Cabinet minister owned £90,000 shares in Faculty at time of NHSX contract

A cabinet minister owned £90,000 shares in artificial intelligence company Faculty when it was awarded a £2.3m contract from NHSX to help run the NHS Covid-19 Data Store, a report has revealed. 

Lord Agnew’s conflict of interest was revealed in a National Audit Office (NAO) report into government procurement during the pandemic which found a lack of transparency and adequate documentation around the awarding of some contracts.

Faculty was awarded three contracts from three different government departments; the Ministry of Housing; Department for Business; and NHSX which employed the company’s services to help develop the Covid-19 Data Store as part of its work with the NHSX AI Lab. The platform uses NHS data to better inform the national response to the pandemic.

The value of Faculty’s contract with NHSX was £2.3million. Lord Agnew, who oversees Government Digital Services, had cross-government responsibilities for supporting procurement and government activity related to Covid-19. He had declared his interests in the company.

The NAO found “no evidence that he was involved in the awarding or managing the procurements”. Lord Agnew relinquished his shares in Faculty on 23 August 2020, the report notes.

The AI firm also has links to Boris Johnson’s former senior aide Dominic Cummings, after working with him on the Vote Leave campaign.

NHSX’s contract with Faculty was the only one found to have considered conflicts of interest, with the organisation concluding that there were no potential conflicts.

But the NAO report adds that the contract “does not have documentation for the basis of choice of supplier” and was not published on the government’s Contract Finder website until 4 September 2020, five months after the contract start date of 1 April 2020. It was due to end on 30 September.

The contract was awarded under the GCloud framework, which does not require the awarding body to publish a tender but does require the process for choosing the supplier to be documented.

NHSX officials said the contract was awarded by the Department of Health and Social Care and assured due process was followed.

The NAO recommended that information on contracts should be published in a “reasonable time” in line with guidance to publish within 90 days of a contract being awarded.

Faculty was originally contracted in early 2020 for work on the NHSX AI Lab but was redirected to help run the NHS Covid-19 Data Store shortly after, alongside Palantir, Amazon, Microsoft and Google.

The appointment sparked controversy at the time over the government’s decision not to publish the contracts, which were awarded in February.

They were eventually published in June just hours before proceedings from openDemocracy and tech justice firm Foxglove Legal were due to start. They had brought proceedings over the lack of transparency surrounding the government’s deals with private tech firms to run the Data Store.

The contract revealed Faculty, along with AI firm Palantir, was originally granted intellectual property rights to train their technology and profit off access to NHS data, openDemocracy reported at the time. Government lawyers told openDemocracy that a subsequent amendment to Faculty’s contract resolved the issue, but further details were not released.

The firm was paid £930,000 for its work, which included supporting NHSX data analytics and the design of the AI Lab. The contract was due to end on 3 August 2020.

A common theme

A lack of transparency was a common theme running through government procurement during the Covid-19 pandemic, the NAO report found.

It noted a general lack of transparency and adequate documentations around key decisions “such as why particular suppliers were chosen or how government identified and managed potential conflicts of interest”.

In March 2020, the Cabinet Office issued technical guidance to support procurement during the pandemic, allowing them to procure services with “extreme urgency” in a bid to tackle the virus.

But the NAO warned it did not set out risks that should be considered as part of a purchasing decision, including “perceived or actual bias in awarding contracts or conflicts of interest that may become more prominent when no competition is involved”.

“We found examples where departments failed to document fully the consideration and management of risks, such as the justification for using emergency procurement, why particular suppliers were chosen, or how any potential conflicts of interest had been identified and managed,” the report found.

Gareth Davies, head of the NAO, said: “At the start of the Covid-19 pandemic in the UK, government had to procure large volumes of goods and services quickly whilst managing the increased risks this might entail.

“While we recognise that these were exceptional circumstances, it remains essential that decisions are properly documented and made transparent if government is to maintain public trust that taxpayers’ money is being spent appropriately and fairly.

“The evidence set out in our report shows that these standards of transparency and documentation were not consistently met in the first phase of the pandemic.”

By 31 July more than 8,600 contracts worth £18.0 billion related to government’s response to the pandemic had been awarded, with 90% (£16.2 billion) awarded by the Department of Health and Social Care.

The NAO found documents to support key procurement decisions were sometimes missing, some contracts were awarded after work had already begun, and many were not published in the timeframe they should have been.

Cabinet Office minister Julia Lopez said: “As this report rightly recognises, we needed to procure contracts with extreme urgency to secure the vital supplies required to protect frontline NHS workers and the public and we make no apology for that.

“We have robust processes in place for spending public money to ensure we get critical equipment to where it needs to go as quickly as possible, whilst also ensuring value for money for the taxpayer.”