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Covid

How the Government sourced PPE - an inside view

18 replies

YouShouldKnow · 12/08/2020 15:49

If you've been horrified by how PPE contracts were awarded, by the sheer waste of public money and the croneyism that has diverted funds from where they were most needed into the pockets of the wealthy, please take a moment to read the following. It could have been so different. People tried to help. The UK could have been at the head of the queue and had the most favourable prices. They chose instead to award contracts to inexperienced companies and their friends and advisors. You have every right to be angry. It's worse than you thought.

That the UK was woefully ill prepared to provide PPE to NHS staff and Key Workers during the pandemic is in itself a national shame. With the details that are now coming to light about how contracts were awarded, who benefited and how those contracts have been fulfilled, it is elevated to the level of monumental scandal.

Based on what is now known about stockpiles of unusable masks, contracts awarded to governments advisers and the sheer waste of money and resources, opposition MPs are calling for inquiries, campaigners are asking for accountability and legal challenges have been launched. This response is, in part, based on guesswork and supposition given the lack of transparency in how these emergency orders were effected. The reality is even worse than feared.

The vast majority of the world’s PPE is manufactured in China where I have lived and worked for the past decade. Images of NHS workers in makeshift masks and wearing bin liners in a desperate attempt to protect themselves were truly distressing. We have very personal reasons to be thankful to the NHS – it’s the one time when saying “they saved my life” is not an exaggeration. We had time on our hands, extensive local knowledge and a wide-ranging network of friends and connections that we could call on to assist, so we decided to take action.

My daughter and I spearheaded an effort utilizing China based trading companies with export licenses and experience of customs documentation, procurement agents and shipping companies (who generously offered to ship PPE for free) and we mobilized an army of our staff and friends to hit the phones and track down production capacity and pricing on the items that were needed. Armed with good intentions, we amassed a considerable skill set of experienced business professionals ready to put their skills to use. Moreover, and importantly, we were on the ground in China (which closed its borders to foreigners on March 23rd) so we were able to negotiate in Mandarin and in person.

The situation in the early months, March and April, was difficult but not impossible – certainly not impossible if you spoke Mandarin and actually knew what you were doing! There were horror stories during the earliest weeks of the pandemic but the Chinese government swiftly enacted laws to close down the new rogue factories that had sprung up, to ensure that only genuine shipments were passed through customs, and verify both the certification status of local suppliers and the companies that were importing to other jurisdictions. From April onwards, given the laws passed here, the phrase Let the Buyer Beware was never more appropriate – if anyone was burned on a contract, it was due to their own inexperience, greed or stupidity.

We found factories making certified products with established reputations, who had production capacity and who were, in line with government orders, offering detailed production schedules and, relative to circumstances, reasonable prices. We verified each one and negotiated delivery times and price and then armed with this information, we began to contact the UK: direct emails to the Cabinet, the department of Health, Education, Transport, NHS management, Science Advisors, Health Trusts, care homes – anyone who might be in need of PPE and was finding it difficult to source. We offered:

• Factory Prices – we viewed this as a humanitarian effort not a profit making scheme
• Constant monitoring and renegotiating of prices as they were changing daily
• Quality Assurance – we had staff who were used to over-seeing factory production in all of the major manufacturing bases
• Pre-Shipping checks through a bonded warehouse – we could check the orders before any payments were made to the factories
• Customs Documentation and Clearance – getting shipments through the ports remains to date a bureaucratic process subject to delays
• Free Shipping – one of the major shipping companies offered to donate free transport and shipping to hospitals and medical personnel.
• ON THE GROUND SUPPORT – China has been closed to foreigners since March 23rd. We were here, able to inspect factories and visit customs offices personally
• Our services would cost NOTHING –

And we heard NOTHING…

The only direct response we had was a call from a lovely lady from the NHS (Slough from the phone number) who had been tasked with making calls. She was clearly overwhelmed, exhausted and entirely frustrated with having been tasked to call numbers in Asia. She seemed relieved to find someone with whom to speak English and my daughter and I spent a while telling her our story and how we wanted to help. We repeated our offer to put our resources at her disposal – to use our local knowledge to source direct from factories at local prices. We also added that if she needed help, she could call or email us and we could make the calls for her, given the language barrier and time difference. We had contacts all over China who could help her. She was genuinely grateful and thankful and said how much of a difference this could make – given that her colleagues were still waiting for supplies.

