05/02/2019 To BBMM re CECA and Rates to Third Parties
To: Catherine Howie @ bbmmjv.com
Brian Read @ bbmmjv.com; Jason Worthington @ bbmmjv.com; Mercer David @ balfourbeatty.com; Wendy Allen @ bbmmjv.com
Subject: RE: Your ref 55712 BM, our ref W04A853
I have commenced a review of the correspondence / claims related to the BBMM-jv. Please could you return to me asap with regard to the following questions to enable me to make informed comment:
1. Confirmation Highways England agreed to you using CECA rates with Third Parties. Whilst Highways England cannot dictate that we should pay these, I wish to be satisfied that HE did not oppose their use.
2. Why you consider the rates used with Highways England to be ‘commercially sensitive’. We wish to view these to ascertain what ‘reasonable sums were agreed for the contract. Presumably these were settled upon with HE because they were reasonable, returned a profit. There may be grounds for a small further uplift, but I wish to understand the ‘base rate’. I am content to receive these in confidence, in the course of claims handling, as opposed to making application to HE via FoIA.
3. An explanation for the use of CECA, as opposed to the price schedule agreed with HE, possibly (likely) plus an uplift
CECA rates do not appear to be an appropriate schedule; they are prepared for use in connection with Dayworks carried out incidental to contract works where no other rates have been agreed. You have a set of rates agreed with Highways England.
4. For claims under the threshold what costs are made up of
a. CECA rates,
b. partly market rates and / or
c. partly cost.
Either the rates agreed and charged to Highways England are reasonable and enable a profit or they are not. No one is looking to ‘cut your throat’, what I wish to understand and establish is a ‘reasonable’ rate for the works.
5. If the rates agreed with HE are reasonable and result in a profit (necessarily so), are you seeking higher sums from Third parties? The reluctance to come to us with open hands suggests so.
6. If the rates agreed with HE are not reasonable and there is no profit, it would appear Third Parties effectively subsidising the repair of highways. Why and who agreed this process?
When reviewing recent matters, I have noted repeated reference from BBMM-jv to a Court matter but confess I have been unable to locate any involvement on the part of CMA or any on-line record. Emails form BBMM-jv advise, as an example:
You may be interested to learn of our recent experience in court. We recently encountered one major motor insurer who declined to pay around 60 claims with a combined value of around £420k. Litigation was commenced in the High Court for the recovery of all 60 losses. About 2 weeks prior to a 4 day High Court trial, presumably after instructing Counsel, the insurer agreed to pay around 96% of the losses claimed, plus 96% of a further list of losses incurred following the commencement of the proceedings. As well as paying the losses virtually in full, the insurer was presented with a combined interest and costs bill on both sides of probably in excess of £300,000 in addition, almost doubling its liability compared to if it had simply paid the claim promptly when it was first presented.
The above commentary suggests the matters were never before a judge.
7. Did the matter go to trial, is there a precedent? If so, please direct me to this.
It is unfair to present my claims handler(s) with limited information in this fashion. To what the matters relate, the circumstances of each, the charges raised and what the insurer knew, asked and more are all unknowns. To enable me to consider the relevance of information BBMM-jv appear to be relying upon, please:
8. provide meaningful detail
With regard to specific costs my attention is drawn to Area 10 matters and I am looking at your ref: 42878 our ref W02A506 and your ref 53832 our ref W02A530. I note:
|Incident 04/05/2016||Incident 29/06/2017|
|2.5tn MRT Response van||£34.15||£36.73||7.2%|
|Standard 18tn safety barrier rig||£110.85||179.04||38.09%|
|18tn traffic management rig||£97.17||£124.73||22.1%|
I cannot reconcile the above increases from 2016 to 2017 with:
a. CECA rates,
b. a general (across the board) percentage uplift; the variation differs
c. an inflationary increase – apparently applied to Highways England claims
9. Please explain the above increases by reference to ‘a’ to ‘c’ inclusive.