Life-and-death PPE was just another source of profit in “Wild West” procurement system

This is news from the ‘first wave’ of Covid-19.

It updates our August 2018 blog post about new NHS supply chain contracts. The ill-advised, confusing Future Operating Model that underpinned the new NHS Supply Chain contracts has had predictably disastrous consequences for the supply of PPE during the pandemic. By September 2020, the NHS Supply Chain Chief Exec had resigned.

The new NHS Supply Chain contracts included a subcontract from Unipart to Movianto UK. At the time, Movianto UK was a subsidiary of the US firm O&M Inc, which has healthcare logistics experience in USA and Europe. O&M Inc have since sold Movianto UK to a French company, EDHD. The blog post explains why this matters.

We Own It is now campaigning for the government to return the NHS Supply Chain to public ownership. (Update 25.11.2020)

On 12.1.2022 the High Court ruled that the Government’s parallel PPE ‘VIP’ supply lane for politically connected suppliers, set up in April 2020, was ‘unlawful’. (Update 12.1.2022 – more info below)

Everyone will surely remember the horror and confusion over lack of Personal Protective Equipment (PPE) for NHS and care workers that went on for months at the start of the Covid19 pandemic in the UK.

It’s Matt Hancock at the Dept of Health and Social Care who has messed up over PPE provision – that’s where responsibility for the NHS Supply Chain sits.

Contract for UK’s pandemic equipment stockpile handed to subsidiary of US health company

In the summer of 2018, at the same time as it issued new NHS Supply Chain contracts, the Dept Of Health and Social Care gave Movianto UK the £55m contract for the management and the distribution of the UK’s stockpile of personal protective equipment (PPE) for use in a pandemic.

A notice for the new NHS contract for the pandemic stockpile management and distribution stipulated that the contractor would be required to maintain “a ready state for deployment in the event of a pandemic event”.

The emergency stockpile is made up of around 52,000 pallets of equipment worth an estimated £500m. While it contains antiviral medicines and flu vaccines which are of limited use against Covid-19, the bulk of stocks are said to be PPE and hygiene products. Much of the stock needs to be frequently monitored, updated and stored in temperature–controlled conditions.

Was the Cabinet Office asleep on the job?

Movianto entered into business with a property developer, Oliver Morley, to build a vast warehouse in Merseyside to store and, if/when necessary, rapidly distribute the pandemic stockpile’s hundreds of millions of face masks, aprons, gowns, gloves and body bags.

Meanwhile, the pandemic stockpile was to be temporarily housed in another warehouse, also owned by Morley, in Knowsley.

The Guardian reported that Movianto’s plans were apparently approved by the Cabinet Office.

If so, the Cabinet Office overlooked Morley’s history of high profile business disputes. For instance, in a prominent lawsuit against RBS in January 2019 he claimed the bank’s controversial restructuring group placed him under duress by seizing his assets after struggling to repay a £75m loan. A high court judge noted Morley used the “borrowed personal wealth” to spend on “South African mining investments, property, cars, a yacht and a jet”.

For its part, Movianto has said its decision to enter into business with Morley was “made by executives no longer associated with Movianto”.

Legal disputes between Movianto and pandemic stockpile warehouse developer

It’s hardly surprising that the company wanted to distance itself from the decision, because Movianto was soon in legal disputes with Morley that culminated in a threat by the developer to “lock the gates” and prevent Movianto employees from accessing the warehoused stock.

Movianto quickly secured a high court injunction in March 2019 to ensure continued access to the warehouse.

The new warehouse was finally completed in July 2019 and acccording to a government source, the transfer of the UK’s emergency PPE supplies to the new warehouse was completed by the end of August 2019.

Morley’s company, Industrial North West, was forced into administration as it “failed to comply” with the conditions of a £61m loan facility. In October 2019 Warrington council bought the warehouse for £45m.

US company sells Movianto to French family firm

In early April 2020, the US health company Owens & Minor Inc sold its subsidiary Movianto UK for $133m (£107m). This was shortly after the UK government had instructed Movianto to start mobilising the PPE supply.

