The Fifth Report of the Public Accounts Committee (external link)
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Question 232: Earlier in response to Mr Howarth you were talking about the people who provided services during this outbreak... you did not get the chance to expand about under-invoicing. Could we have note on the amount of under-invoicing which took place?
UNDER-INVOICING BY CONTRACTORS IN THE FMD OUTBREAK
34. DEFRA received over 200,000 invoices in connection with FMD. The financial and management accounting systems of many contractors were overwhelmed by the scale of the FMD outbreak and the resultant number of invoices and supporting documentation that those systems were expected to generate. The Department is aware of five cases (although there may be more) where contractors have claimed they have under-invoiced.
35. These contractors claim that their financial records indicate (often several months after services have been delivered) that they could or should have charged for services but have in fact not done so. In some of the cases it has been the work of DEFRA's forensic accountants that has identified the apparent under-invoicing. DEFRA's payment policy is to pay contractors the monies legitimately due to them for work commissioned by DEFRA. The claims of any contractor with regard to under-invoicing would be subject to forensic examination by DEFRA's forensic accountants.
36. The total value of unpaid disputed invoices relating to FMD is substantial —not less than £70 million. On current knowledge the value of under-invoicing is less than 1% of the monies being withheld from contractors whilst forensic examination of their accounts is concluded.
37. In cases where contractors have claimed they have under-invoiced, these claims will be part of the resolution of the overall commercial dispute with the contractors concerned. From information held centrally we are unaware of any cases where under-invoicing is not part of the overall forensic examination and financial reconciliation of the contractor's account.
38. DEFRA has no interest in holding back payments legitimately due to contractors. Given the substantial amounts of public money involved and DEFRA's public responsibilities, it is duty-bound to carry out a proper investigation of contractors' accounts with DEFRA before authorising payments. Substantial resources have been committed to carrying out this exercise as quickly as possible.
39. It has been and remains DEFRA's intention to ensure that invoices submitted by contractors and suppliers for payment by DEFRA relate to valid work requested by DEFRA to combat the outbreak and are supported by valid supporting evidence. We will continue to facilitate the payment of supplier and contractor invoices based on a clear and complete audit trail.