And again, we heard NOTHING…

In retrospect, it seems very clear that the government set up procurement websites in order to appear to be operating fairly and with transparency. It now seems that contracts were awarded for many reasons but fiscal responsibility and transparency never came into the equation.

The failure to understand the situation on the ground here has led to some disastrous decisions. If the government had been aware of the regularly changing requirements and daily changing pricing, they would NEVER have awarded contracts for a year. Firstly, companies that offered production from new manufacturers in March, would be entirely unable to fulfill those contracts on the basis offered from April once the Ministry of Commerce finalized their new policies.

Prices changed DAILY – this was Wall Street not Walmart! In April/May there was a buying frenzy and N95/KN95 masks were available from the factories at $1.45 to $2.10 (approx. £1.10 to £1.60 at current exchange rates) By the end of May, early June this was tumbling to around $1.20 (92p). Today those same masks are available for less than 60 cents (46p).

Last month, Nitrile medical grade gloves were c. $9 per box of 100 (£6.90). Today they are less than £5. Are the government locked into yearlong contracts at the top end of the market pricing???

The Good Law Project which currently suing the government for its mismanagement quote a statement from the government (Liz Truss’s department). The government denies that surgical masks were available from 39p to 46p at the height of the bidding frenzy and insists that the prevailing market price was 64p.

THIS IS CATEGORICALLY UNTRUE: FACTORIES were selling IIR 3 ply surgical masks with full CE and FDA certification at this point for 35 cents (27p) for medical grade and 27 cents (21p) for civilian use at the height of the pandemic. I have dozens of price quotations to prove it.

These same masks are now available at over 10 cents per unit less.

Are the Government/PHE locked into contracts with fixed pricing? Fixed at the point of highest demand and lowest supply? Will there be a downward movement now that prices are falling?

An interesting point to note, is that anyone familiar with China’s export regulations and the Ministry of Commerce announcements during March and April, would know that a Hedge Fund, a Confectionary Company and a Pest Control Firm, would not legally have been able to export PPE from China. Only companies with a history in the industry and importers with a verified end-user (ie not for re-sale) objective were actually permitted to export. Those regulations remain in force. That being the case, how are these contracts being fulfilled and is the hedge fund simply taking a cut for sitting in the middle???

Who is vetting the factories with whom these companies made hasty deals?
Moreover, who funded the 30-50% deposits that factories require to commence production. Certainly the Pest control and confectionary companies seem to lack the resources to do so, as did Andrew Mills Prosper Mills Company. So again, if the government were bearing the full weight of payment and liability, what were these middlemen actually doing to earn their very large share?

The UK government funds trade missions in China, but the consulates have not been staffed since March. Even the Embassy in Beijing maintains only a skeleton staff and calls are diverted to the FCO. Could those staff not have made a phone call or two? Surely they would have the experience and language skills to understand the situation and procure PPE. We offered to do it for free – to put our own resources and staff at the government’s disposal and source PPE at factory prices. Our offer was not even acknowledged. Could that be because, having removed the element of profiteering from the equation, no one in a position of power or influence could actually gain financially from the transaction? Scammers, opportunists the most corrupt have all sought to profit from this pandemic. We’ve encountered horror stories and seen the worst in people. We’ve also seen kindness, humanity and people genuinely motivated to help. Where does the UK Government’s handling of the billions of pounds of taxpayer resources fit into that scale? We may never know given that they have broken their own rules regarding publishing contracts and awards, preferring to keep the details hidden.

It’s a question that needs to be answered as a matter of urgency and national interest.

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Barbie222 · 12/08/2020 16:03

It's a fucking disgrace, and I've already supported the crowdfund for the Good Law Project. Did you apply through the procurement website? I hope this topples Johnson in the end.