160706 Pricing Methodolgies

Our ref: FOI 738,807       06 July 2016  



I am writing to advise you that we do hold information that is relevant to your request 04 June 2016 but regret to inform you of my decision not to disclose this information. In your request of 04 June 2016 you asked:

I originally asked for –

How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?

What were the pricing methodologies?

When did they come into effect?

What increases in charges have been agreed year on year?

  • There have been annotations made and I am asking what increases in charges have been agreed year on year with Kier Highways Ltd?
  • The specific values agreed and that have occurred.

It seems the contacts have been in place for years.  For each contract what was agreed and what has occurred, the actual percentages or sums.

The information you requested is being withheld in reliance on the exemption(s) in section(s) 43 http://www.legislation.gov.uk/ukpga/2000/36/section/43 of the Freedom of Information Act 2000 because information is exempt information if its disclosure under this Act would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it).

In applying this exemption we have had to balance the public interest in withholding the information against the public interest in disclosure. The key public interest factors for and against disclosure are set out in the table below.

With regard to the number of pricing methodologies Kier Highways have used when charging Highways England for ad hoc work or repairing damage over the last 5 years, this would be governed by the Highways Agencies MAC contract and more recently ASC contract, so principally two. It should be noted that EM Highways Services Limited was taken over by Kier Highways in the last quarter of 2015, for convenience we with use the term “Service Provider” instead of Kier / EM Highways.

The pricing methodologies used to charge the Highways Agency or Highways England is based upon the NEC Contract, adapted by the Highways Agency or Highways England. As your question is framed as “damage” I assumed you are excluding “deterioration” and are in essence referring to Damage to Crown Property by Third Parties.

The ASC contracts commenced in 2013 in Area 3 and 2014 in Area 9, the MAC contracts preceded these.

With the MAC Contracts, the Service Provider was required to provide such breakdowns and supporting information to justify the cost of repairs, as may be reasonably expected by the third parties insurance company (or Highways Agency / Highways England). With the ASC contract the emphasis is again on the Service Provider justifying the costs, though the approach in how the costs were compiled changed from the predominant use of CECA rates under the MAC to Defined Cost plus Fee under the ASC Contract. The principle’s behind both are or were standard practice and significant information is freely available on the internet.

Price adjustment factors and discounts are set out under the specific contracts, though I believe your question is framed with regard to Damage to Crown Property by third parties. With regard to the latter, as stated above this is claimed upon either CECA rates or the principle of Defined Costs using Notional Rates, the latter, in essence, are the average costs of a person, plant or equipment captured over a time period to provide an average hourly cost, given the rolling nature the costs will vary over time though this should not be confused with price fluctuation flowing from discount or inflation. As stated the principles and rationale behind Defined Cost plus Fee is freely available on the internet.

If you are unhappy with the way we have handled your request you may ask for an internal review. Our internal review process is available at: https://www.gov.uk/government/organisations/highways-england/about/complaints-procedure