Following the Money: Navigating the ‘Wild West’ of procurement

A tangled web of ever-changing players involved in the ferociously competitive fight to secure personal protective equipment is under scrutiny like never before, as covid-19 squeezes the global supply chain.

Nations are bidding fiercely, and resorting to underhand tactics, to secure supplies in Asia, middlemen (and women) are peddling their wares on Twitter, local councils are chartering planes to transport PPE, and NHS procurement teams are setting up factories.

Some of the sharpest criticism has, however, been reserved for the UK government, over its failure to supply adequate PPE to health and social care workers. This week’s Turkish gown debacle was a particularly embarrassing moment for ministers — and an indication of just how difficult it is not only to buy products abroad, but to actually get them onto UK soil.

Over the last few weeks, NHS procurement leads have raised concerns to HSJ over the UK’s presence in China, where many of the goods under pressure are usually sourced.

Reports suggest US buyers have been hijacking orders at factories and airports in China, paying through the nose at source to snap up supplies before they can be shipped elsewhere.

The extent of the UK’s presence at these manufacturing hubs remains a source of speculation, with HSJ contacts saying we simply cannot compete without enough officials negotiating on the ground. While everyone else is falling back in love with the telephone, it is no longer a sufficient tool for the world of procurement.

HSJ has been pressing the Department for International Trade to clarify who the UK has on the ground and where over the last few weeks, with mixed results. A spokeswoman confirmed the DIT and the Foreign and Commonwealth Office set up a unit to procure medical goods in China and elsewhere some weeks ago. UK-based staff, she said, are working with the government’s “extensive overseas networks”.

When pressed on the “network” in China, she clarified this referred to UK staff on the ground. But questions as to the number and location of government staff — and the involvement of contractors and consultants — went unanswered.

On Tuesday, health and social care secretary Matt Hancock said the government was in “direct talks” with factories producing PPE and the fabric used to make it. He thanked colleagues in China for making “fruitful” connections.

But the actual make-up and success of this network — and of others — remains opaque.

Beyond the factories, an International Trade Committee meeting on Thursday shed light on the hurdles further down the supply chain. Dozens of export restrictions have bottlenecked shipments, according to Association of British HealthTech Industries chief executive Peter Ellingworth, although he stressed the UK government was working hard to keep products moving.

Another little-covered cost pressure is that of shipments themselves. As the number of passenger flights has dropped, for example, the associated freight capacity has shrunk. Mr Ellingworth said a company that used to deliver pallets from the US to the UK for £200 apiece was now charging six times this.

These spiralling costs are no doubt one factor in the high and wildly variable PPE prices facing UK procurement teams. One procurement lead involved in direct procurement told HSJ he had seen coveralls — normally about £5 — advertised for £40. Face masks that were pennies a few months ago are offered at nearly a pound, in some cases.

Producing large volumes of PPE in the UK was once considered prohibitively expensive. Now, it is a serious option. The government is trying to scale up domestic manufacturing — perhaps most famously with Burberry — as well as work with UK companies sourcing protective equipment abroad.

On Tuesday, Mr Hancock said the government was working with 159 UK manufacturers. But it continues to face criticism over claims offers from companies are being ignored.

Some procurement teams are taking matters into their own hands. Greater Manchester, for example, is finalising a deal for a local factory that will produce a million face masks a week.

Procurement director Neil Hind told a virtual Public Policy Project forum earlier this week he and his colleagues felt like “arms dealers” navigating the “Wild West” of an intensely pressurised global market. It is hoped efforts like the mask factory will help bring some security to local teams working night and day to protect health and social care staff.