A new £800m government science and defence research agency will be exempt from existing procurement rules, prompting warnings from Labour that it could be used as “cover for cronyism”. Originally the brainchild of Dominic Cummings, the Advanced Research & Innovation Agency (Aria) will be more lightly regulated than a normal government body. A press notice released on Tuesday to accompany the publication of the bill needed to set up the body said it would imitate the long-established US agency Darpa, which operates “outside standard government contracting” procedures. The Aria bill, the government release added, will “provide the agency with exemption from the existing public contract regulations, enabling Aria to procure vital services and equipment with maximum flexibility so that it can carry out groundbreaking research at speeds rivalling a private investment firm”. Ed Miliband, the shadow business secretary, said: “‘Maximum flexibility’ sounds like an excuse for no competition. The government’s procurement has been riddled by conflicts of interests and lack of transparency. Ministers must not use Aria as cover for further cronyism.” Kwasi Kwarteng, the business secretary, said Aria would be “equipped with all the tools and freedoms it needs to succeed” including placing scientists at the heart of decision-making and “stripping back red tape”. He said it would aim to follow the “success of our Vaccine Taskforce”, the body responsible for buying coronavirus vaccines and developing the drug production supply chain. Ministers have been repeatedly accused of presiding over the award of government contracts to friends and contacts since the start of the pandemic. A string of deals were handed out using emergency procedures because of the scale of the crisis. Last year, a former publican and friend of the health secretary, Matt Hancock, won £30m in contracts to produce Covid test vials despite having no experience of the medical devices industry. His firm is now under investigation by the industry’s regulator. The National Audit Office reported that the Department of Health created a secret high-priority VIP channel to process offers of PPE supplies that had been raised by ministers, MPs, peers and senior NHS staff. Aria, which will have access to £800m in funding over the course of the parliament, is to be exempt from freedom of information legislation. Although it will be audited by the National Audit Office and required to submit annual reports, there is concern be allowed to invest taxpayers’ money in financially risky projects. Jolyon Maugham, the director of the Good Law Project, which last month won a legal challenge over the government’s failure to publish multibillion-pound Covid contracts within the 30-day period required by law, said Aria’s legal exemptions appeared problematic. “It is no less remarkable for the government to respond to concerns around cronyism with legislation that removes the right to challenge it. If it was your goal to give money to your pals and have those choices both hidden from public view, and be protected from legal challenge, it’s hard to know what you’d do differently,” the barrister said. Aria is intended to invest in hi-tech projects. But with Cummings, Boris Johnson’s former senior adviser, now out of government, there is some scepticism as to what the agency’s focus will be. This month, the science and technology committee warned that it was “a brand in search of a product”.