Highways England does not hold schedules of individual service providers’ DCP Rates

Since 2013, Highways England have kept ‘Defined Costs’ (a.k.a. DCP Rates or Base Rates) from Third Parties citing commercially sensitive or ‘vexatious’ when asked to disclose them.  Of 175 requests or reviews between 2013 and 07/2018 (118 from others), there was no mention the rates were not possessed, did not exist – just the opposite, they do (or what were they considering?) but there were commercial interests at stake. Subsequently, continued requests were deemed ‘vexatious’. Then …


11/2018 – A Highways England manager, Patrick Carney, informed a Tribunal DCP Rates are not commercially sensitive … a further request was made and the response:

They do not exist … they are mythical. Examples of these responses can be found here:


07/02/2019 Highways England Company Limited do not hold DCP Rates

Further to the below my colleagues have provided the following response:

Highways England does not hold schedules of individual service providers’ DCP Rates, with the exception of A-one+ who, of their own volition, took a business decision to publish what has been referred to as “DCP rates”.

For the most part, repair costs are built up on a case by case basis using defined or reasonable costs, plus third party overheads or a fee where appropriate

Consequently I can confirm information relating to schedules of individual service providers DCP Rates is not held by Highways England.

Yours sincerely

Sian Jones| Lead Information Rights Officer | Information & Technology
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD


27/03/2019 769,307 / 769307 190329 Internal Review Mr Wright 769 307  the text appears here extract from WhatDoTheyKnow:

We do not hold this information. The term ‘Defined Cost’ refers to the definition in the contract as previously provided. The contract does not contain a schedule of Defined Costs. The Defined Cost for each incident is calculated in accordance with the definition.
The overhead is not applied according to a schedule of rates. The overhead is calculated in accordance with the definition, as previously provided.

Internal Review Mr Wright 769 307 no DCP Rates


27/03/2019 – email from Highway’s England’s General Counsel

As you note from your discussions with Jim, Highways England is 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. The new schedule of costs makes no distinction between above threshold and below threshold claims. All future claims in those Areas will be taken forward on the basis of the new schedule.

In Area 9, Kier have withheld bringing new DCP claims since January this year. Those outstanding claims will be taken forward on the basis of the new schedule of repair costs.


29/03/2019 FoIA response from Highways England 190329 no rates held Final FOI Response 769391 extract from WDTK FoIA Request / Response:

For the avoidance of doubt the contract does not contain a schedule of rates for use in conjunction with Annex 23.

The term ‘Defined Cost’ refers to a definition in the contract which can be found in clause 11 at point (27). The contract does not contain a schedule of Defined Costs. The Defined Cost is calculated in accordance with the definition


08/04/2019 FoIA response from Highways England – FOI 769,534 / 769534

Following complaints from loss adjusters, Highways England commissioned an independent investigation into the pricing in Area 9 of below threshold (i.e. below £10,000) claims for damage to the strategic road network (sometimes referred to as Damage to Crown Property (DCP) or Green Claims). The investigation revealed a lack of transparency in the pricing of Green Claims in Area 9, citing the lack in the Asset Support Contract of any schedule of rates (labour or materials) for third party repairs.

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.

Whilst the investigation into Area 9 in isolation was concluded it was widened into a root and branch review to improve the end-to-end process for the recovery of Green Claims generally. This review is ongoing and a final report has not been produced.

To read more, click here.

Another similar responses is recorded that same day:

I have taken the opportunity to discuss this with my colleagues and they have provided the following statement as explanation.

Following complaints from loss adjusters, Highways England commissioned an independent investigation into the pricing in Area 9 of below threshold (ie, below £10,000) claims for damage to the strategic road network (sometimes referred to as Damage to Crown Property (DCP) or Green Claims). The investigation revealed a lack of transparency in the pricing of Green Claims in Area 9, citing the lack in the Asset Support Contract of any schedule of rates (labour or materials) for third party repairs.

None of the ASCs contain schedules of rates, and Highways England considers that the lack of transparency applies equally to above threshold claims (ie, those above £10,000) claims as well as claims below threshold.

Following the investigation, Highways England wrote to service providers under the ASCs reminding them of their obligation to charge the reasonable cost of the repair and not to duplicate or inflate costs.

Whilst the investigation into Area 9 in isolation was concluded it was widened into a root and branch review to improve the end-to-end process for the recovery of Green Claims generally. This review is ongoing and a final report has not been produced.

