps the most comparable dataset within this, which is where colleagues at OCP started with this analysis, is to compare Germany, the UK, France and Poland on the basis of similar levels of size of population because, as I mentioned earlier, smaller nation states like Cyprus and Luxembourg, it can be a bit distorting if you’ve got a smaller population.

So relative to those immediate peers and this slightly wider sample, which we see in the evidence, yes, the UK is very substantially, over the period – I believe this data, yes, runs to the end of 2021, so again, a long sample from the pandemic, is relying very heavily on the use of direct awards which in itself is one of the corruption red-flag risks that we would identify.

Counsel Inquiry: Another graphic, if we may, please, to deal with your second point. INQ000474994, the graph on the top of page 6, please. This is UKACC’s analysis of the Covid contract notices cumulative total. At the top an outlier by any standard is the UK, with all the other countries, Germany, Spain, France, Italy and Poland, down at the bottom.

Mr Daniel Bruce: Exactly. This is all Covid-related contracts that my colleagues at OCP could find for all countries, again using data from Tenders Electronic Daily and Contracts Finder.

I mean, I think the data speak for themselves in terms of what this is telling us, but there was something particularly unique about the amount of money that the UK spent on Covid contracting relative, again, to peer countries, many with similar sized populations in Europe.

I think it’s really important to look at this data in parallel with the other issues that we’ve already discussed as well, as we start to sort of build a picture of the UK’s response. So here you have this enormous variance in the amount of public money that is being spent, with that enormous variance in the use of direct awards that we’ve just seen, with a VIP Lane that was completely unique to the UK, and with a notable collapse in public transparency around public spending, all into this sort of melting pot of issues which characterised the UK’s response, and I think leads to some of the – clearly the wider questions that this Inquiry will need to seek to answer over the weeks ahead.

Counsel Inquiry: One of the comparisons which you draw is between the UK and Canada on the approach to the call to arms being a public call for the provision of healthcare equipment and supplies. Could you help us, please, with the differences between the way that the UK approached that problem of open sourcing procurement and the way that Canada dealt with the same issue?

Mr Daniel Bruce: Canada, I suppose, going into the pandemic was already greatly advantaged by the fact that it had a mature, well resourced, digitally savvy centralised government procurement service, for want of a better term. It’s called Buy and Sell Canada. So that was there and poised and ready to go. With that infrastructure, what Canada was able to do was to take an approach that went to market for PPE and other products, testing, and so on, with very clear well publicised, well detailed specifications of, “This is what we need as government through our centralised procurement platform”, and was able to go to market with that very transparently, very quickly and had a system in place that allowed suppliers to then put in their offers and their bids that was based upon an approach, “This is what we need, can you fill this need, and how much is it going to cost?”, with transparency baked into that approach and publication with as much of that data as possible throughout.

The UK’s approach feels in many ways inverse, in that the so called call to arms for PPE and other supplies felt like a “Tell us what you’ve got and we’ll work out what we want to buy”, leading to this overwhelming volume of offers that the government was struggling with just managing the data for in those early weeks and months of the crisis, and therefore the introduction of measures to get through all of that data, which, in our assessment only increased the risks of corruption or maladministration, rather than reducing them, whereas Canada was sort of tanking along, buying the things it wanted to buy, and there was this marketplace, if you like, where buyers and suppliers could see each other.

To come back to my opening remarks, that ability for good transparency to lead to better procurement and better buying capacity at the outset was greatly advantaged by systems such as this.

Counsel Inquiry: Would you agree that the approach, at least from your analysis in the UK, was to say that “Tell us what you’ve got” was the UK’s approach, and “This what we need”, in short, was Canada’s approach?

Mr Daniel Bruce: Yes.

Counsel Inquiry: What, from your analysis, do you think could be learned in this country and in the devolved administrations about the approach to procurement from the experience of Canada?

Mr Daniel Bruce: Well, I think at an overarching level, the need for investment in procurement expertise that is centralised and becomes a more professional cross-government function, in and of itself, the need for digitised platforms and tools that work, and that are fit for purpose, both in terms of publishing contract opportunities and then the follow-up transparency data that we have discussed. And a few other areas as well, which are evident in Canada and other countries, such as Germany, Lithuania again, Paraguay had much innovation in its procurement response.

Tools such as the use of mini frameworks, which the UK doesn’t use, but the ability to quickly put together groups of properly screened suppliers. Germany had an approach where it did this and had a sort of take-it-or-leave-it approach on pricing, where the Federal Government would say, “Well, that’s what we’re willing to pay for this, and let’s leave that standing there for when we need it.”

The framework situation in the UK is much more cumbersome and is perhaps one of the underlying challenges that led into the barriers that government was facing when we went into the pandemic. I know there is a –

Counsel Inquiry: Pause there for a moment. What do you mean by “cumbersome”? In what ways was it cumbersome?

Mr Daniel Bruce: So the UK generally relies on closed frameworks rather than open frameworks, and I think this might be behind some of the challenges that SCCL, Supply Chain Services, experienced and seemingly let to its kind of notional collapse early on in the pandemic, in that, periodically, the UK Government will go to a market in any department for suppliers of X or Y, so that there is a pre-approved bench of companies who can provide the types of things that that department needs to procure, and then that – that framework is locked off for a few years. Usually you get your framework agreement in place as a supplier, it – you know, it protects you in that select group for a few years. It doesn’t normally set pricing information, that would come later at the call-off point if government was to go to its framework for that particular area.

It’s very rare that government adds in suppliers to its frameworks, whereas mini or open frameworks allow that to happen quickly and, as we can see in places like Paraguay and Germany, they could be stood up quite quickly in the context of the pandemic.

Lady Hallett: Sorry, I’m not following. The standard framework that we use, every so often we’re going to recognise you, Mr Supplier or Mrs Supplier, and you go onto our list. The advantage there is that they’ve already been through a process of validation. Do you not lose that established process of validation if you have more open frameworks, some mini frameworks that you’ve just been describing?

Mr Daniel Bruce: Thank you, my Lady. So your interpretation of my evidence is correct. I – no, I don’t think – I don’t think we would contend that that is the case. I think those things we can see, from some of the evidence, can co-exist side by side. Much of this, for the UK, though, would be resolved with the other procurement recommendations that we and others have made in terms of systems and investment and training, and different types of mechanisms beyond these cumbersome frameworks but I think that, again, you can just see in other international comparisons that other countries came up with nimble, effective, solutions, faster and quicker that cost less.

Lady Hallett: Can I just – sorry to pursue again. Going back to the point you made about Canada and its much, you said, digitally savvy system for data analysis, whenever I make a recommendation in a time of constrained resources I always have to try and find a way whereupon it could be something that could be used in peacetime or it’s something that will be spent to save. The professor earlier suggested this could be quite expensive if this were a recommendation: better training, better data system. Have you anything to say that would help me make a recommendation that might be persuasive for a government faced with difficult resources?

Mr Daniel Bruce: I’m afraid I can only hypothesise, my Lady.

Our suggestion would be that we would agree with the professor that better procurement systems need investment and it will need spending investment in systems technology and training in particular. The benefits that – and here’s my hypothesis – the benefits that should flow from that would be delivered in the years that followed that investment. And, again, not all of the countries in the OCP sample necessarily have the best digital platforms, but I just come back to that pattern of massive spending by the UK Government using the tools that it did or didn’t have at its disposal in the pandemic, and I think that, for me, is a data point alone enough to say that, actually, if this were to happen again or some other crisis of this magnitude, would we really want to have the UK as such an outlier on how much money it spent?

So again, I’m hypothesising, forgive me, but I think the returns come in later years.

Lady Hallett: Thank you.

Mr Sharma: Can I turn, please, to just a few recommendations which the UKACC makes, in addition to investment in a procurement system and development of procurement professionals.

One of them relates to conflicts of interest and an observation you make about the implementation of the recommendations of the Boardman Review, which we heard about earlier this morning. Could you help us, please, with what UKACC’s view is of the implementation of recommendations about conflicts of interest from the Boardman Review?

Mr Daniel Bruce: Thank you. Our understanding at the time was that government accepted the two sets of Boardman recommendations in full. They haven’t yet been implemented in full, and perhaps the most salient point in this context is the conflicts of interest policy work. Only two of many more government departments had overhauled their conflict of interest policy in light of the Boardman recommendations. The rest, last time our coalition checked, remained unaddressed.

I think we would go further in our recommendations and suggest that you don’t have a department-by- department conflict of interest policy; you just have a single policy for conflict of interest management as it relates to procurement for government departments.

There are other areas of Nigel Boardman’s recommendations which remain unaddressed and which are still salient today. One of them comes back to the point that we were just discussing around training, you know, at the minute many civil servants have a sort of mandatory 10 hours online training on procurement and conflict of interest management and this needs to be more substantial going forward.

And there are various other sort of smaller details around getting alignment between the way that conflicts of interest are published and declared and, again, introducing more transparency into that regime. So one of the recommendations we make, which builds upon Nigel Boardman’s recommendations, is that when public contracts are being entered into, it shouldn’t be just enough in future to confirm that a conflict of interest assessment has been conducted, but that that assessment should be published as part of the disclosure regime, for example.

And perhaps finally on this point, our recommendations, I believe, are aligned in that we suggest that suppliers should have matching conflict of interest policies and management, as well as the – those within the government department that they are contracting with.

Mr Sharma: Mr Bruce, thank you.

My Lady, unless you have any further questions?

Questions From the Chair

Lady Hallett: No, just another question, Mr Bruce.

