Ministers and government officials played “fast and loose” when awarding £777m in Covid contracts to a healthcare firm that employed the Conservative MP Owen Paterson as a lobbyist, the head of parliament’s spending watchdog has said.
In a damning report, the House of Commons public accounts committee (PAC) concluded that the government made a series of failures, making it impossible to know if the contracts had been awarded properly to Randox.
The Department of Health and Social Care did little to deal with potential conflicts of interests despite “clear concerns” about Randox’s political connections, the cross-party committee of MPs found.
It added that officials were aware Paterson had been in direct contact with Matt Hancock, who was then the health secretary, while promoting Randox.
The MPs found that Randox made “substantial” profits after it was given the contracts to carry out Covid testing during the pandemic.
The firm’s profits in the year to June 2021 were “more than 100 times greater” than the previous year, according to the PAC, which questioned whether they were excessive.
In its latest accounts, Randox reported a profit of £177m for the year to 30 June 2021. The MPs said this compared with a profit of £1.2m that Randox reported for the 18 months up to 30 June 2020.
A Randox spokesperson accused the PAC report of being “deeply flawed and wrong in assumptions it makes and the conclusions it draws”, and added the firm had issued a legal complaint.
He said: “At no stage, either during its deliberations or in its preparation of this report, did the PAC make any contact whatsoever with Randox. Consequently many elements of its report relating to Randox are false, based as they are on wrong and unchecked assumptions about the company.”
A spokesperson for the company has previously said Randox contracts were awarded in full compliance with government procedures and protocols in place at a time of the emerging pandemic.
The PAC also concluded that the health department did not keep proper records of why it gave the contracts to Randox, nor of what happened when ministers met the company. The department was approached for comment.
The publication of the report comes after Randox and Paterson were accused of cronyism in parliamentary debates. Randox paid Paterson, then MP for North Shropshire, £100,000 a year.
The former cabinet minister was forced to resign from parliament last November after he wrongly used his parliamentary position to lobby for his clients, including Randox. Evidence of his lobbying had originally been uncovered by the Guardian.
The Liberal Democrats won the subsequent byelection, and the lobbying saga – including attempts by Boris Johnson to force his MPs to change the rules to protect Paterson – contributed to fury within the party and among voters, which ultimately led to the prime minister’s downfall this month.
Between 2010 and 2018, Randox donated £160,000 to the Conservative party. During the pandemic, Paterson directly lobbied Hancock on behalf of Randox. After Paterson’s lobbying, Hancock chased his officials, saying he was “very worried” about how his department was treating Randox and other firms.
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The PAC concluded that the department’s “woeful [and] poor record-keeping means that we cannot be sure that all these contracts were awarded properly. Even allowing for the exceptional circumstances at the start of the pandemic, basic civil service practices to document contract decision-making were not followed.”
It said that the health department neglected to scrutinise obvious conflicts of interest when it awarded the contracts, even though officials knew of Paterson’s contacts with Hancock.
Between January and October 2020, Paterson and Hancock exchanged messages eight times over private email or WhatsApp while the MP promoted Randox. Hancock has said he did nothing wrong.
The MPs said officials were also aware that Hancock had received hospitality from Randox in 2019 when he stayed overnight at a country estate owned by the head of the firm. Hancock said he did not need to publicly declare this hospitality.
The health department was also criticised for failing to meet the basic rule to publicly declare meetings between ministers and outside firms. Only four out of the eight meetings between Randox and health ministers were made public as they should have been. Records of what was said at only two of these meetings were kept.
At the start of the Covid pandemic in March 2020, the health department gave the first contract, worth £133m, to Randox without allowing any other firms to bid. The government had suspended normal rules for awarding contracts as the pandemic was deemed to be an emergency.
The PAC said the award of this contract did not receive “the scrutiny we would expect from the department’s senior civil servants. The role of the department’s ministers in approving the contract was also confused and unclear.”
The MPs added: “Randox struggled to deliver the expected level of testing capacity against its first contract, which did not set out any performance measures. Yet the department still awarded Randox a contract extension worth £328m seven months later, again without competition.”
Meg Hillier, the PAC’s chair, said: “We repeatedly hear the reference to the crisis we were facing as a nation. But acting fast doesn’t mean acting fast and loose.”
She added that “much of the business was won without any competing tenders from companies who may have had better capacity to deliver”, pointing out that Randox had also been given money to pay for equipment to conduct the testing.
A spokesperson for Hancock said: “Randox was the UK’s largest testing provider. Not to work with them during this unprecedented global pandemic would have been a dereliction of duty.”
The Department of Health and Social Care said:“There is no evidence that the government’s contracts with Randox were awarded improperly, as has been concluded by the National Audit Office.
“To suggest otherwise is misleading. By building the largest testing industry in UK history from scratch and at pace, we were able to break chains of transmission and save tens of thousands of lives. Contracts with Randox and other suppliers made a significant contribution to our national response to Covid.”