To address the transparency issue as soon as possible, Highways England decided that a schedule of repair costs for typical repairs to the infrastructure should be created and published. This schedule of repair costs will apply nationally to most Green Claims (bearing in mind that the new Asset Delivery Contracts remove any distinction between above and below threshold claims).

The schedule of repair costs will reflect Highways England’s view, informed by service providers and insurers, of what constitutes a “reasonable” cost for a typical repair. This increased transparency should enable claims to be processed more quickly, with less room for argument and fewer court proceedings. The new schedules of repair costs will be put on the Highways England website in April 2019 and will be piloted in Areas 3, 7 and 9, with a view to rolling them out nationally after three months.

Full response here: 190408 Internal Review 769260


08/04/2019 FoIA response from Highways England 769,535 / 769535  (WDTK FoIA Request

Extract from request:

You replied the release of all labour, plant and equipment rates, is considered commercially sensitive and inappropriate, particularly given that these rates are detailed individually with each claim form submitted to the insurance company. I am told this is not commercially sensitive and you say the rates are detailed on claims so why would it be. I am asking for the rates.

Extract:

Under section 1 of the Freedom of Information Act 2000 Highways England does not hold Schedules of DCP rates. Each incident is treated on its own merits in line with the relevant contract. The reasonable repair costs are built up from Defined Costs using the Schedule of Cost Components (as defined in the contract) plus fees and third party overheads, where appropriate. In other words effectively, the actual cost of undertaking the individual third party repair work.

Full response here. but continues:

There appears to be a misunderstanding about Mr Carney’s use of the term “DCP rates” (Damage
to Crown Property) at the First Tier Tribunal on 21 November 2018. Mr Carney in his Witness
Statement was clear about the meaning which was strictly for the purposes of the Tribunal. The
definition of “DCP rates” contained in the Witness Statement is repeated below.

Item 8 In what follows, references to the DCP Rates are references only to the materials attached to the Appellant’s Email. I make no comment in relation to the
provenance, accuracy or veracity of those attachments, all of which are matters
outside of my own knowledge.

Under section 1 of the Freedom of Information Act 2000 Highways England does not hold
Schedules of DCP rates. Each incident is treated on its own merits in line with the relevant
contract. The reasonable repair costs are built up from Defined Costs using the Schedule of Cost Components (as defined in the contract) plus fees and third party overheads, where appropriate.

In other words effectively, the actual cost of undertaking the individual third party repair work.  The subject matter of this request formed part of a recent appeal by the complainant to the First Tier Tribunal. The background to the information is also captured in the judgment EA/2018/0104.

Although the judgment is in relation to the refusal by Highways England for information under the contract where an exemption under s43 FOIA was relied upon it does contain background relevant to the information requested under this request.

Paragraph 52 of the judgment sets out the tribunal conclusion that “… the withheld information does not contain specific DCP rates. We accept Mr Carney’s evidence that the withheld information sets out target rates for the main contract as part of the tendering process for ASC Area 10, and is very different from DCP rates which are actual costs charged in emergency situations”. The Tribunal confirms that [while] “there may be some overlap in the types of items covered, the withheld information would not easily allow DCP rates to be calculated, and would not give an accurate picture. In particular, it would not show clearly how DCP rates charged to third parties are calculated, or whether different rates are charged to third parties directly by contractors”

The Tribunal summarised at paragraph 53 that “Put simply, the withheld information simply does not show what the appellant wants to know about DCP rates”.

The PIT used to apply the Section 43 exemption in this case, which was also provided in the response to FOI 762,168, has been provided again with this response. This sets out what was considered by the PIT members.

Following complaints from loss adjusters, Highways England commissioned an independent
investigation into the pricing in Area 9 of below threshold (i.e. below £10,000) claims for damage to the strategic road network (sometimes referred to as DCP or Green Claims). The investigation revealed a lack of transparency in the pricing of Green Claims in Area 9, citing the lack in the Asset Support Contract (“ASC”) of any schedule of rates (labour or materials) for third party
repairs.

None of the ASCs contain schedules of rates for third party claims, 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.

Following the investigation, Highways England wrote to service providers under the ASCs
reminding them of their obligation to charge the reasonable cost of the repair and not to duplicate or inflate costs.

To address the transparency issue, as part of a root and branch review to improve the end-to-end process or the recovery of Green Claims generally, Highways England decided that schedules of repair costs for typical repairs to the infrastructure should be created and published.