Going back to your point about companies that have really only just been set up, as a non-expert in procurement, I would expect that any form or – I gather it was a SurveyMonkey result, would – almost the very first question was: when was your company established? And that if it was within the last few months, I’d be very wary. Do you know if that’s a principle that anybody thought of? It just seems so obvious.

Mr Daniel Bruce: I don’t know if it was on the SurveyMonkey because I didn’t see the SurveyMonkey that was used for gathering contract data. I mean, I think it’s part of the wider landscape of the attitude towards these controls and, if – you know, if – of public spending in the pandemic, and if there is, you know, one aspect of the UK Government’s response which, in our assessment, was the most egregious, it was the creation of the High Priority Lane, the so-called VIP Lane.

You know, as I’ve said, other countries had their pockets of scandal. The UK Government, in essence, ended up creating a system that invited corruption risk that flew in the face of all international best practice and threw the rulebook out of the window. It must never happen again.

The then Labour Party in opposition suggested they would legislate to make such VIP Lanes unlawful in the new Procurement Act. That hasn’t happened yet but, if we look at actually the loss and the write-offs associated with the High Priority Lane, contracts that were 80% more expensive for PPE for all companies going through the High Priority Lane, £1 billion, representing 59% of spent on PPE written off as not fit for purpose, that – if I can implore one thing, that is the biggest lesson that we must learn from the UK’s approach to procurement because all of the details around the information that was being collected, or not able to be collected and then the collapse in transparency was only further exacerbated by the creation of the VIP Lane.

Lady Hallett: Message received.

The Witness: Thank you, my Lady.

Lady Hallett: Thank you very much indeed – oh, no, we’ve got Mr Weatherby.

I think you’ve got some questions?

Mr Weatherby: Yes.

Lady Hallett: Sorry.

Mr Weatherby has some questions for you.

Questions From Mr Weatherby KC

Mr Weatherby: Thank you.

I ask questions on behalf of Covid Bereaved Families for Justice UK. Just three short points on something you nearly finished on, conflicts of interest.

So in your witness statement, or the statement that you’ve adopted – for the record, paragraph 51– it’s stated that:

“The UK Government’s approach to emergency contracting had effectively turned ordinary rules on handling conflicts of interest on their head. Personal relationships resulted in suppliers going through the High Priority Lane rather than being used as grounds to more carefully scrutinise suppliers and record decision-making processes.”

So my questions are, firstly, do you consider that commercial or personal links between a referrer of an offer and a supplier in the VIP Lane were, in principle, capable of constituting a conflict of interest?

Mr Daniel Bruce: Yes, we do.

Mr Weatherby KC: Do you consider that ensuring that a fair system of procurement required proactive disclosures of conflicts of interest by both referrers as well as suppliers?

Mr Daniel Bruce: Well, I think that’s a caveated “yes”, because the language of “referrers” and “suppliers” is, again, germane of the High Priority Lane approach, and in the context of my remarks a moment ago that we think that that approach should never be repeated again in the UK, we would rather you didn’t have to retrofit such controls to such an approach because we’d rather it didn’t exist.

Mr Weatherby KC: Yes. My question was rather prefaced on that basis, but thank you for clarifying that, and it’s the same caveat here. But if yes, do you consider that in practical terms referrers should have been required to disclose any conflicts of interest at the point of making the referrals to the High Priority Lane? Same caveat.

Mr Daniel Bruce: Again, the same caveat. I mean, in hindsight and retrospect, yes, in the context to that system having been chosen to be the system that was used.

Mr Weatherby: Indeed. Thank you very much.

The Witness: Thank you.

Lady Hallett: Thank you, Mr Weatherby.

That completes the questions that we have for you, Mr Bruce. Thank you very much indeed to you and to your colleague for the written statements you’ve prepared, and thank you so much for all your help today. You’re a very good advocate for your cause, if I may say so.

The Witness: Thank you, my Lady.

Lady Hallett: Thank you.

I think we’ll carry on, Mr Sharma. It’s a bit early to take the break now.

If you’d like to take the oath.

Sir Gareth Williams

SIR GARETH RHYS WILLIAMS (sworn).

Questions From Lead Counsel to the Inquiry for Module 5

Lady Hallett: I hope you were warned you would be on later this afternoon?

The Witness: No, not a problem.

Lady Hallett: Sorry to keep you waiting.

Mr Wald: Could you start, please, by stating your full name for the Inquiry.

Sir Gareth Williams: Yes, Gareth Rhys Williams.

Lead 5: Is that how you would prefer to be referred to, Sir Gareth?

Sir Gareth Williams: Yes, that’s fine, thank you.

Lady Hallett: Sorry, I’ve been through this before with another witness. Was the question meant to be whether you want to be “Sir Gareth”?

The Witness: Yes.

Lady Hallett: No, you accept and you get called “Sir Gareth”. I’m afraid I pointed that out to Sir Christopher Wormald.

The Witness: Then Sir Gareth it is.

Mr Wald: Sir Gareth, you have, and we are grateful for it, provided for the Inquiry a number of witness statements: a corporate Cabinet Office witness statement dated 5 July, INQ000497031; a witness statement dated 14 January 2025, which is INQ000536362; and INQ000535017, a further witness statement dated 23 January 2025; is that right?

Sir Gareth Williams: Yes, for fullness, there was a – I did one also for Module 1, but that was much smaller, that was more of a summary for everybody.

Lead 5: Yes. Those are the three that we’re focused on within this module.

Sir Gareth Williams: Yes.

Lead 5: Can you confirm, and I believe you have done with your signature, that the contents of those statements are true to the best of your knowledge and belief?

Sir Gareth Williams: They are.

Lead 5: And there are, in addition, number of statements that have been provided to us by Clare Gibbs, a corporate statement on behalf the Crown Commercial Service, INQ000528389, dated 20 December 2024, and an additional statement by Clare Gibbs INQ000569124, dated 28 January 2025. Can you confirm that you’ve read those statements?

Sir Gareth Williams: Yes, I think the first that you mentioned was a Cabinet Office statement not a CCS statement. Mrs Gibbs took over after I left the Civil Service.

Lady Hallett: Sir Gareth, can I apologise, I should have checked my facts, you didn’t accept a knighthood, did you?

The Witness: I would never have dreamt to –

Lady Hallett: I’m really sorry that I caused that confusion. Please forgive me.

The Witness: I’d never have dreamt to –

Mr Wald: Where are we left?

Lady Hallett: We are left – if you’re a baronet, I still think you’re Sir Gareth, but it’s certainly up to the witness.

The Witness: Whatever. I’m here.

Lady Hallett: It’ll teach me to be a pedant, won’t it, really?

Mr Wald: You left the Cabinet Office in 2024 and are now the chair of National Highways.

Sir Gareth Williams: Correct.

Lead 5: You’re a chartered engineer by background with a wealth of experience managing a variety of companies and, more specifically, in so-called just-in-time operations and continuous improvement?

Sir Gareth Williams: Yes.

Lead 5: That’s right. Very briefly – we’ll turn to the concept of just-in-time operations next week, with a further expert witness that’s appearing on Monday.

Sir Gareth Williams: Indeed.

Lead 5: But in the meantime, would you, if you wouldn’t mind, very briefly explain what is meant by those terms, “just-in-time operations” and “continuous improvement”?

Sir Gareth Williams: Well, we’ll take the latter first, and I think it is an ethos I’ve tried to engender in the commercial function. Continuous improvement is vital to get better and better and better and take every opportunity to learn things across a system, and that goes to the heart of the way that the commercial function has been structured up until now. I don’t know if you’re going to come back to that.

In terms of just-in-time, that’s a study – a methodology initiated in Japan about driving out waste out of a production system or an office system really by focusing on not making more than you need, moving it as fast as you can, and having, you know, the least inventory within a factory. That is slightly different from least inventory in a finished goods environment. So, to take an easy example, cars. Factories are very just-in-time, but we’ve all seen plenty of garages with lots of cars on the forecourt.

So I spent my early career working on manufacturing systems, how to make things quickly and scale things up quickly. But that’s perhaps the relevant bit.

Lead 5: Thank you. Moving forward, then, to the pandemic. During the pandemic you were the Government Chief Commercial Officer, weren’t you?

Sir Gareth Williams: Correct.

Lead 5: And you held that position between March 2016 up until July 2024?

Sir Gareth Williams: Correct.

Lead 5: Yes. What did that role entail, in brief terms, if you would?

Sir Gareth Williams: So two sides to that. The first side is I was one of the – what is called the “functional leader”, introduced into government in order to try to drive professionalism, in my case in the commercial function, but there are colleagues in Projects, colleagues in Digital, colleagues in HR, doing much the same. That’s about, how do we recruit better people? How do we train them? How do we retain them?

And back to sort of the “continuous improvement” point that Mr Wald raised: how do we learn from each other so we don’t make the same mistake again? Or how do we learn from each other by taking good practice in one part of the government network and spread it around the others?

Our government is hugely siloed, you’ve probably heard that before, in that things don’t easily move from one department to another.

Lead 5: We’ll come on to that –

Sir Gareth Williams: Capability is one side of the role, and the other side of the role is really, I was the face of government towards its suppliers. And of course, I mean, we’ve had tens of thousands of suppliers. So the more senior suppliers, you know, I had a relationship with and I was brought into senior fora if there was a question of how would the supplier base, how would industry, feel about dot, dot, dot.

Lead 5: I want to come on to the Government Commercial Function. We’ve heard in previous modules about the role of Cabinet Office in government decision making generally and in respect of civil emergencies. In this module, with your help, we want to focus on the Government Commercial Function.

