The cat is out of the bag – contrary to Highways England’s previous statements, ASC (pre-planned) rates and DCP (damage to Crown property) rates are the same.
Following a collision, spill or fire on a motorway, Highways England have long helped their contractors profiteer at the expense of drivers, fleets, hauliers or their insurers (Third-Parties).
From 2013 to 2018, Highways England prevented Third-Parties from completing a simple, contractually agreed, equation to ascertain what Kier Highways should be charging if their vehicle was unfortunate to cause damage to Crown Property (DCP), for example, hit a barrier. The math’ should have been:
‘defined cost’ (£) + Third Party Claims Overhead (%) = maximum (£)
The TPCO is known, so the equation was:
‘defined cost’ (£) + 25.29% = maximum (£)
The ‘maximum’ was also known, it was the presented cost. Therefore, with regard to an AIW (Kier emergency incident attendance operative), as any schoolgirl or boy will tell you, the equation can also be presented as £73.05 – 25.29% = ‘defined cost’ which equates to £58.30/hour (charged even more after 5pm and of a weekend because Kier claimed they pay their AIW’s a 1.5x multiplier after 5pm).
Odd … Highways England was being charged £23.71 / hour. Not only did HHJ Godsmark (Judgement para. 25) expect the rates to HE and a TP to be the same, Kier was telling us ‘the rate to Third Parties and the Authority is the same, it is the uplift that differs’. This is untrue. We asked Kier Highways, Highways England and their lawyers to do no more than was set out in the contract (Appendix A to Annex 23); bill using the agreed equation. But no, they continued to ignore the agreement.
We repeatedly attempted to obtain these ‘rates’ so that we could produce the sum, only to be told the rates were ‘commercially sensitive’. But in 12/2018, a Tribunal finding for us, the DCP rates were to be released. But they were not, the Authority U-turned; there was no such thing – so just what was deemed commercially sensitive that now does not exist? Highways England’s previously cited ‘held, but commercially sensitive’ became:
- we have ASC rates for pre-planned works, schemes but …
- we overlooked agreeing on any DCP rates for Green Claims (claims against Third Parties)
Then, in 2020:
- a judge was informed by Kier/Highways England’s own witness (a Kier employee) the charges to Third parties included unauthorised uplifts (6 years of misleading, overstating, profiteering – £millions inappropriately demanded and received form Third Parties). The Judgement records this, at para. 36.
- multipliers charged to already inflated rates for AIW’s, gangers and TM staff for working after 5pm of a weekday (it was claimed they worked 8am to 5pm and were paid uplifts after or of a weekend) were considered ‘undoubtedly fraud’
- There are schedules of rates – for people and plant
- DCP rates are ASC rates – they are the same!:
approximately annually since 2015, Kier provides the Authority information setting out the way they propose to charge people rates under the Area 9 ASC. This information is reviewed and the outcome is:
- a set of people rates it is recommended Highways England pay,
- for all work performed by Kier in Area 9 under the ASC:
- scheme work, and
- repair work.
- agreed people rates are used consistently across all services in the contract which are reimbursed on a defined cost basis, including those services required by the contract to be delivered as cost reimbursable, schemes to replace life expired assets, or enhance the Area network, and Green Claims against third parties for damage to the Area network.
- approximately annually since 2015, Kier provides the Authority information setting out the way they propose to charge people rates under the Area 9 ASC. This information is reviewed and the outcome is:
There you have it; there is no schedule of DCP rates (in isolation) because ASC rates are DCP rates … they have been hiding in plain sight for years!
This information has been conveyed to the ICO – registered users read more here.
If these agreed rates are not being used to bill Third-Parties what is?
The answer was, until relatively recently, an inflated set of rates to which unauthorised uplifts were added – assisted and enabled by the Authority. Drivers, Fleets, hauliers or their insurers (Third Parties), the public, which Highways England is to work for, were fleeced in the Authority’s name. Between 01/07/2014 and 10/2015 (when we put an end to the process), Third-Parties were brazenly strong-armed out of £millions using a process that bore no relationship to the contract (1153) – from day-one, Kier ignored the contract and Highways England did nothing. Kier was happy to convey the costs then, to dupe Third- Parties; no commercial sensitivity cited when supporting deceit! Just quickly – Kier divided those annual costs by 1153 claiming this was the number of claims they handled every year – but they were actually handling about 5-times this, and many of the tasks undertaken by the staff were already paid for by the Authority, by the taxpayer.
So what rates are used now? Still not the above, simple & reasonable, contractually agreed process – this would not allow Kier to profiteer! Instead, seemingly unable to have Kier comply with the contract, Highways England have altered the contract to assist Kier to gain more – by Deed of Variation (example: Area 3 Deed of Variation) which allows contractors free reign to charge what they like!
Kier did not have authority to seek sums greater than the defined costs formula (above) under the contractual agreement with Highways England, so, rather than have Kier comply, Highways England released the contractual limitation.
Highways England will say pricing of claims is all about ‘reasonable’ rates. But who decides what is ‘reasonable’? In 2014, it was the obvious ‘what you charge us, you charge a Third Party’, in 2019 it was the Authority with the ‘NSoRC‘ but this was short-lived with Highways England claiming insurers put pay to it – but they are unwilling to evidence this (FoIA request resisted) and it appears contractors would not sign up.
Currently … the contactor decides the rates! Not based upon their actual costs of labour and materials, but an imaginary formula which is considerably higher than comparable market rates – much higher than those charged to the Authority.
An updated approach to the National Audit Office can be read here.