Those schedules of costs will apply nationally to all Green Claims (bearing in mind that the new Asset Delivery Contracts remove any distinction between above and below threshold
claims). This schedule of repair costs will reflect Highways England’s view, informed by service providers and insurers, of what constitutes a “reasonable” cost for a typical repair.

The new schedules of repair costs will be put on the Highways England website in April 2019 and will be piloted in Areas 7 and 9, with a view to rolling them out nationally after three months.

WDTK


17/04/2019 – From: tim.reardon @ highwaysengland.co.uk
Sent: 17 April 2019 14:47
Subject: Defined Costs

Dear Mr Swift

I am replying to the above email to Jim O’Sullivan. I am also taking the opportunity to reply to your email dated 21st March to Patrick Carney as it covers the same ground.

In a nutshell, you are seeking to compare what you believe to be the schedules of rates that Kier and BBMM use to bill third parties for damage to the strategic road network with the schedules of rates you believe Kier and BBMM use to bill Highways England.

As has been made clear to you in previous correspondence, other than Aone+ on Area 12, there is no published or available schedule of rates among service providers for unplanned / emergency work. The work involved in an emergency response is determined by the nature, scale and urgency of the incident and repair, and consequently the repair costs are a bespoke calculation. Unplanned work tends to be far less efficient than planned repair work (for which in ASCs there is a contractualised schedule of rates) and hence will be more costly. The schedules of rates specified in the ASCs are not used to work out the Defined Cost, or for assessing the reasonable cost, of repair in respect of third party claims.

Even where the ASC specifies that the repair work is to be charged by reference to the Defined Cost plus overhead, there is no schedule of Defined Costs. Each case is treated on its own merits. The Defined Cost will be the cost to the service provider of inspecting the damage and having the repair carried out, almost certainly without the advantage of any economies of scale that Highways England may be able to utilise or the advantages that may flow from a wider commercial relationship.

In any event, it does not actually matter what Highways England is charged for a repair. As Judge Godsmark QC said in the Hughes case:

“…in a case of chattel damage the diminution in value is the recoverable loss . The Claimant is not obliged to repair the chattel to recover the loss, nor does it matter if the Claimant can get the repair done at less than cost. In these cases Highways England is entitled to recover the reasonable cost of repair of the damaged barrier – not the actual cost.”

Even if there were a schedule of preferential rates for emergency repairs negotiated between Highways England and the Kier or BBMM, as the Judge says, those companies are not obliged to charge those rates to anyone else.

The issue, as ever, is what is the reasonable cost for a repair? There is not one single cost for a reasonable repair, but a range of costs all within the reasonable bracket. Highways England accepts the need for greater transparency around repair costs and, as I have previously told you, we are intending to publish a national schedule of repair costs for typical repairs to the network. These costs will not be actual costs, and they will reflect a national average rather than regional variations. This schedule will represent Highways England’s view as to the reasonable cost for repairing typical damage to the network. We will be piloting this schedule in a number of Areas, including Area 9. We are happy to sit down with you to take you through how we arrived at the repair costs in the national schedule.

In the meantime, I would like to draw a line under the issues set out in your email above and your email of 21st March, and many other emails covering the same ground. The tone of your emails, particularly to Patrick Carney and those involved in Green Claims, is often belligerent and offensive and this has to stop. We have answered your questions as best we can and there is nothing more we can usefully add.

Yours sincerely

Tim Reardon

Tim Reardon
General Counsel
Highways England


15/05/2019 WDTK FoIA Request response:

Works in Area 6 and Area 8 CRS Ref: 770,360 / 770360

I’ve got an email that says the areas have no rates for damage works and will not
have. Why’s this and what’s the difference in rates now Kier have got them?

You are correct, there are no schedule of rates within our Contracts for the
calculation of the repair costs for claims against negligent Third Parties (TP) who
have caused damage to the Strategic Road Network. Instead such claims are
calculated using the contractual mechanism of Defined Costs incurred. Though they
are pursued as reasonable costs under an action outside of contract and under Tort.
The majority of TP repair works are involved in an emergency response which is
determined by the nature, scale and urgency of the incident and repair, and
consequently the repair costs are a bespoke calculation related to need.
Such unplanned work tends to be far less efficient than planned repair work (for
which in our Asset Support Contracts there is a contractual Schedule of Rates) and
hence will be costlier. The Schedules of Rates specified in the ASCs are not used to
work out the Defined Cost, or for assessing the reasonable cost, of repair in respect
of such TP claims.