It’s a cross-government network of staff based in all departments who procure or support the procurement of goods and services for the public sector amongst other taxes; is that right?

Sir Gareth Williams: Yes. Would you like me to expand on the structure?

Lead 5: Well, I’m going to ask you to do that in a moment by reference to a graph that is included within your evidence.

Before I do that, I just want to get a sense of the scale of it in terms of staffing.

The Cabinet Office employs a senior card of the Government Commercial Function numbering about 1,500 staff; is that right?

Sir Gareth Williams: Yes. So of the, roughly speaking, 6,000 people in the commercial function across central government – and we perhaps need to come back to delineate that, because at the time, well, and as of now, it doesn’t formally include the NHS, and at the time of the pandemic it didn’t include some other arms length bodies that have since been moved into it – but of that total 6,000 who are – 4,500 broadly are employed directly in their departments like any other civil servant working in their department. There’s the management layer from what’s called grade 7 and upwards – I don’t know if you’d like me to explain that – but from grade 7 upwards are contracted centrally, albeit they actually work in the Ministry of Justice or in the Home Office or, in this case, the DHSC. So they are formally employed by the Cabinet Office and, therefore, in the structure that I led, and therefore that is the glue that has enabled us to drive through common training, common methods, learning from each other, which otherwise, in a siloed structure such as we have in government, is very, very difficult to execute.

And that structure is similar to what you see in the Government Legal Department, in that they have a central group, but then people deployed in each one, except I – subject to everyone in this room correcting me, GLD are all of lawyers, whereas the commercial function is just the GCO, this senior 1,500, it was about 1,000 at the time of the pandemic, are just the leadership grades of it.

Lead 5: Now, I promised I’d come to and display, if I can, one of the visualisations, the graphs within your evidence.

It’s INQ000497031, which features at page 32 of your corporate statement, paragraph 220. Let’s see if we can get that up on the screen now. And whether it might assist. Were you thinking of that a moment ago?

Sir Gareth Williams: That’s what I was starting to … yes.

Lead 5: Yes. Does this help us understand anything further than that which you’ve already explained?

Sir Gareth Williams: Yes, it does a little bit. And the red – so the blue, the Government Commercial Function, 6,000 people. Everything on the slide, my Lady. The red, the GCO, the management layer.

So it’s a graphic. It’s – you know, it doesn’t cover just those – the words that are inside the red label. I’m trying to indicate, you know, the seniority of the people.

I think what is important here to understand perhaps for the Inquiry is who does what, because the Cabinet Office is a complicated word in the procurement structure. So if it – is it useful to take you through the three columns?

Lead 5: Well, it would be to the extent that it will help us understand this issue of siloing that you mentioned a moment ago.

Sir Gareth Williams: Okay. So in the department – so on the left-hand column – the Home Office buys very different things from the Ministry of Defence, different from the Ministry of Justice. Those teams should buy the things that are specific to them: prisons, or warships, or whatever it is. Other people should not be buying those. That should be for the obvious department.

The Crown Commercial Service, in the middle, which is also an ALB of the Cabinet Office, hangs off the Cabinet Office, puts in place the frameworks that you’ve heard a lot about today for what are called common goods in services, things that one would normally expect everybody would want to buy, and the obvious example is buildings.

Everybody has buildings. It makes no sense at all for 20-odd departments each to develop a skill in buildings procurement. Much better that CCS, Crown Commercial Service, generate a framework and then everyone else pulls off from that. And you’ve heard about similar – well, we can talk about the NHS structure in a second if that’s helpful.

In the Cabinet Office, there are two things. There are the four central – or five central teams, we’ve rationalised them since, that lent people that were – as has been discussed today, and we’ll probably get back into, who were then deployed out into departments to staff the PPE team, the test and trace team and the ventilator team. But there is a version of the left-hand column because the Cabinet Office of course has its own procurement team that does not work for me – or it works for me in the functional sense, but it works with the Permanent Secretary for the ministers in the Cabinet Office. So there included in the left-hand column.

Is that helpful?

Lead 5: It is. I want to move us, with that helpful background, to the role of the Cabinet Office in PPE procurement. Can we move in to that now?

Now, if I’m right – I’m right, aren’t I, that whilst it was a DHSC that was the procuring department for PPE, it was the Cabinet Office staff that had close involvement?

Sir Gareth Williams: Yes. And that’s because the – when we think about Covid procurement, my Lady, we need to recognise that these are “and” procurements. All the other underlying work of government needed to continue happening, prisons, IT buying, whatever it was, schools, buildings – whatever it was. That still needed to happen. And for reasons that you heard earlier, SCCL ran out of staff, IT and so on. DH had been through a – as I recall, a pretty savage downsizing a couple of years beforehand, and that slightly goes to the staffing issues that the professor talked about in SCCL. We might come back to that.

So the only pool of spare people that we had, apart from the people I could frankly ask for and encourage, colleagues in departments that I felt would be less loaded than others, was the Complex Transactions Team and, to a lesser extent, the Markets and Suppliers team, who worked directly for me but in the Cabinet Office, and we were able to – (a) they’re very high-level people, very experienced, skillful. We were able to move them over immediately, because they worked for me and I could just do that and take them away from whatever else they were doing, supplemented by resource from the MoD, which I couldn’t directly control but they were good to volunteer, DfE, and other government departments where I could – I was able to encourage them to be released.

And between them, and staff from the – commercial staff from the NHS, that’s what made up the PPE Cell team.

Lead 5: Mr Rhys Williams, you referred to the professor. You’re talking about Professor Sanchez-Graells of this morning?

Sir Gareth Williams: Yes, sorry. Yes.

Lead 5: You heard his evidence? Did you hear his evidence?

Sir Gareth Williams: Yes.

Lead 5: Oh good, because I’m going to come back to it. It’s useful to know you heard it. I want first, though, to ask you about the Complex Transactions Team and how that fits into the organogram that you’ve been explaining, to us. There was such a team, wasn’t there, which assisted? Now, in brief terms what was the team for and what did it do?

Sir Gareth Williams: Okay, they were in the right-hand column of the graph you just put up somewhere in that column. So they, they’re a team of 35-ish plus or minus, of senior experienced commercial staff, so generally, at what’s called senior commercial – senior civil servant level 1 or the equivalent in the GCO structure. They didn’t have lots of people working for them. These are an internal consultancy arm that we would essentially rent out, departments could ask for help, for things that – a dispute, a complex negotiation, a complex piece of strategy, where it would make no economic sense for the government – for that government department to have that resource on hand, year in, year out.

If they needed it for the six months, they could borrow and pay for one of the people in the CTT in order to support that and then, at the end of that assignment, those people would then come back into the Cabinet Office pool. In the meanwhile, they would be working in the Home Office or the Department for Education or whoever it was, under the direction of the Local Commercial Director or Chief Operating Officer in whichever department was hiring them.

Lead 5: Cabinet Office staff were involved in setting up the PPE Buy Cell, also known as the Parallel Supply Chain, weren’t they?

Sir Gareth Williams: Yes.

Lead 5: We heard something about that earlier today with Professor Sanchez-Graells. During the course of the pandemic, you were also involved in a number of key decisions and commissioned reviews regarding the High Priority Lane, prices and processes, weren’t you?

Sir Gareth Williams: Yes.

Lead 5: Examples of those are the two GIAA reports 1 and 2?

Sir Gareth Williams: Yes. During that summer, there was increasing noise in the press about these PPE contracts, what’s going on and, as I cover in, I think, one of my submissions to you, my Lady, some of those were placed with – some of those contracts were placed with companies that, on the face of it, you look at and you go, “Why would you buy PPE from a – you know, a pest eradication company?” Well, because actually those people do that sort of work wear PPE and so that’s why they’re able to help. So there were a number of issues like that, questions on pricing, questions on so on and so forth, and I thought – I, at the time – and I didn’t think anything was going wrong but, you know, these things need checking.

So I asked – I was not allowed to commission GIAA myself but I persuaded Alex Chisholm, who was then the Permanent Secretary, that he should commission GIAA to look at – and I said, “Pick six contracts that have been in the news, you choose, dive into them, discover what you can”.

When they did that, I said, “Fine, okay”, we’ll perhaps come on to their findings in a minute, and I asked them to do another six.

Lead 5: Well, not in a minute but we will come on to them.

Sir Gareth Williams: Yes. I also commissioned – the first thing I commissioned was actually a pricing analysis. So the big concern, if there’s bias, favouritism, cronyism, which was what was being alleged, was that there might be a pricing advantage to the people that had been thus favoured. At the time we were using an external consultancy called Efficio to analyse the contract data and plot pricing – that’s an exhibit you’ve got – to look at the pricing by category.

Lead 5: Mr Rhys Williams, can I rein you in a little bit. We are going to come on to the GIAA reports and if at that point you wish to make points about the pricing analysis you’ll be free to do so. I don’t want to really go share right now, is that all right? Thank you.

The Cabinet Office and Number 10 also had some overview of the DHSC’s procurement activities as PPE updates were given to the Prime Minister on a regular basis. That’s right, isn’t it?

Sir Gareth Williams: Yes, but I didn’t see those. That was – Emily Lawson and her team would present that directly to the –

Lead 5: You never attended those meetings?

Sir Gareth Williams: Never might be too strong but – I think never actually, but, no, I don’t think at all.

Lead 5: There were cross-departmental discussions about the sourcing and distribution of PPE, which presumably you did attend?

Sir Gareth Williams: No, I had no input on distribution at all. So –

Lead 5: Sourcing and distribution?

