Area 6&8 Defined Costs / DCP Rates

26/04/2019 @ 09:20 hrs  To Highways England:

I refer you to a recent Highways England statement:

‘As none of the ASCs contain schedules of rates, and Highways England considers that the lack of transparency applies equally to above threshold claims (i.e. those above £10,000) claims as well as claims below threshold it was considered that a review covering all areas was required’.

This statement has been made to account for Highways England being unwilling to produce a schedule of rates, specifically the ‘defined costs’, ‘DCP Rates’ or ‘base costs (pre-profit pricing).  It is now claimed there are no schedules and therefore neither a Third Party nor Highways England are able to reconcile any ASC contractor invoice pre-payment.  This situation appears to have existed since 2012.

On 27/03/2019, Tim Reardon wrote that you are:

‘working on a schedule of repair costs for typical instances of damage to the strategic road network, or DCP. This new schedule of costs, which we intend to publish on Highways England’s website in April this year, will be piloted in Areas 3, 7 and 9 with a view to national roll-out’.

You make no reference to Area 6&8 which Amey managed until 01/04/2017 when Kier took over. Area 6&8 is an ASC in respect of which Appendix A to Annex 23 applies. The ‘Highways England Full Business Case Investment Decisions Area 6 and 8 Asset Support Contract’ of 24/03/2017 at page 5 states with regard to AMOR:

There are notable increase from the Amey tender for some aspects such as Health and Safety, Quality Management, Traffic Management and Incident Response as well as Customer Service. (Full document here:  190420 Kier and 6 8 Decision IDC Doc 17 047 ASC 6 8 Redacted 15042019 Redacted)

The above makes reference to ‘notable increases’ from the Amey tender  in respect of:

  • Traffic management
  • Incident Response

Both the above are not simply mentioned in conjunction with DCP (damage to Crown property), they are elements of this, in particular ‘incident attendance’. Please:

  1. provide the Kier defined costs, the rates used to bill Third Parties (below-threshold) and HE (above Threshold); the schedule which is to be the same to both
  2. provide the last Amey schedule of such rates
  3. identify the notable increases?
  4. Provide the rational and agreement for these

There are clearly known rates in Area 6&8 yet Highways England deny the existence of such rates throughout all ASC’s

  1. Please explain the term ‘non-standard DCP approach’ and its implications with regard to cost
  2. What is being done about transparency in Areas 6&8;

You appear to be of the impression Areas 6&8 have no schedule of rates yet there is no suggestion of this being addressed.

26/04/2019 @ 11:31 hrs to Highways England – Subject: RE: Defined Costs Area 6&8

Please excuse this prompt follow-on from the Area 6&8 issues I raised today however, when reviewing the Area, I noted an ongoing matter retained by your contractor for a sum in excess of £10,000.

This demonstrates my concerns, principally, a failure to act in accordance with Appendix A to Annex 23, which will apply to 100’s, if not 1,000’s of invoices by Kier in Area 6&8 – the contractual process is not being adhered to, Third Parties are not being charged in accordance with the agreed process, they are being overcharged using Kier’s secret, inflated, schedule. During my recent conversation with Mr O’Sullivan it was confirmed that the contract is applicable and Jim thought an operative was paid about £10 to £12 / hour. This accords with my understanding and in turn an ultimate cost to HE of about £25 / hour.

I have no desire to become involved in individual, sub-threshold claims. However, it is likely the attached is indicative of all claims emanating from Area 6 & 8 and my concerns about ‘multipliers’ and overcharging remain serious.

Area 6&8 is an ASC in respect of which Appendix A to Annex 23 applies. The attached claim for 2 beams and 2 posts exceeds £10,000 but has been retained by Kier – likely because of the contract non-complaint process and overstatement employed inflating costs significantly. If Kier used true, actual ‘defined costs’ the matter would fall substantially below £10k, as we would expect for such a small repair.

  • Please confirm this claim will be clearly, correctly priced in accordance with Appendix A to Annex 23 with the two components separated, distinct and:
  • we will be provided the schedule of defined costs for the Area

There exists a schedule of rates in Areas 6&8 yet despite this, the contract is not complied with. Clearly the lack of a schedule of rates cited by Highways England has not led to the abuses we have reported and which you now appear to acknowledge. Even with this ‘transparency’, a schedule of rates for third party repairs, Highways England have failed to monitor and ensure compliance with the contract enabling systematic exaggeration and misrepresentation. It is apparent you now understand there is an issue with claim pricing under the ASC, concerns we have presented since 10/2015, yet it is permitted to continue in Area 6&8.

As there is no lack of transparency in Areas 6&8, what excuse is there for contract non-compliance and overstatement:

  • Please explain the difference between the conduct or Kier in Area 9 and Areas 6&8 such that:
    • in 9, Kier have suspended bringing new claims; why have they withheld presenting new claims and why does this not apply to all their ASC Areas?
    • Highways England has failed to act to ensure compliance with the contract in Areas 6&8?

26/04/2019 @ 12:36 hrs Highways England responded ….

The above and another approach, considered FoIA requests would not be commented upon at this time.

No exemption having been cited, no invitation to an Internal Review made, the matter has been presented to the Information Commissioner.