David Hencke reveals that the UK Government’s COVID-19 contract with the data surveillance firm owned by Donald Trump-backer Peter Thiel was approved under an obscure statutory instrument.

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Highly controversial contracts which allow ministers and senior health officials to mine confidential data from tens of thousands of COVID-19 hospital patients have been awarded to technology companies without being put out to competitive tender, NHS England has disclosed to Byline Times.

The system is now live and being used to inform senior health officials on the latest situation at the daily Downing Street briefings. The contracts involve five companies – Microsoft, Google, Amazon Web Services, Palantir Technology UK and Faculty.

Two of the contractors – Palantir and Faculty – are highly controversial either because of links to the CIA and the Donald Trump administration; or to Dominic Cummings, the Prime Minister’s chief advisor and the former head of the Vote Leave campaign during the 2016 EU Referendum, which was found to have breached UK electoral law by overspending.

Palantir is owned by Peter Thiel, a right-wing billionaire, who has set up ‘HHS Protect Now’ in the US, which – according to Forbes magazine – won a $17 million contract on 10 April from the US Department of Health and Human Services Program Support Center to provide detailed data from a wide range of organisations on the spread of COVID-19. Thiel is publicly backing Trump’s 2020 re-election campaign.

According to the Guardian, Faculty – which had a pre-existing contract with other companies to help build a £250 million artificial intelligence lab for the NHSX subsidiary – took on a leading role in the data response to the pandemic. It is run by Marc Warner, whose brother, Ben, was reported by the Sunday Times to have been recruited to Downing Street by Cummings after running the Conservative Party’s private election model.

Ben Warner, who used to be a principal at his brother’s AI company, is said to have worked closely with Cummings on the modelling programme used in the Vote Leave campaign.

Faculty’s lawyers told the Guardian that “its NHS contract was the result of a tender process that was not influenced by Cummings”.

The decision to award the new contracts without competitive tenders is justified by NHS England as legitimate under an obscure statutory instrument laid before Parliament in February 2015 by the Coalition Government.

The statutory instrument was drawn up by the Cabinet Office under the then Conservative Minister Francis, now Lord Maude of Horsham, as part of a reform of public contracts following new European Union directives. It includes a ‘get out’ clause which states that “contracts and framework agreements may be modified without a new procurement procedure” and then lists a series of scenarios. The two that appear to be relevant in this case state:

“for additional works, services or supplies by the original contractor that have become necessary and were not included in the initial procurement, where a change of contractor– (i) cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, services or installations procured under the initial procurement, or (ii) would cause significant inconvenience or substantial duplication of costs for the contracting authority, provided that any increase in price does not exceed 50% of the value of the original contract; (c) where all of the following conditions are fulfilled: (i) the need for modification has been brought about by circumstances which a diligent contracting authority could not have foreseen; (ii) the modification does not alter the overall nature of the contract; (iii) any increase in price does not exceed 50% of the value of the original contract or framework agreement.

A Department of Health press release in August last year shows that the NHSX AI lab was obviously not envisaged for COVID-19 work. The onset of the pandemic could be used as a reason to do this.

NHS England would not provide the value of the new contracts but under this regulation it is allowed to spend up to half the value of the original award – giving it scope to spend up to £125 million.

The contracts have been staunchly defended by Matthew Gould, chief executive of NHSX, in a blog on the gov.uk website.

In the blog, Gould states: “All NHS data in the store will remain under NHS England and NHS Improvement’s control. Once the public health emergency situation has ended, data will either be destroyed or returned in line with the law and the strict contractual agreements that are in place between the NHS and partners.”

He concludes: “After the emergency is over, we hope to be able to use what we have learned from our technology partners to get better within the Government at data collection, aggregation and analysis in a way that protects the privacy of our citizens. Having relevant data to hand will make our systems more resilient and better able to respond immediately to the next crisis – or even predict it before it happens.”

The chief executive of NHSX claims that this new system should also allow Public Health England to respond much faster to any crisis in a particular health trust or hospital facing difficulties with handling COVID-19 patients.

When asked for an example, NHS England said: “I’m afraid we aren’t at this stage sharing examples of how it has helped locally just yet.”

The NHSX contract is the second big Government data contract that has not been open to competitive tendering in recent months.

Idox Software Ltd, part of the worldwide Idox Group, won a £1.7 million contract for its revamp just in advance of purdah imposed by the 2019 General Election – purdah is the period in which politically sensitive announcements or decisions cannot be made in the run-up to an election – and before new regulations had come into force that will allow the company to make major software changes to the compilation of the new electoral register.

It was put to the Cabinet Office back in January that the award of such large contracts breached EU rules stipulating that any construction and works tender above £663,450 should be put out to competition. A spokesperson explained that there were only three specialist companies that could do the work in the UK and each of them had won a contract.