Sir Gareth Williams: Um, sourcing – you know, I worked with a colleague, Rob Nixon, who is one of the CTT people, who drafted the first sourcing roadmap. When SCCL’s suppliers – who were, as we discussed earlier, mainly distributors based in the UK – ran out of stock, we needed to rapidly work out who the underlying manufacturers were such that we could then approach them and Rob did a piece of very quick work on that and I discussed that with him, and that then became a cornerstone of the work that Emily Lawson took over, and fed into the China Buy.

So I was involved in that, but that was right at the start.

Lead 5: All right.

Sir Gareth Williams: I would say – Rob did the work, almost, I would say, my involvement was de minimis on that.

Lead 5: But you tell us – excuse me.

Sir Gareth Williams: I think between sourcing and distribution is the important point to about volume. So DH were the contracting party, they were the people with the forecasting ability. It was their forecasts that then the Buy Cell was just then told to execute. And it’s not really the place for procurement people to decide how many tanks the army wants, or they say how many they want and then the procurement team’s job is to find them in the most effective way they can do. So, again, I don’t think any of us were involved in that demand framing.

Lead 5: All right, let’s touch now, if on the scale of the challenge that you and others faced, in terms of procurement, when the pandemic arrived. You tell us at paragraph 8.1 that:

“The scale of the challenge that the pandemic posed was unique in peacetime, the scope and intensity of procurement activity that was undertaken across government to meet this challenge was therefore substantial and underpinned our ability as a country to combat the virus to allow the NHS to continue to function and ultimately to protect the public.”

Yes?

Sir Gareth Williams: I don’t know, is that from my –

Lead 5: Those are your words, yes, paragraph 8.1.

Sir Gareth Williams: Okay.

Lead 5: Now in terms of visualisation to help us understand this, the scale of procurement activity, I wonder if we could have up on the screen INQ000497031. It’s your paragraph 1.22, page 8 of your corporate statement. It shows us –

Sir Gareth Williams: Ah, yes.

Lead 5: You know this, do you?

Sir Gareth Williams: Yes, I prepared this for the Inquiry when we first met some of your colleagues.

Lead 5: Yes, and it shows us, does it not, that the greatest intensity of activity on PPE procurement ended, PPE procurement being the orange –

Sir Gareth Williams: Yes.

Lead 5: – end of June, beginning of July?

Sir Gareth Williams: Yes.

Lead 5: With other testing carrying on beyond that, and we can see, at much lower levels, ventilators –

Sir Gareth Williams: Oh, ventilators was really a one-off in March and April.

Lead 5: – in March and April, for which you also – you had responsibility?

Sir Gareth Williams: Yeah.

Lead 5: In relation to which we’ll be hearing evidence from you tomorrow, rather than today?

Sir Gareth Williams: (The witness nodded)

Lead 5: All right. That’s helpful.

Sir Gareth Williams: I think it’s worth just explaining, these, I believe, are contract dates. So the delivery dates, when it goes to some of the points that you were sort of touching on earlier, the delivery dates –

Lead 5: With Professor Sanchez-Graells?

Sir Gareth Williams: Well, and with the gentleman from Transparency International. The delivery dates, of course, are a couple of months after that. This is contract placement dates, I believe.

Lead 5: Yes. Yes, there’s some time lag between contracts and arrival or deliveries, yes.

All right, let’s turn to another topic now, please. This is helpful to understand the scale of procurement and the challenge. A topic that was touched on this morning with Professor Sanchez-Graells: guidance. It became necessary, he told us, and I’m sure you will also tell us, during the pandemic, to issue guidance in the form of PPNs or Procurement Policy Notes.

Sir Gareth Williams: Yes, that was the standard way that pre-dated the pandemic for getting policy information out, not just the central government, right across the public sector.

Mr Wald: Yes.

I’m conscious, my Lady, I’m starting a new topic. I don’t know whether that is a convenient moment to pause.

Lady Hallett: Certainly.

Yes, very well. I shall return at 3.30.

(3.14 pm)

(A short break)

(3.30 pm)

Lady Hallett: Mr Wald.

Mr Wald: Thank you, my Lady.

Mr Rhys Williams we had reached the topic of procurement guidance which is one that I hope to be able to deal with relatively briefly with you.

You had agreed that, during the pandemic, it became necessary to issue on a number of occasions guidance by PPNs, procurement policy notices –

Sir Gareth Williams: Yes.

Lead 5: – or notes. That guidance evolved as the pandemic progressed, didn’t it?

Sir Gareth Williams: Yes, in a number of different ways.

Lead 5: But routed within the guidance is the importance of observing the principles of public procurement regulation, explained to us this morning by Professor Sanchez-Graells; that’s right, isn’t it?

Sir Gareth Williams: Yes.

Lead 5: He remunerated there are nine of them: predictability, effectiveness, economy, transparency, integrity, access, fairness, accountability and capacity. All of those are enshrined and are encouraged whether or not procurement is conducted on an emergency basis or on a business-as-usual basis?

Sir Gareth Williams: Yes, I think the keywords that will be in the EU regs from which, at the time, our regulations were derived is fair, open and transparent.

Lead 5: Yes, those are the ones that Professor Sanchez-Graells alighted on as – these aren’t his words, but non-negotiables. The others, he said, may need to be adapted in the light of emergency circumstances but those of transparency and fairness, you would agree, need to be maintained whether or not one is procuring on an emergency basis?

Sir Gareth Williams: Yes, that’s certainly the ideal.

Lead 5: In fact, one could go further, I wonder if you do. One could say that, in an emergency, where direct awards are made, it is all the more important to maintain and ensure that those principles of transparency and fairness are happening.

Sir Gareth Williams: So let me take those two in two bits. So transparency, I think, is really important and, during my time in the Cabinet Office, we have been publishing more and more things outside of the regulations, for example, KPIs, because they are performance indicators for a contract, because it is vital that the citizen feels that their money is being well spent and it also helps drive competition, so transparency is good. I –

Lead 5: Mr Rhys Williams, I don’t want to in any way limit your answer but can I just have an answer directly to what I asked. I just want your view, please. Those principles apply whether or not one is in an emergency. I’m suggesting – I’m inviting your view on whether they should apply all the more in than emergency: fairness and transparency?

Sir Gareth Williams: So the reason I was separating them is I think they’re slightly different. So transparency: there are additional requirements, rightly, as I’ve said in my statement, and Professor Sanchez-Graells touched on it as well. The workload to publish correctly, using Reg 32 is rightly larger and more onerous, “Why have you done this outside of the rules?”

Lead 5: So is that a “Yes”, in that case?

Sir Gareth Williams: Yes, that is a “Yes”.

Lead 5: That’s a “Yes”. Okay. On the other one, is it a “Yes” or a “No”?

Sir Gareth Williams: So there are two legals cases going on that – were judged on the during the period of the pandemic that go to, legally, whether, if you’re operating under Reg 32, whether you need to be – to generate competition and to be fair, I forget the exact wording.

As a point of principle however, yes, if you can possibly generate competition, that is going to be fairer and, in my statement, I point to a number of examples – there are many – where, even where we use Reg 32, we did generate a mini competition underneath the Reg 32 in order to drive out value for money but also to allow other people to compete. But it was just done very quickly and I think we heard this morning about the 35 days minimum time, which just wasn’t acceptable in a lot of cases.

So I think my answers to transparency is yes, absolutely. Fairness, if you can.

Lead 5: If you can –

Sir Gareth Williams: Within a Reg 32 context –

Lead 5: – then there’s an enhanced requirement to achieve it in emergency conditions.

Sir Gareth Williams: Transparency?

Lead 5: Transparency, yes. Fairness, if possible?

Sir Gareth Williams: So there are conflicting legal judgments on this from a public first case, which said “If you’re doing Reg 32, then you don’t need to consider other angles”, and then the case against PestFix, bizarrely because the government won it, we weren’t able to challenge the ground of whether – I don’t think the word used was for equality of treatment was something we needed to test, but I deferred to the legal profession on that.

Lead 5: All right.

Sir Gareth Williams: But from the point of view of getting the best value for money, the best deal for taxpayers, then, yes, the more fairness you can introduce, the more competition you can introduce, obviously the better.

Lead 5: Some of the guidance that was issued during the pandemic related to ministerial involvement in procurement, didn’t it?

Sir Gareth Williams: Yes, so it was towards the end –

Lead 5: Wait for the question, please. Your evidence contains a number of references to the pressure that was brought to bear on those responsible for procurement, due to ministerial pressure, doesn’t it? We’ll come on to the detail of that in a moment.

Sir Gareth Williams: So –

Lead 5: Is that a “Yes” or “No” and then whatever elaboration you choose.

Sir Gareth Williams: Yes, but with couple of caveats.

I think the pressure can take several forms and I think a minister chasing “Have you done this yet?”, is one thing. Their office more usually chasing up, “You said you would have done this by now, have you?”, that is also annoying but fair. That is very different from a minister saying, “Buy this from them”, which is not right and, in my experience, that only happened to me in one situation which I suspect we’ll discuss tomorrow.

Lead 5: We’ll be hearing in due course from Mr Cairnduff and Mr Hall, they had more of the day-to-day experience?

Sir Gareth Williams: I wasn’t involved in the High Priority Lane day to day at all.

Lead 5: You weren’t involved in the High Priority Lane day to day. So far as ministerial pressure is concerned, and its impact within the High Priority Lane, those witnesses will be able to give more direct evidence to this Inquiry?

