Are you contracting with the UK government? New Tussell Report reveals the impact of the pandemic on public spending

The COVID-19 pandemic has had a significant impact on public spending in the UK. 

From ventilators and PPE equipment to free school meals and laptops for school children, emergency goods and services have been required to help the public sector deal with the pressures of the crisis and alleviate its impact on communities. 

As a result, contracts for goods and services have been awarded on an urgent basis, without a competitive tender process. As discussed in our recent blog, the procurement rules allow for this in certain circumstances, including where there is 'extreme urgency' brought about by unforeseeable events.

The scale of the disruption to public procurement is revealed in the recently published Tussell Report. 

The key findings of the report are as follows: 

• Urgent procurement: £1.7bn worth of contracts have been awarded to help the government deal with the COVID-19 pandemic, and the bulk of these have been awarded without a competitive tendering process.
• Central government procurement: the pandemic response has been centralised, with the vast majority of contracts (more than 90 per cent in value terms) having been awarded by central government.
• Types of contract: the majority of 'COVID-19 response contracts' have been for food, PPE and testing.
• Big winners: a number of companies have been awarded more than one large contract. For example, one consultancy firm has been awarded seven contracts to support the COVID-19 public sector response, while two medical firms have each won six contracts. Several freight companies have also been awarded multiple contracts.
• New suppliers: perhaps given the novel circumstances and the nature of the procurement requirements, a significant number of 'COVID response' contracts (25 per cent overall) have been awarded to companies that have never before supplied the public sector. 
• Recovery in public procurement: following a dip in the first few months of lockdown, public procurement in the UK is now on the rise, and it is expected that the next few months will see an increase in the number of contract opportunities.

While this is a valuable insight into the government’s emergency procurement activities, gaps in the data remain. In particular, nothing has yet been published by the government in relation to the creation of Nightingale hospitals or the human contact tracing programmes.

What should government contractors be doing?

While the potential increase in contract opportunities represents a glimmer of hope for contractors, the Tussell Report warns that disruption to current and future procurements is likely to continue for the foreseeable future. 

The report sets out a number of things that contractors can be doing to maximise their chances of being awarded a contract in the meantime.

In order to best position themselves in this climate, suppliers are advised to explore whether extensions to existing contracts might be possible within the limits permitted by procurement law. 

Both existing and potential suppliers are encouraged to proactively reach out to public authorities where they think they can support their response to the crisis.

Scrutiny and challenge to contracts 

Calls for a public enquiry into the government’s response to the pandemic are mounting, and the public sector’s procurement activities are likely to be a focal point of any such enquiry. 

Any directly sourced contracts identified as part of this process are likely to face a high level of scrutiny, in particular by former or potential government contractors who may otherwise have bid for those contracts.

In the event that direct awards continue at a time when it may reasonably be said that the virus and its effects are no longer unforeseeable, those companies who have lost out will no doubt be considering their options and their grounds for bringing a bid challenge.

Our briefing (PDF) sets out the steps that should be followed by those considering challenging a direct award, and those to whom a contract has been awarded directly and who are seeking to protect their position.