Between March 2020 and October 2021, the government department received total penalty charges of £436m because it had to store PPE (personal protective equipment) in containers for longer than expected.

Overall, it cost DHSC £737m to store the equipment during that time, according to the National Audit Office’s investigation into the management of PPE contracts.

It said billions of pounds of taxpayers’ money is “still at risk” as the government continues to deal with the contract management issues around its need to buy unprecedented volumes of PPE amid the pandemic.

Since February 2020, 10,000 PPE contracts have been awarded and DHSC has spent £12.6bn of the predicted £13.1bn it earmarked for the 38 billion items of equipment it forecast would be required.

To date, DHSC has taken receipt of 31.5 billion items of PPP, with 1.4 billion items stored in China and five billion yet to be received.

The NAO revealed 17.3 billion items have been delivered to frontline services, but 14.2 billion items remain in UK storage.

Between March 2020 and October 2021, it had cost DHSC £737m in storage fees, including the £436m in penalty charges.

While the NAO appreciates it was challenging to assess the total demand for PPE at the start of the pandemic, DHSC estimates it now has 3.9 billion more PPE items than needed – around 10% of stock purchased.

And storing this excess is costing £7m a month.

“The Department is trying to reduce excess stock by selling, repurposing, donating to other parts of the public sector or recycling,” the NAO added.

Unsuitable and out-of-date PPE

The DHSC continues to store unsuitable PPE for frontline services – a total of 3.6 billion items, around 11% of all PPE received, according to the scrutiny group.

The NAO investigation revealed 394 contracts worth £7.9bn were awarded to largely new or unknown suppliers to the NHS.

Of this number, 115 contracts were awarded to 51 ‘VIP lane’ suppliers which were suggested by government officials, ministers’ offices, MPs, senior NHS staff and other health professionals.

Of the unsuitable PPE, 53% were from sourced from these ‘VIP lane’ suppliers. And around 1.5 billion items in storage have passed their expiry date.

Discrepancies, disputes and fraud

“The Department does not have a single end-to-end stock management system and the management data it holds contains inconsistencies between the volume of PPE ordered and quantities received”, the NAO noted.

In data provided to the NAO, in 21 of 36 contracts there were differences of more than 1% between the number of PPE items contracted for and the number actually received. For 14 of these contracts, DHSC received a total of 107 million fewer items than it had contracted for. In the remaining seven contracts it received 13 million items more than it had contracted for.

“Discrepancies arise for several reasons including the double counting of PPE as it is moved between locations, and some stock being missed from the count in cases where it is held in storage by the supplier”, the report read.

Contract disputes are also apparent, usually surrounding quality, with a total of 76 discussions concluded on equipment worth £1.9bn.

Further, the department estimates that potential fraud will be between 0.5% and 5% of expenditure.

Gareth Davies, the head of the NAO, said: “DHSC is still dealing with the results of its emergency procurement decisions, some two years after it first needed to rapidly buy PPE in unprecedented circumstances.

“The Department is continuing to manage 176 contracts where it believes it may not achieve full value for money, with an estimated £2.7bn at risk.”

‘Priority to save lives’

A DHSC spokesperson, said: “Our priority throughout the pandemic has been saving lives, and we have delivered over 19.1 billion items of PPE to frontline staff to keep them safe.

“Having too much PPE was preferable to having too little in the face of an unpredictable and dangerous virus, given this was essential to keep our NHS open and protect as many people as possible.

“Where contracts are in dispute, we are seeking to recover costs from suppliers and we expect to recover significant amounts of taxpayers’ money.”