Sir Gareth Williams: Absolutely. Yes.

Lead 5: So let me come to the question then. The guidance that was issued in relation to ministerial involvement on procurement, did that come about in order to respond to the problem of ministerial involvement in procurement? Let’s not get into which types of pressure we are talking about. You’ve given a range of different possibilities, but ministerial pressure or ministerial involvement in procurement itself provoked some guidance, didn’t it?

Sir Gareth Williams: Yes, and the answer is partly. Partly to address the – if you read that it’s a document that I think was published in July ‘22. I think I drafted it in April and later in ‘21. Partly –

Lead 5: You drafted it?

Sir Gareth Williams: Yes, with Chris Hall. So partly – who you’ll talk to later in the week, my Lady. So there are conflicts of interest tightening of wording in there. It’s not for me to write or contribute to a ministerial code. That is not what a civil servant is allowed to do but I thought that that guidance would nonetheless be helpful to be clear on conflicts of interest, and what that establishes, the idea that, as soon as the minister see and the gentleman before me touched on this – as soon as the minister meets or has contact with a supplier who is interested in a procurement, they should declare a conflict of interest or not, but there should be a document done there and then. So that bit of it was triggered by the pandemic.

Lord Maude, a few years before, I forget exactly then, had issued some very good guidance on how ministers could be involved but his guidance was limited to the procurement process itself. What it missed was the pre-procurement, which is exactly the subject that the Inquiry is rightly interested in, and also, it didn’t cover contract management, which you may be interested in. So I was trying to tighten it up and cover that first and third block, if you like, out of the three, around the centre that Lord Maude had already done a few years before.

Lead 5: Mr Rhys Williams, I am going to have to do my best to tighten up the question and answer because we have a limited amount of time. You have lots of very interesting things to say but we’re going to have to stick to the topics that I’m asking you about, if that’s all right. I just want to know, were you responsible for drafting the contract award notices that came out around the same time?

Sir Gareth Williams: No.

Lead 5: You weren’t?

Sir Gareth Williams: No.

Lead 5: All right. Emergency procurement is something that seldom happens, isn’t it?

Sir Gareth Williams: Yes.

Lead 5: Would you accept that even experienced procurement staff did not have much experience in emergency procurement?

Sir Gareth Williams: Yes, by nature, it doesn’t happen very often.

Lead 5: Yes, and there wasn’t pre-existing guidance available to assist those individuals?

Sir Gareth Williams: Correct. That’s why we put out the PPN120.

Lead 5: Nor playbooks?

Sir Gareth Williams: Playbooks is something slightly different. Playbooks are more how do we work with a particularly different segment of our industrial base.

Lead 5: They are more focused in their remit?

Sir Gareth Williams: They are not so much about procurement regulation as best practice, both from our side, the Government’s side, the public sector side, and from the supplier side. They were co-developed with industry on a sector-by-sector basis in four sectors, one after the other, where the government had persistently run into problems or industry had run into problems.

Lead 5: Would it have been helpful or desirable for there to have been a playbook, particularly for those – likely almost everyone – unfamiliar with the workings of Regulation 32, emergency procurement?

Sir Gareth Williams: Yes, but it might have become shelfware. I think the PPN was put out, 120, which was the one that covered the use of Reg 32 was very thorough and went to everybody and they would have read it because it was there on the desk at the right time.

Lead 5: All right, I’m moving on to transparency. We’ve touched on it already and the importance that you ascribe to it, not just even in an emergency, but especially in an emergency?

Sir Gareth Williams: Particularly.

Lead 5: You are, of course, aware of both High Court challenges, you’ve referred to one of them, the PestFix one where there was a finding in relation to that there was – a finding that the High Priority Lane was contrary to equal treatment principles, but there was also a High Court challenge that considered the late publication of contract award notices, of which I’m sure you’re aware?

Sir Gareth Williams: Yeah.

Lead 5: Yeah. You agree had the late publication of contract award notices undermines transparency, doesn’t it?

Sir Gareth Williams: Yes, and I think in my statement I say it’s one of my big deepest regrets because it allowed, you know, concerns to multiply and it is, you know, a matter of huge regret that we just weren’t able to get those publications done, and you will have seen in my statement lots of emails to DH, DHSC, encouraging them in stark terms to try to find the resource to publish faster.

Lead 5: In brief, it erodes public trust in the process?

Sir Gareth Williams: Yes.

Lead 5: Yes. That was in relation to PPE but there were also late publications of contract award notices for ventilators, weren’t there?

Sir Gareth Williams: Yes, yeah, that – we’ve covered that in my statement. That was a regrettable oversight. As soon as that was highlighted, we published the contracts. We’d already published all the cans(?), so the award notices, but we hadn’t published the redacted contracts partly because the CTT, the Complex Transaction staff, who were working on that, to be honest, don’t normally do actual procurement hand – you know, turning the engine themselves. They’re there to advise governments and it was just a slip-up and, as soon as we were alerted to that, they were published.

Lead 5: I was going to ask you for the reasons for it. You said regrettable oversight. I think in fairness to you we should look at table – the table at page 45 of your evidence, it’s Inquiry document INQ000497031. It sets out, as I’m sure you’re aware, you included it in your evidence, the rather, if I may say so, onerous or even counterintuitive or clunky nature of the contract award not requirements. Would you agree with that description of what was required and when?

Sir Gareth Williams: Yes, it’s overly complicated and allowed people to say, “Oh, well, I thought I had to do this but in fact” – so there’s a distinction made, my Lady, between central government departments and arm’s-length bodies, while, was SCCL an arm’s-length body because it belonged to DH or – yeah, anyway. And it’s complicated. Different dates for different scenarios and, over a period of time, colleagues published different PPNs clearing this up and it’s now – and the Procurement Act is crystal clear.

Now, the confusions in here to be honest, none of those readings of confusions would explain – we were late under any reading of this. I’m not trying to hide that. We were very late to publish, regardless of which column or box you pick on, on here.

Lead 5: The regrettable oversight was in part down to old-fashioned IT and data management tools, wasn’t it?

Sir Gareth Williams: No, the lack of publishing of the ventilator contracts I think was just an oversight. The complexity you talk about in DH was absolutely a part of that, reading everyone’s evidence, and at my understanding at the time, because the PPE Buy Cell weren’t allowed, for obvious reasons to join the MoD procurement system computer because that would have generated all sorts of security concerns, and neither were they allowed to join the DH system, and the SCCL system at that time – it’s been updated since – was – just didn’t have enough space for enough users.

So they were completely separate, and that generated finding the data problems that are talked about by my colleagues and in my statement.

Lead 5: All right. You’ve emphasised more than once in your evidence to us today the importance of transparency. Why was it that the Cabinet Office withdrew the transparency guidance in June 2021?

Sir Gareth Williams: It withdrew the one from 2019 and clarified it along the lines of the table that you just showed up –

Lead 5: I beg your pardon, you’re quite right. It was November 2017 is what it withdrew.

Sir Gareth Williams: Sorry, it withdrew the one from ‘17 and replaced it with a clearer version in 2021.

Lead 5: You say that the Act brings much needed clarity, as well?

Sir Gareth Williams: So under the old regime – yes. Under the old regime, the – you had to do contract award notices right at the start when you’re thinking about an award, and at the end when you placed a contract. And then, actually, when the contract timed out at the end.

Now, there are multiple, from memory a dozen, different contract notes you have to lodge at different stages in your procurement. Not only does the Act now require machine readable data, which is obviously much more transparent, anyone can look at that, but it’s in standard format, only one – unique identifiers, the gentleman talked about earlier different spellings for the MoD. We’ve got rid of all of that. We now have a machine which is basically a dropdown data safe, there is only one University of Sheffield, there is only one MoD, there is only one version of a customer, because we’re trying to clean up procurement data.

But it also, having a series of notices, as they’re called, allows anyone – my successor – to look through and say, “Hang on, there’s seven notices here, whether where’s the eighth?”, and chase up so it goes to – a couple of the comments from this morning about how do you ensure that the new transparency agreement is – arrangements are being put in place and that’s what Parliament has allowed us to do. It is much better.

Lead 5: From this morning, again as a reference to the evidence of Professor Sanchez-Graells, yes?

Sir Gareth Williams: But I think also – forgive me –

Lead 5: Mr Bruce?

Sir Gareth Williams: Mr Bruce touched on the same matter.

Lead 5: So did you hear Professor Sanchez-Graells reflections on the problem of enforcement within the new Act?

Sir Gareth Williams: Yes, that’s – my – my comments just now sort of go to that. We weren’t given by Parliament enforcement powers, but nonetheless, that’s a stepped series of notices, it will be easy to detect if there’s one missing or if one has not been submitted that should have been, which is the mechanism I had to adopt halfway through the pandemic to work out who had not submitted the appropriate transparency requirements.

So this will be much tighter in the new – under the new regime.

Lead 5: Well, detection is one thing, enforcement is another. You’d agree with the professor that there is a problem in that the enforcement mechanisms are inadequate within the Act?

Sir Gareth Williams: Well, I would say an alternative approach to that would be the NAO asking my successor every now and then to give them a list of which notice series hadn’t been completed and I think that would achieve much of what – I don’t speak for the professor – but that would drive adherence pretty quickly.

Lead 5: All right. I don’t think we’re going to discuss now the relative merits of the two routes but let’s move on to the call to arms, which is a matter that you deal with relatively extensively in your written evidence.

You were involved in the procurement of ventilators, as you’ve told us. There was a public call to arms for the supply of ventilators, wasn’t there?

