200403 Highways England Re Contract Non-Compliance & Fraud

03/04/2020 to Highways England re Kier Highways
Systematic State-Enabled Exaggeration and Fraud on an Industrial Scale. 

Thank you for your emails of 16/03/2020.  However, I also sought the schedule of rates used sub-threshold in Area 9.

1. When is this to be provided?

Fraud

Regarding your main response at 16:03, my complaints also relate to the rate uplifts used by Kier Highways, not just their failure to comply with the contract. I have raised and await answers to what appears to be fraudulent conduct by Kier Highways, enabled and permitted by your Authority.

2. When will you address and explain this conduct?

Kier Highways have, since 10/2015 applied multipliers to many of their operatives; AIW’s, traffic management (TM) and barrier repair staff claiming they pay these uplifts to them.  I have concentrated upon AIW’s because they appear on virtually every claim due to the nature of their role; they are ‘first-responders’ to emergency incidents.

Kier states their AIW’s work 8 am to 5 pm weekdays, that AIW’s do not work shifts.  An indication this statement is false is the contradictory accounts Kier have presented about AIW hours.  However, Kier state to Courts, Third Parties and us that these operatives do NOT work shifts and ARE paid multipliers as follows:

  • 1.5x after 5 pm of a weekday
  • 2x of a weekend

However, AIW’s work shifts; they tell us so and the documentation we possess conveys this. Furthermore, we are advised, AIW’s:

  • are not paid the claimed uplifts after 5 pm of a weekday/weekend and
  • overtime is at a flat-rate

3. How is claiming for a cost not incurred other than fraud; how is claiming a multiplier (as above) and misrepresenting the basis of such a claim to us, Third parties and the Courts, in the name of Highways England, not dishonest?

4. Why is Highways England permitting Third Parties (drivers, fleets, hauliers or their insurers) to be subjected to this conduct; systematic overstatement of claims? 

It strikes me as peculiar that in Area 9, from 8 am to 5 pm, Highways England was charged £23.71 / hour for an AIW plus 7.38% given we are told the base rate for an AIW the base-rate, the cost to Kier of an AIW was £58.32/hour.  It appears the £58.32 / hour breakdown Kier provided to substantiate claims was also false; a dishonest representation to further the exaggeration.

A Third-Party was charged £70.32 / hour (more in Area 9) for an AIW between 8 am and 5 pm. But after 5 pm of a weekday, while Highways England was still charged about £23.71 / hour for an AIW plus 7.38% uplift, a Third Party was charged the £70.32 / hour plus a 50% uplift i.e. over £135 / hour.

Kier stated AIW’s were paid this 50% uplift, that this was a cost Kier Highways incurred. On its own, the 50% uplift after 5 pm to a Third Party equates to £35 / hour; less than the £23.71/hour Highways England were charged.  Highways England are not charged the uplift after 5pm!.

We believe the stated uplifts are false.  Kier nailed their colours to the mast, documented the uplifts in their ‘Insurers Guide, the relevant extract appearing left. The ‘Guide’ sets out the uplifts which on occasions we have seen applied to TM and Barrier crews also.  The document appears intend to further the deceit. 

Appendix A to Annex 23

The contract states:

23.4.4 The Provider does not seek to claim more than the amount calculated in accordance with the principles set out in Appendix A to this Annex

Appendix A to Annex 23 of the ASC (contract) sets out the MAXIMUM a contractor is to claim from a Third-Party:

Defined cost (£) + Third Party Claims Overhead (%) = maximum

Kier has not complied with this since day one of the Area 9 contract, to this date. This is and should be obvious to Highways England; from 07/2014 (Area 9) Kier ignored Appendix A and ‘coincidentally’ Highways England kept the document hidden.  Indeed, between 07/2014 and 10/2015, Kier Highways used their 1153 methodology which we estimate gave rise to exaggeration during the period exceeding £10million. In 10//2015 we, not Highways England, forced a change.  Kier gushed with figures to support their contract non-compliant process.  You and they now stand silent, refusing to provide schedules of rates. 

5. How is Kier’s conduct contract-compliant when the agreements set out ONE process and they have used multiple methodologies and rate schedules?

Kier is now on their 7th process.

01/2017, we uncovered Appendix A to Annex 23.  We are aware:

  • The TPCO (above) is 25.29% in Area 9 and 20.58% in other Areas. 
  • ‘Defined Costs’ are rates that are to be common to Highway England and Third-Parties; a ‘base rate’ the ‘actual cost’. 

6. Please explain how the charges presented since 07/2014, are consistent with Appendix A to Annex 23.

Kier’s conduct, their multiple pricing methodologies when there should be one consistent process as set out in the contract, evidences a failure to comply. I trust the logic of this is apparent.

7. Why are Highways England are unable to simply tell their contractors ‘comply with the contract’ and why have they failed to do so?

Appendix A is ‘good’, your CEO stated so. Your writing also conveys the relevance, that it was a contractually agreed process and should have been implemented. It has not been. Instead, you have allowed Kier to utilise profiteering processes and herein is the problem; you appear to be so complicit as to be ineffective, compromised.

Simple Math’

Taking the example we presented to Highways England 21/06/2017, the Authority is charged:

  • Defined cost (£) + Fee (%) = maximum or:
  • £23.71 + 7.38% (£1.75) = £25.46 / hour

Defined cost being a constant, a Third Party should be charged:

  • Defined cost (£) + Third Party Claims Overhead (%) = maximum or:
  • £23.71 + 20.58% (£4.88) = £28.59 / hour

However, a Third Party has consistently been charged £70.32/hour – to which, as above, multipliers have been added to further exaggerate the costs.

To put it another way, the difference in cost to the Authority and a Third Party should be the difference in the uplifts; 7.31% to you and 20.58% to a TP i.e. 13.27%.  In reality, £25.46 to £70.32/hour is an uplift of 176%.

8. How is my math’ flawed?

Cardiff County Court Stayed Matters

You state:

These have been priced using the procedure set at Appendix A to Annex 23. 
This includes the cases before Cardiff County Court to which you refer.

This is incorrect; cases currently outstanding, the subject of proceedings have not been priced in accordance with Appendix A, nor have the cases before Cardiff County Court. Clearly, by reference to your response, they should have been.

The fact is, the claims see the processes have described above:

  • consistent charges for AIW’s 
  • no breakdown of Defined Cost and TPCO
  • the addition of multipliers

Without raising a specific claim, mindful The following rates and uplifts, should not appear:

There is no good reason for matters to be before any Court as despite HH Godsmark’s logical and reasonable statement:

‘It would be odd if a tortfeasor was liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and in a different sum if sued by Highways England via BBMM (a contractor).’

we have been prepared to make a settlement in accordance with Appendix A, willing to pay the defined cost (base rate), charged to yourselves, plus the TPCO uplift.  This despite not being a party to the contract, not bound by it and accepting HH Godsmark’s writing (above) and only liable for defined cost + fee % (as opposed to the higher TPCO %).

8. Why is this unacceptable?

9. Please confirm all claims will be re-priced in accordance with Appendix A and represent them displaying the relevant defined cost (for the date) and the TPCO.

Yours sincerely,