DCP Rates – Highways England Digging Holes for Themselves?
Is stating they have no Damage to Crown Property (DCP) Rates1 for repairs undertaken by their contractors, the lesser of 2 evils for Highways England?
Is a (false?) confession ‘we have never been able to check the invoices but have simply paid £millions‘ better than the alternative; ‘we have the rates but let contractors charge what they want and … could care less about what they charge the public and … do not know how much they (possibly) owe us’?
1DCP Rates are the base rates (cost pre-profit) for staff, operatives, plant and materials, also known as ‘defined costs’, ‘notional rates’ or ‘nominal rates’ for attendance and repairs following an emergency incident; collision, fire or spill. They are NOT commercially sensitive (stated 11/2018). They differ from:
ASC Rates: for pre-planned (scheme) works i.e. for schemes and the like. We have never sought these rates, we have no interest in them and accept they are commercially sensitive.
But is this latest statement true – are ‘defined costs’ a myth?
If you smash into a barrier, expect a bill …in many instances, an exaggerated invoice for the past 5+ years thanks to the Authority’s negligence. The demand will likely be accompanied by insufficient information for you to make an informed decision and resistance could result in proceedings being issued – with some contractors prepared to make false statements to progress legal action taken in the name of Highways England.
It seems for years Highways England have at best failed to protect those they serve; abandoned them to contractors some of whom are profiteering. ‘If’ the above is true and Highways England really have no rates for DCP works, the Authority has:
- since 2012, on numerous contracts, put in place rates for planned works (ASC Rates) but ‘overlooked’ ensuring there is a schedule of prices for repairs (DCP Rates)
- been unable to confirm the DCP rates charged by their contractors for repairs are correct, as agreed; there is no agreement!
- ‘missed’ the lack of DCP rates on every audit – even when directed to concerns about the very subject multiple times since 26/10/2015
- been unable to establish whether their contractor has recovered:
- in accordance with the contract
- over a threshold that would see their lump-sum payment reduce i.e. the burden on the public purse alleviated – for more about this issue, click here.
- Been misled by their own contractor
We have presented facts to Highways England for years. Just how do you overlook such a basic requirement, not realise that there is no price schedule when you are daily receiving and paying (without thought?) invoices? Highways England receive about 5 bills / day for over £10,000, if just one per day is from an ASC, that’s a minimum of £2 million / annum … we have seen invoices for over £100,000. How have their auditors, the National Audit Office, not identified the failing?
Then there was the 01/2016 Audit instigated following our 10/2015 report. From day-one Kier used their own ‘1153’ process and not the contractually agreed methodology. But who would know; Highways England kept the document / process secret, Kier did not comply, the audit make no reference to ‘Appendix A to Annex 23‘ and seemingly is unconcerned with Kier’s £10 million (?) of overstatement between 07/2014 and 10/2015 when ‘1153’ saw gross overstatement simply for the incident attendance aspect – £4,700 as opposed to a few pounds! What effect should this profiteering have had on the public purse in a pain / gain arrangement? None according to the Authority; no contractor had ever reached the threshold such that their lump-sum payment would be reduced. An unrealistic threshold or misrepresentation by the contractor to Highways England … whose audit makes no comment upon this facet.
And 1153 saw Kier gush information; present detail about the amounts and calculation involved (the figures are here). On one hand ‘commercially sensitive’ (?) information was volunteered to support the 1153 process that saw gross exaggeration on the other, it is subsequently deemed ‘commercially sensitive when required to corroborate compliance with a simple, contractually agreed, process; Appendix A to Annex 23.
Aside of their own audits (which indicate DCP Costs were present) and those of the National Audit Office, Highways England complained in a ‘statement of truth’ 07/2018 that they had received 175 FoI requests / reviews for rate related information. These sought DCP (damage to Crown property) rates and in respect of each Highways England either stated ‘commercially sensitive’ or, if the requester persevered, the approach was deemed vexatious. 118 requests are listed here. Yet in reply to none did the Authority say ‘what you are seeking is not held’.
An example of a request response can be found here – Highways England 160406 FOI 735547 re pricing and inflation160406 FOI 735547 re pricing and inflation. This is one of many (118?) requests / reviews specifically for DCP Rates, claim costs:
- 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?
- What increases in charges have been agreed year on year?
The response explains that the process is a:
‘Cost reimbursable service: the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work.’
There is a ‘cost’ i.e. base rate (DCP Rate) or ‘defined cost’ to which is added an uplift. This is the process set out in some contracts at Appendix A to Annex 23; defined cost (£) + Overhead (%) = maximum to charge a Third Party (driver, fleet, haulier or insurer). It is a process Kier have no complied with sine the commencement of the Area 9 contract (07/2014) and is not applied in Areas 6&8. The above FoIA response from the Authority adds:
In accordance with the contracts, the prices are adjusted by the contract price adjustment for inflation on an annual basis.
The above is clear; there are contract prices and these are adjusted annually. The reference to ‘inflationary’ is a further indicator that the rates have hardly moved; inflation being low i.e. a daily / weekly movement / calculation is not undertaken as is now being indicated (the changes are annual), any movement would be slight over the year, unreasonable to undertake with frequency.
Are these rates a myth or do they exist? Watch this space … the Information Commission’s Office (ICO) made a telling statement in respect of an ongoing Appeal to a Tribunal EA/2019/0119:
29/04/2019, the ICO wrote:
c. If indeed the Appellant’s request sought DCP rates as opposed to ASC contract definitions it would appear that HE’s response that such information does not exist is incorrect, as in a previous DN, it was ruled that DCP rates do in fact exist but they are commercially sensitive;
Within the same document, the ICO then addresses the ‘if indeed’ statement, answers their uncertainty, by confirming what I sought at para 20:
d. ‘It is clear from the Appellant’s Grounds that he is seeking DCP related information.’
The full submission can be read here. EA20190119 Philip Swift v ICO Submissions by ICO 29042019.
There is much to indicate the ‘not held’ statement is false, that Highway England’s statement, whilst seeming to get them off the hook, has ironically, seen them dig a rather large hole for themselves.
Continued here – ‘We have no DCP Rates’ – Really?