Sir Gareth Williams: Sort of, but not in the same way as for PPE.

Lead 5: Not in the same way. But whatever it was, it resulted in a number of offers of support from businesses in relation to PPE, as well, didn’t it?

Sir Gareth Williams: Yes, because by that time I think the public had woken up to the idea that we were in a problem situation, to put it mildly.

Lead 5: You wanted to avoid a call to arms in relation to PPE of overwhelming the system, didn’t you?

Sir Gareth Williams: I was nervous about that. We got some 5,000 responses to the relatively limited call for ventilators, and I was concerned – and that nearly broke the back of the team processing them and I was concerned with PPE, which is a much more commodity item, that, as indeed turned out to be the case, we would be drowned in offers that we would then need to go through but which, regrettably, would probably turn out not to be worth pursuing.

Lead 5: There was eventually a call to arms in relation to PPE but, even before that, the Cabinet Office and DHSC were receiving high volumes of offers, weren’t they?

Sir Gareth Williams: Yes.

Lead 5: Before the call to arms.

Sir Gareth Williams: It accelerated.

Lead 5: It made it worse?

Sir Gareth Williams: It accelerated, yes.

Lead 5: As a result of the call to arms?

Sir Gareth Williams: I believe so but I could get you that data, but I –

Lead 5: Let’s have a look at – can we display INQ000497031, please.

And this is in your evidence:

“Many new suppliers responding to the pandemic emergency worked extremely hard to create successful products in a short timeframe, and this led to the success of the Ventilator Challenge. The very large number of offers for PPE, however, led to extreme stress on the procurement system …”

And then here are the numbers, which I didn’t expect you to recall, hence putting up the screen now:

“… approximately 25,000 offers were received from 15,000 suppliers in a period of only around 15 weeks.”

So the system was under enormous strain as it was?

Sir Gareth Williams: Yes, the point I was trying to make earlier is I think the initial series of offers for PPE that came in after the ventilator call to arms, much more limited, accelerated when there were – when there was a PPE call to arms. So that’s the point I was trying to make.

Lead 5: Now you’ve expressed your views on the risks of a – thank you very much for that display – on the risks of a PPE call to arms, but you were invited to express your view at the time, weren’t you –

Sir Gareth Williams: Yes.

Lead 5: – on that? And you did so, didn’t you? You said that your office replied on 23 March to state that you would support a call to arms for PPE but any if there was a dedicated mailbox for it, and a PMO team to triage the offers coming through effectively. And you made a series of recommendations in relation to it, didn’t you? Do you recall?

Sir Gareth Williams: Yes, not the individual ones but yes, absolutely.

I think it’s fair to say at that time a decision had been taken by ministers to have a call to arms, and I’m saying, “Well, okay, if that’s what you want to do, but please can we have this ready to go before you do it.”

Lead 5: We’ll bring it up on the screen if necessary but it may not be so. Your recommendations, perhaps on the basis that it was a fait accompli by then, included reducing the amount of human interaction by using a web form; yes?

Sir Gareth Williams: Yes.

Lead 5: Avoiding a situation where emails were going all over the place, and requesting details of product specification volumes and delivery dates.

And then yousaid this:

“… if it’s anything like the response to ventilators you will be inundated with offers, possibly even more given some of the items are less technical than others …”

And this is your commodity point, isn’t it?

Sir Gareth Williams: Correct.

Lead 5: So, picking up on the first point first, why was the advice that you gave to reduce the amount of human interaction?

Sir Gareth Williams: So with ventilators, what we were initially trying to get was a ventilator, a unit. Most of the 5,000 things that came back – offers that came back in, my Lady, were for bits, for components, which – useful but not that useful. That’s not an option with PPE. It’s either – it is what it is. I think the mask is a mask.

And so it was obvious we would need to be much more specific about the items that someone was offering, and that’s why the web form ended up with the questions set that it did.

Lead 5: Wasn’t it the case that you were anxious that those individuals responsible for triaging offers should be protected from the deluge by a web form, by the requirement that a number of specifications were offered by whoever it was that was making the offer at the outset, effectively removing the human burden on that paragraph of triage?

Sir Gareth Williams: Well, reducing it. I don’t think you were ever likely to remove it because, as you heard this morning, there are – the word “gown”, there are lots and lots of different flavours of gown, but it least it would, you know, do the first cut of what is being offered.

Lead 5: To your knowledge, was any of the advice in your joint Chief of Staff note followed in that call to arms?

Sir Gareth Williams: Well, we did end up with a web form. It went through a number of iterations.

Lead 5: But the call to arms proceeded in any event? You have indicated a moment ago that it was a fait accompli by the time you were giving advice, but a few days later the call to arms was made, wasn’t it?

Sir Gareth Williams: It was going to happen, then it was postponed, then it was postponed, then it happened. But there was – you know, if you remember the daily briefings, there was plenty of talk about the country is short of PPE. So everybody knew that this was –

Lead 5: Matt Hancock made the announcement that contained the call to arms, didn’t he?

Sir Gareth Williams: Yes.

Lead 5: Yes. And what was the effect of it? Were your fears well founded? What was the effect of those that were already experiencing a significant amount of pressure?

Sir Gareth Williams: Well, as the data that you put up shows, the call to arms worked in the sense that we got lots and lots of offers and we had to race to find more and more people to staff the PPE Cell in order to deal with those offers. And substantial backlogs built up, because we were not able to find enough people fast enough to be winning against the rate of inflow of new offers.

Lead 5: It consumed your team, didn’t it?

Sir Gareth Williams: Well, I think we ended at 500-and-change people in the team. So this is people from all over government that we were drafting in to do this work.

So if you meant by “[my] team” the Complex Transactions Team, yes, I mean – but there was 35 of them. This was multiples of that.

Lead 5: What you tell us in your evidence is that:

“Over the following days it became clear that the offers being referred had the capacity to overwhelm my office.”

Sir Gareth Williams: That’s a slightly different point. So initially, the – I think my office email was used before we had a web form. Then we build a web form, then we build a better web form. And that then meant that the offers didn’t go direct to the, by then, probably half a dozen people in my office who were triaging. But that was right in the early – that was in the early couple of days of the PPE offer period.

Lead 5: Can we display now, please – to get a sense of how it was experienced by those responsible for the day-to-day, so Chris Hall was an example, Max Cairnduff another example, could we have INQ000534626, please.

Do you see this email entitled “I dream about this stuff”?

Sir Gareth Williams: All of us had – I think that might have been alluding to the fact that none of us were getting any sleep. So yes, I remember that.

Lead 5: If we scroll down a little bit we can see Chris Hall writing:

“We have designed the least efficient process possible.”

Note the date, 13 April.

Secondly:

“The lag in the process and shipping is killing our demand signal.”

What do you understand by that?

Sir Gareth Williams: Okay –

Lead 5: He sets it out a little bit underneath there.

Sir Gareth Williams: So a couple of things about this email. What’s missing from this photocopy of it – so Chris blind copied me into that, so this was a discussion between him and Max.

So, as you heard today, the process that was put in place for the PPE was very linear: one team, then another team, and then another team.

Now, that is very good for stopping corruption because you would have to engage, you know, an individual person in all of those linear steps in order to get a corrupt response. We can – I’m sure we’ll come back to that. But there are lots and lots of hand-offs in that. So that’s what I understand Chris is meaning by “least efficient process”.

And it was shortly after this email that Chris and the team, Andy Wood and others, started thinking about the rapid reaction teams that you’ve touched on earlier, which are much more flexible but if you’re going to have a rapid reaction team, which they decided to organise by category, ie one team for gowns, one team for gloves, one team for mask, whatever, you need people in those teams who actually understand the product much more than you do if you’ve got a pool of people that you can access in the linear structure that we started with.

So that’s what I understand.

And the lag, we were being very slow. Weeks in some cases. I’m not across the detail but I’m sure Chris or Max or Andy will be able to give you the detail. We were taking weeks in some cases to process even the good offers.

Lead 5: And that’s crucial, isn’t it, because in a volatile market, in a competitive market, speed of processing of offers is absolutely crucial; that’s right, isn’t it?

Sir Gareth Williams: Absolutely.

Lead 5: Yes. Which means that any offer that is processed more quickly, by dint of that alone, will have a better prospect of succeeding in securing a contract. That’s the finding of the High Court.

Sir Gareth Williams: Yes, could I – perhaps I could put a little nuance on that?

I think the High Court was talking about the early stage of introducing it to the technical team. This is an unusual situation. Most procurements, my Lady, you put out a bid, you say what you want, and there are dates and then an order.

With this we were getting constant offers and DHSC was wanting to make constant offers. So there is an issue with – irrespective of speed, and we’ve done some analysis recently which you’ll probably want to talk to Chris Hall about, you need the offer to land at the same time as the requirement.

So suppose that a gowns offer had gone fast through the system, if it turned up the day before there was a gowns requirement, it wouldn’t necessarily have got – resulted in an order. On the other hand, one that turned up slower but after the requirement had been flagged might get “Aha!”

Lead 5: Well, let’s deal with that point –

Sir Gareth Williams: So it’s not like a normal system where there’s a – like a racetrack, it’s the first across the finishing line; there were being offered – there were being contracts placed repetitively every – well, multiple contracts every day I think for most categories.

Lead 5: There was internal guidance that recommended or that required the rejection of offers that were two weeks old or more, weren’t there wasn’t there?

Sir Gareth Williams: I think that was something within the technical approval stage, yes.

Lead 5: Yes. So you’re not suggesting that an offeror might benefit from delay in the processing of his or her offer, are you?

