The government has been accused of wasting “huge amounts of money” after reportedly spending millions settling a lawsuit over a Lighthouse Lab contract. 

The BBC reported on Thursday that the government had agreed a settlement amounting to some £2m following a lawsuit over how it chose who should be awarded an IT contract for the new Covid laboratories. 

Diagnostics AI, a British company, claimed that it had been swept aside by officials in favour of UgenTec, a European company, despite allegedly spotting some of the positive Covid-19 cases its rival missed.

The company went on to sue the government, describing the procurement process as “unfair and unlawful”. 

The Department of Health and Social Care (DHSC) has vehemently denied any claims of wrongdoing, and is in the process of settling the case – which means their selection process won’t be publicly scrutinised in the courtroom. It also added that the final figure of the settlement remains subject to agreement. 

Some have criticised the government for the decision to settle, raising concerns regarding the transparency of the government’s expensive private contracts paid for with public money during the crisis. 

Shadow cabinet minister Rachel Reeves told HuffPost UK: “No public transparency, and plenty of money wasted: seems like that’s just how this Tory government likes it these days. 

“This government’s incompetent way of handing out contracts like these not only wastes huge amounts of money while local public services crumble – but more efficient and experienced British businesses also miss out while massive companies take the spoils with little transparency or accountability.”

The government has repeatedly been accused of maintaining secrecy around its coronavirus spending, with a major HuffPost UK investigation published in August revealing “scandalous and shocking” revelations about the way taxpayers’ money was handed out. 

In the wake of the Diagnostics AI case, Steve Goodrich of Transparency International UK told HuffPost UK that months into the pandemic the government should be working to open up its tendering processes once more. 

He said: “Earlier this year, government was under immense pressure to expedite the UK’s response to the Covid-19 pandemic, including shortcutting usual procurement processes.

“Whilst uncompetitive tendering sped-up supply chains, it has also raised valid questions as to who was awarded what contract, when and for how much.

“Now eight months into the pandemic, it’s time the public sector returned to open and competitive tendering to avoid further damage to trust and possible litigation.”

According to the BBC the contract Diagnostics AI missed out on was worth in excess of £1m, with settlement costs coming to an estimated £2m. 

The company had hoped that their software would be used in thee Lighthouse Labs – which were set up around the country in response to the pandemic – in order to determine whether the graphs produced following analysis of Covid testing swabs showed a positive or negative result. 

During a trial run of 2,000 samples, Diagnostics AI claimed there were issues with UgenTec’s analysis – alleging it had found negative results when they were positive or inconclusive. 

Diagnostics AI said it had taken legal action over the matter as they believed it was “significant public importance to highlight the serious and harmful consequences of a biased procurement process for the British public’s health.”

A spokesperson added: “NHS experts including leading virologists confirmed our findings – that the system the Lighthouse Labs chose was flawed and produced incorrect results. This gives rise to serious questions about the accuracy of the testing process.

“Diagnostics.ai provide the only system for accurate PCR result analysis that has been independently peer-reviewed and publicly validated by the NHS. 

“We hope that the issues raised in this claim will make the UK government reflect carefully on how vital it is to have an impartial, rigorous and comprehensively validated procurement process for the provision of all such crucial services”.

DHSC have slammed the company’s claims as “inaccurate”, with a department spokesperson saying: “We completely refute this inaccurate claim about the accuracy of results – the tests are reliable and effective, the laboratories that undertake them have been reviewed and assessed by experts and the percentage of false negatives or positives is tiny.

“This was a commercial dispute over a software contract where a number of factors were considered before it was awarded, which is still subject to final agreement over costs.”

Diagnostics AI also sued two non-profit companies owned and financed by the government, UK Biocentre and Medicines Delivery Catapult (MDC), which were in charge of the process to decide which company to use for the Lighthouse contracts. 

The BBC reported that Diagnostics AI had repeatedly asked for information about what services were required by government and how their bid would be evaluated. 

According to the company, that information never came – though they say claim UgenTech were provided with the details they needed. 

In the situation of a national emergency, as declared by the PM, the government can have the power to procure services without going through the usual tendering process.

But Diagnostics AI claim that because the company had been recommended to UK Biocentre alongside UgenTec they were therefore both being considered – and so say the ensuing process was unfair. 

A spokesperson for UK Biocentre said: “The allegations are groundless; this was a commercial dispute. The software in question is being used widely in the Lighthouse Laboratories, in some NHS laboratories and abroad. 

“External quality assurance has confirmed that the PCR testing in the Lighthouse Laboratories (of which the automated diagnostic software forms part) is performing well.”

HuffPost UK has also MDC – which strongly refuted Diagnostic AI’s allegations in a statement to the BBC – for comment.