With the sale of Movianto, custody of the UK’s PPE emergency stockpile passed to EHDH in France – the company which bought Movianto UK. After the completion of the merger of EHDH and Movianto in June 2020, the company was renamed the Walden group. The merger makes the company

“the European leader in transport and logistics services for the pharmaceutical sector”.

Privatised NHS Supply Chain falls to pieces

Amid all this chaos, towards the end of April 2020 the Health Service Journal reported that an NHS regional procurement lead likened the PPE procurement landscape to the “Wild West”, in which some people were acting like “international arms dealers”.

It added,

“The NHS Supply Chain usually runs PPE procurement and distribution, but the process is being managed by the government in cooperation with the military and NHSE/I.”

Update 12.1.2022 The High Court has ruled today that the Government PPE ‘VIP’ lane for politically connected suppliers was ‘unlawful’

The High Court ruling (Background facts: The PPE Cell) explains that once the Covid-19 pandemic hit, and the need for PPE soared, the Cabinet Office activated an emergency section of the 2015 Public Contracts Regulations, in order to suspend the requirement for open competitive tendering of PPE contracts. It did this on 18 March 2020, with the publication of Procurement Policy Note – Responding to COVID-19: Information Note PPC 01/20.

The Department of Health and Social Care then decided to establish a parallel PPE supply chain to the NHS Supply Chain. Over the weekend of 20 and 21 March 2020 it created the “PPE Cell” formed from NHS, industry and the armed forces. Volunteers joined from various government departments and consultants were brought in from outside.

At first referrals for suppliers went through a “portal” but as senior officials were making a large number of referrals outside the official portal, in late March the Department of Health and Social Care set up a High Priority/VIP Lane to assess the viability of referrals from MPs, ministers and senior officials including those in the NHS. These referrals were occurring because many would-be suppliers were contacting their MPs, Ministers or senior officials.

On 12 January 2022, the High Court found that the Government PPE ‘VIP’ lane for politically connected suppliers was ‘unlawful’ .

The Court found the Government allocated offers to the VIP lane on a “flawed basis” and did not properly prioritise bids: 

“there is evidence that opportunities were treated as high priority even where there were no objectively justifiable grounds for expediting the offer.”

The government must bring the NHS Supply Chain back into public ownership.

In September 2020, the Health Service Journal reported that the Chief Exec of the NHS Supply Chain had resigned.

https://weownit.org.uk/sites/default/files/attachments/Privatised%20and%20Unprepared%20-%20The%20NHS%20Supply%20Chain%20Final.pdf

Update 8.11.2022 – NHS Supply Chain is to bring back in-house the procurement of all clinical products for NHS organisations

The Health Service Journal reports that as from April 2023 NHS Supply Chain says “direct control over these categories will support us to provide a more resilient supply chain” which continues to see considerable disruption following “covid-19, EU Exit and the war in Ukraine”.

The clinical products cover surgical products and consumables, and rehabilitation and community products.

The supply of Food and NHS hotel services will continue to be tendered out.

Update 4.7.2023 – NHS Supply Chain tenders for Logistics Service Provider

NHS Supply Chain has put out an invitation to tender for a £4.4bn contract to provide Storage and warehousing services for a maximum duration of 11 years and 11 months. The £369m/ year contract value is significantly higher than current £146m/year contract with logistics firm Unipart.

The new contract’s storage and warehousing services include:

• Warehousing at Dedicated Sites
• Dedicated Fleet and Transport Operations
• Inbound Logistics & Transhipment (currently a subcontracted service)
• Inventory Management
• Carriers and Sub-contracted Transport
• Operational Finance and internal audit services 
• Customer Services
• Systems and applications including the implementation of a Warehouse Management System (WMS)
• Facilities Management Services
• International Inbound Freight Services  

A press release from NHS Supply Chain says they have “learnt lots from the pandemic” and the contract will include the “future development of a warehouse network, which is currently made up of nine facilities strategically located across England” as well as future pandemic response support, such as storing and distributing personal protective equipment.