Sir Gareth Williams: I’m saying it’s much more random. It’s not a question of who start – everyone starting at the same time, who gets to the finishing line first gets the order. That’s not how it was. I wasn’t running the team, I wasn’t in the team, but that was my understanding at the time and remains my understanding.

Lead 5: Well –

Sir Gareth Williams: There were multiple offers coming in on different days and multiple orders being placed on different days, and so you needed your offer for whatever it was to match the demand for whatever it was on the day that that happened, and they might be weeks apart.

I think there’s a lot of – I think Chris has done some analysis recently, which I think the Inquiry has got. There’s a huge variation in the amount of time that offers took to get through the machine. So it’s not as deterministic as I think – I sympathise with what you’re saying, and in a normal race event that would be true but I think it’s a little bit more nuanced.

Lead 5: You’re not aware of any of those that chased for feedback on offers, asking that their offer should be slowed down, are you?

Sir Gareth Williams: So no, but neither am I aware of – which is not to say there weren’t any – the Inquiry has a lot more information than I had at the time and have now. But that’s why I tried to draw the distinction earlier between – asking for “Have you assessed this offer?” is annoying but legitimate, to – whereas “Place an order with that person” or “Speed that up” is not legitimate unless it’s a very attractive offer.

So there were days – I’m sorry for the lengthy answer, but there were days when, as I understand it, Emily Lawson got a demand signal from nurses in the NHS that, “Gowns are very urgent today, we’re about to run out”, or “Gloves are very urgent today”, in which case that would be a good reason for accelerating pulling things through the system.

Lead 5: We’ll come on to modelling in due course, but the reality is for a long period, so far as PPE was concerned, the practice was to acquire as much as possible as quickly as possible, wasn’t it?

Sir Gareth Williams: Yes, in which case the time that the order – the offer got there is not so relevant either.

Lead 5: Well, that’s – that’s not quite right, is it, Mr Rhys Williams, because those that made their way to the decision sooner than others, given that there is guidance that says “Two weeks or more, the offer is expired”, you’ve got to get to the decision-making process within two weeks in order to be in contention for a contract?

Sir Gareth Williams: I deferred to others on this but I think that two weeks related just to the technical assessment phase.

Lead 5: All right, well, we’ll wait, we’ll hear on Thursday from Mr Hall and from Mr Cairnduff. We can pick up these points with them.

But looking back, the call to arms was a mistake, wasn’t it? It was counterproductive?

Sir Gareth Williams: I can understand why it needed – why politicians felt it needed to happen but it had some very, very serious ripple – well, more than ripple, it caused huge problems, and a lot of the problems that the Inquiry is rightly looking into, I think, flow as much from that as they did from our lack of stock to start with.

Lead 5: Well, that’s a very, if I may say so, diplomatic if telling response. You can understand why politicians felt it had to happen. It was an announcement that was counterproductive in terms of the challenges of procurement at the time. That’s fair, isn’t it?

Sir Gareth Williams: Yes, the yield from the offers generated through the call to arms rather than getting the industry into a room, which is what we did with ventilators, I suspect was marginal.

Lead 5: It’s an example of ministerial pressure or ministerial interference proving unhelpful, isn’t it?

Sir Gareth Williams: Um, yes, I wouldn’t describe it as “pressure”. It was a decision that ministers took to engage the country.

Lead 5: Against your advice?

Sir Gareth Williams: Yes.

Lead 5: It’s even an example of ministerial deference as explained to us this morning by Professor Sanchez-Graells, isn’t it?

Sir Gareth Williams: I would say it was slightly different. I mean, there was no way on earth I could have stopped the Secretary of State for Health, you know, getting on TV to say what he said. Ministers are, you know, enabled to take those sorts of decisions.

Lead 5: No, the only practical way of doing so would be to be even more forthright in your advice or your caution? That would be all you could have done?

Sir Gareth Williams: Yes. The notes are pretty forthright, and I suspect he was getting similar – I don’t know this – similar advice from within DHSC. So he wasn’t my minister. So again, that’s – the government doesn’t work like that.

Lead 5: I want –

Sir Gareth Williams: It doesn’t quite work like that.

Lead 5: – to pick up with you the theme of different forms of pressure, we’ve looked at ministerial pressure it’s one of the forms I wanted to ask you about. Procurement teams, particularly at the start of the pandemic, were under enormous pressure to make progress and secure PPE, yes?

Sir Gareth Williams: Yes.

Lead 5: Now, I am going to suggest to you that that pressure can be thought up in the following four categories: frontline staff pressures, ie the obvious pressure that arises from the vital need to supply those on the frontline with urgently needed PPE. Yes?

Sir Gareth Williams: (No audible answer)

Lead 5: Ministerial pressure, and we’ve touched on that. Political pressure which is slightly distinct, and then pressure from the media?

Now, clearly, first and foremost is the frontline staff pressure. I’m not going to develop that with you. I see you nodding, you’d accept that that is first and foremost.

Sir Gareth Williams: Everybody was watching the videos from Newsnight and knew exactly what the problems were and how ghastly it was.

Lead 5: You have referred several times in your statement to ministerial pressure, examples are at paragraphs 38, 103, and so on. You yourself paint a picture of ministers and the media generating real pressure for those procuring PPE to demonstrate progress. That was the day-to-day experience, wasn’t it?

Sir Gareth Williams: Yes, but I – but I don’t believe that was on specific orders, it was “Where is the PPE?”

Lead 5: Did it result in being a distraction from the important task of actually assessing offers and negotiating sensible contract terms?

Sir Gareth Williams: I don’t think the media was a distraction, the civil servants aren’t allowed to talk to the media, so it was a constant reminder of the state of the country, and the state in hospitals, you know, and people were dying. So that generates a lot of pressure. But ministerial pressure, translated into chasing – and I wasn’t in the team, so I defer to my colleagues – but my understanding at the time and now was that that was “Have you processed this offer?”, rather than order it from this person. And that – so I think that – you need to distinguish between noise and pressure, perhaps.

Lead 5: Well, you made that point earlier but let’s take that example. You had an offer that comes in, say, through the High Priority Lane. It’s followed-up by a request for feedback. There are also many offers that confirm in that our outside the High Priority Lane, yes?

Sir Gareth Williams: Yes.

Lead 5: They, of course, are not followed up with any request for feedback. There is no referrer for those offers unlike in the HPL?

Sir Gareth Williams: I’m not sure that’s true because the large offers that came through on the non-HPL would rapidly have become known to people and so would have generated, you know, where have we got to on that one? That looked like a good one. But it was perhaps from a different set of people. I don’t know. Again, I defer to my colleagues on that.

Lead 5: But even if, as you say, the request for feedback was not to the point of, you know, strike a contract here but, rather, “What is the state of play in relation to this offer”, that request for prioritisation could quite easily have proved a distraction to the task of assessing offers in the round against all the data that was available. I mean, you must agree surely –

Sir Gareth Williams: Yes.

Lead 5: – that it may have had that effect?

Sir Gareth Williams: It was completely a distraction and that’s why I think the idea behind the HPL, I wasn’t involve in setting it up, but I think the idea was to have a single point manned by rather more senior people than were in the – than were generally found in the Opportunities teams to be able to put all that in one place.

If the Inquiry accepts that the chasing was inevitable, the alternative was to distribute the referred offers across the eight Opportunities teams, in which case the questions would still have arisen but they would have been harder to respond to and probably, because there were more junior people in the other Opportunities teams, I suspect, you know, that the effect that you allude to of, “Does this generate action”, would have been more of a risk than the way that we did end up with it. Again, I defer to my colleagues on that.

Lead 5: All right. I said that I was making a distinction between ministerial and political pressure. Could we now please display INQ000088672, and just have a look at paragraph 3 of this. It’s minutes of a cabinet meeting 4 May 2020. Paragraph 3:

“DHSC to produce, by close on Tuesday, 5 May, a plan which sets out:

“A proposition for the definition of the PPE test.

“A clear and credible set of steps that will be taken to meet the PPE test.

“And a forecast of when the PPE test will be met, including an assessment of whether the test can be met by the end of the week. This plan should be consistent with the data picture set out in the CCS dashboard.”

Was that sort of test and, once it had been set, the requirement to meet that test, helpful, in your view?

Sir Gareth Williams: So I wasn’t at that meeting and I don’t think I would have seen that minute until it showed up in the evidence packs. I believe that the test that they’re talking about there is the “Have we got four months” – sorry, my Lady – “Have we got four months of stock of everything”, which was a key test I believe that the Prime Minister had set before releasing lockdown.

I think I should also clarify, CCS in that sense of the word there does not mean Crown Commercial Service but rather means Civil Contingency Secretariat.

Lead 5: All right, understood. Okay, so that’s your answer in relation to that document.

Sir Gareth Williams: Yes.

Lead 5: Yes. So far as media pressure was concerned, you were aware of significant media scrutiny. In fact, you referred to it earlier in relation to the GIAA reports, and what you described as negative media attention. That’s paragraph 38 of your statement, yes?

Sir Gareth Williams: Yes, the media, there were a lot of stories in the media about PPE buying.

Lead 5: Would you say that concern about public perceptions regarding the progress in buying PPE consumed a lot of government time and energy during the pandemic?

Sir Gareth Williams: Well, government – well, yes, because the media does consume a lot of government time.

Lead 5: But by those who were responsible for procuring, were they placed –

Sir Gareth Williams: I’m sorry, could we let me know which document you’re looking at?

Lead 5: No, I just asked you a question. You refer at paragraph 38 of your HPL statement – I don’t have an Inquiry document number.

Sir Gareth Williams: I’ve got it here.

Lead 5: You’ve got it? Great.

Sir Gareth Williams: 38 is talking about the rapid response teams?

Lead 5: No, I’m talking about media scrutiny, or paragraph 88.

Sir Gareth Williams: Aha, sorry.

Lead 5: Inquiry document INQ000531549.

Sir Gareth Williams: I’ve got 536362.

Lead 5: If we start at 38 at then move on to 88.

Sir Gareth Williams: So 88 talks about overwhelming number of offers, but that’s in my HPL statement. I’m so sorry.

Lead 5: I’m sorry, INQ000536362.

Sir Gareth Williams: Yes, which paragraph, sorry?

Lead 5: Unless they’ve changed, it’s 38 and 88.

Sir Gareth Williams: The one I’ve got –

Lead 5: Paragraph 38.

Sir Gareth Williams: Ah, page 38. Sorry.

Lead 5: It’s now 39.

Sir Gareth Williams: Sorry, your colleagues have put up page 39.

Lead 5: No, paragraph 39, page 15, forgive me.

Sir Gareth Williams: Ah.

Lead 5: “A hot political issue”.

Sir Gareth Williams: Possibly that’s political with a small “P”. There was a discussion at the time – sorry, I’m just reading this but my memory of that meeting was there was a discussion at the time as to whether PPE procurement should move from DHSC as being the lead department to the Department for International Trade, and the Cabinet Secretary was Mark Sedwill at the time, called the meeting to discuss that. Well, there were several meetings to custody that.

I mean, it was a “hot Political issue” with a capital “P”, meaning ministers as well, but at this – what I intended to say here was, you know, there was some debate internally as to how – who should lead on this.

Lead 5: You say at 89, I don’t know if you’ve got paragraph 89 there:

“In such a situation it was perhaps inevitable that individuals who had PPE and were wanting to sell it to the UK would do what they could to bring that to the attention of those with power in the administration, ministers, MPs and senior civil servants, including using any links or contact details that their company might have.”

That really is the genesis of the HPL, the High Priority Lane, isn’t it?

Sir Gareth Williams: No. So, yes, any supplier, whether for good reason or bad, will try to get to the highest decision maker, or as they perceiver it, point that they can in order to say, “I’ve got this stuff, it’s really good, you should buy it”, and there were lots of very well-intentioned people who did just that, and also quite a lot of bogus offers in that way. The HPL arose from what happened next, which was once ministers or other offices or other officials’ offices had referred those, often with a just ‘Over to you’ type of referral note – colleagues can talk about those, and you’ve, I think, got examples – the HPL was in response to then the chasing calls to, “What has happened to the thing we sent you three days ago? Have you” –

Lead 5: That’s right –

Sir Gareth Williams: It wasn’t the action of the suppliers, per se, that generated the HPL, it was the chasing subsequent.

Lead 5: It was the referrers, that – to put it bluntly, because the referrers were relatively demanding, the High Priority Lane was set up?

Sir Gareth Williams: Yes.

Lead 5: Yes.

And we see that from Inquiry document INQ000498337, or at least we see an indication of the origins of the High Priority Lane. Email from Mr Wood.

Does it go over on to a second page? If we could scroll down, please. That’s it.

“Another action I took was to advise Lord Agnew if we could fast track ministerial/seniors emails regarding offers of help that they were sending through. We have developed a public pro forma – very simple, that automatically populates our database. We may change that by providing a field that alerts us to a ‘ministerial/seniors link’ but we need to do this carefully so as to avoid ministers inboxes being clogged up with scammers claiming association. In the meantime, and for Lord Agnew please send ‘hot’ leads to myself.”

Do you – is that consistent with what you understand to be the origin or the genesis of the High Priority Lane?

Sir Gareth Williams: Yes, I can’t see the date on this but I suspect that was at the very – at the very start. The –

Lead 5: If we scroll through –

Sir Gareth Williams: The public pro forma I think they’re talking about is the web form –

Lead 5: 25 March.

Sir Gareth Williams: Yeah, so right at – right at the start. The problem that this generated, or of offers coming directly into someone’s office, is that they were bypassing filling out the pro forma, and therefore there was different – we had to get hold of that information or somehow populate that ourselves in order to know exactly what they were talking about. So I think that’s what he means by the pro forma there. But Andy will be able to – I don’t think I saw this at the time.

Lead 5: Now, I think I’m right in saying that in your evidence, the only concern you express about the HPL is in relation to its name; is that right? Is that fair?

Sir Gareth Williams: No. The problem we had anyway is, once you have, as I’ve said earlier, a China team, a Make team, several Opportunities team, is that we are already in dangerous territory from a point of view of fairness, because inevitably there are different routes, and that is not what you should strive for.

And that – but that flows directly – hence my comments about the number of offers and the call to arms. One flowed from another. We just couldn’t put all of those offers through a single channel. So we were already in a “How do we handle this? We are in, you know, tricky territory from a fairness and consistency point of view.”

Lead 5: But that’s a slightly different point to the one I was asking about. What were your other concerns about the High Priority Lane? It’s name was one of them, wasn’t it?

Sir Gareth Williams: Well, yes, it was – that it’s another, another different route.

Lead 5: You were concerned that the name would suggest that the buying process favoured a particular subset of sellers?

Sir Gareth Williams: Yes – sorry, yes, I don’t have my list in front of me. There’s a whole list of things I was worried about. Principally that it would give the wrong impression to everybody.

Now, calling it a “high priority” – so important to recognise, I think, the word “lane” was only introduced by the NAO when they did their report some months later. At the time – colleagues will know better, and can talk to my Lady more about this – it was called the “VIP” or whatever – whatever, or “high priority”. Now, that is helpful in, frankly, calming down an irate multinational chief executive who has written to their MP or whoever. It is very unhelpful in the context of we’re discussing it here for exactly the reason we’re discussing it here.

Lead 5: You were also concerned that it was a “very important person” rather than “product” lane, weren’t you?

Sir Gareth Williams: Well –

Lead 5: The focus was on an individual person rather than the product being offered?

Sir Gareth Williams: Well, that was my concern, that that would be the implication of the word “VIP”.

Lead 5: But that was certainly the appearance?

Sir Gareth Williams: Yes, and I think – I’m afraid I was right. It would have been better, had we been able to do it, to have a team who just handled the handling aspect of these chasing completely separate from anyone involved in procurement. Not staffed by any staff with the procurement qualification. That, I think, would have shown a firebreak between chasing and progressing. But at the time, we didn’t have the people and things moved too fast.

Lead 5: You were right that it would give rise to the appearance of preferential treatment to certain individuals. We’ll move on tomorrow to whether there was any actual preferential treatment as a result of the VIP or HPL, the VIP Lane or the High Priority Lane. But before we – if we could just finish on one point – I note the time.

In relation to the concerns you had about the name, just the name, did you act upon those concerns?

Sir Gareth Williams: Yes, so I got a call about this around, I think – you know, shortly after it was set up, and, as I described it to other colleagues, I think my first reaction was Anglo Saxon in expression, because of the risks that we’d talked about. And I asked if we could change the name and I was told no, this is already set up and running, it’s been communicated out to other offices, you know, it is what it is.

So at the time I was, you know, running the ventilator programme, you know, full pelt, but it was very clear, you know, that ship had sailed.

Lead 5: Well, you had a two-minute conversation with Dame Emily Lawson about it, didn’t you?

Sir Gareth Williams: No, I – well, I can’t remember. I didn’t note who I was talking to. I mean, I remember it was a discussion as I walked from my kitchen to my office, and it was “We’ve been asked to set up a lane, you know, a team called the High Priority team or the VIP team”, I can’t remember the exact –

Lead 5: You say at 47 of the same statement, your 14 January statement, which I’ve described as the HPL statement, INQ000536362:

“I do remember asking if we could do something about the name, however I was told that it was too late as it was up and running and widely communicated. If it had been called an ‘enquiry response handling’ team or similar, I think it would have avoided a lot of the negative implications and consequent interest which has arisen since. I cannot recollect whether I expressed my surprise verbally or in a text or email, but since I cannot find an email relating to this at the time [there it is up on the screen] … I note that in January 2021 I made a similar point by email …”

That was the extent of what you attempted to do about its name, wasn’t it?

Sir Gareth Williams: Yes.

Lead 5: And you had no objective basis, did you, for concluding that offers that came in via the HPL, that referred in to the HPL, were better or worse than offers received by other ways? You had no objective basis for concluding that, did you?

Sir Gareth Williams: I think the smaller – sorry, the non-priority lane, the other lane – again, colleagues who were actually working those cases would know this much, much better than I do – but my impression was that a lot of those were for very small amounts. Some people offering to hand-make scrubs, which was brilliant and helpful, but was never going to do it. So it was much more likely, I thought at the time, that corporates would have asked someone in their office to find the email of the minister or the officer – I mean, these are available on gov.uk.

So – but that was the limit of how I thought about it.

Mr Wald: All right.

My Lady, I note the time, would that be a convenient moment to adjourn?

Lady Hallett: Certainly.

You’ve obviously been warned; I do try to avoid having witnesses come back overnight but I’m afraid it proved impossible. I did ask some time ago whether we could get through you in one day, but I hope you don’t mind coming back tomorrow.

The Witness: No, no problem. These are important matters.

Lady Hallett: Thank you very much indeed. I shall return for 10.00 tomorrow.

(4.31 pm)

(Hearing adjourned until 10.00 am the following day)