For the avoidance of doubt, we do not have any contracts with Kier that contain a
schedule of rates for the calculation of the repair costs for claims against negligent
TP’s who have caused damage on our Strategic Road Network

The conflict is not lost on the Information Commissioner – the contradictions and logic supporting the existence of the rates


13/06/2019FoIA Response on WDTK

In your latest email you have asked the following questions:

What’s this mean? Instead such claims are calculated using the contractual
mechanism of Defined Costs incurred.

We consider that this question has been addressed previously. For the avoidance of
doubt, we confirm that the Asset Support Contract contains the mechanism to
produce a Defined Cost. The model Conditions of Contract for Highways England
Asset Support Contracts (ASC) is publicly available online
https://webarchive.nationalarchives.gov.uk/20140603121903/http://assets.highways.gov.uk/about-us/procurement-asset-supportcontract/ASC_Model_Conditions_of_Contract.pdf.

The term ‘Defined Cost’ refers to a definition in the contract which can be found in
clause 11 at point (27). The Defined Cost is calculated in accordance with the
definition. The contract does not contain a schedule of Defined Costs as the
mechanism sets out how the Defined Cost is calculated.

”Why are there no rates schedules?”

The Asset Support Contract operates a target price with a pain/gain share is used by
Highways England for most scheme work. The target price mechanism is not used
for Green Claim repairs following challenge by insurers who were not prepared to
accept any pain/gain approach in their payment of claims for damage repairs from
negligent drivers.

There are rates contained in the contract i.e. the Pricing Schedule that are used for
determining the target cost as part of this pain/gain share mechanism. The Pricing Schedule, including Appendices A, B and C, contain the rates tendered by the
provider. These rates are exempt from disclosure as the conditions under section 43
of the Freedom of Information Act 2000 are met. This was recently upheld by the
First Tier Tribunal in an appeal against the Information Commissioners decision
(reference EA/2018/0104).

As stated in our previous response there are no rates contained in the contract, or
held by Highways England, that are used in the calculation of the repair costs for
damage caused by third parties to the strategic road network.

The majority of TP repair works are involved in an emergency response which is
determined by the nature, scale and urgency of the incident and repair, and
consequently the repair costs are a bespoke calculation related to need.
Such unplanned work tends to be far less efficient than planned repair work (for
which in our Asset Support Contracts there is a contractual Schedule of Rates) and
hence will be costlier. The Schedules of Rates specified in the ASCs are not used to
work out the Defined Cost, or for assessing the reasonable cost, of repair in respect
of such TP claims.

”How’d you get a rate? What calculation? Give me examples.”

Please see our response to your first question. Please see an example attached –
this document is for illustrative purposes only and has been prepared solely in
response to this request.

”You told me costs were different in 6 8 and 9. How so and what’s the difference with
what you get charged?”

It is not clear what this statement refers to. The contract for area 9 is publicly
available https://data.gov.uk/data/contracts-finder-archive/contract/1238249. The
costs in areas 6, 8 and 9 are determined under this contract. The other areas have
separate contracts and the costs are determined in accordance with the relevant
contracts. You have been provided with access to some of our contracts in
response to other requests you have made. If there are any other contracts that you
require access to then we can provide access if you identify them.

The above is accompanied by a template – Example Cost Breakdown Document below over threshold. For more about this, click here.

 


26/06/2019 WDTK FoIA response

We are writing to confirm that we have now completed our search for the information, which you requested on 5 May 2019.
Your request stated:

“I was billed for Area 9 and no one will tell me about the rates. I’ve got an email says in
Area 9, Kier have withheld bringing new DCP claims since January this year. Those
outstanding claims will be taken forward on the basis of the new schedule of repair costs.
Why’s Area 9 not bringing claims this year. I want all the information about it. What’s the
new rates. The email says these arent sensitive.”

Following complaints from loss adjusters, Highways England commissioned an
independent investigation into the pricing in Area 9 of below threshold (i.e. below £10,000)
claims for damage to the strategic road network (historically referred to as Damage to
Crown Property (DCP) or Green Claims). The investigation revealed a lack of
transparency in the pricing of Green Claims in Area 9, citing the lack in the Asset Support
Contract (“ASC”) of any schedule of rates (labour or materials) for third party repairs.
None of the ASCs contain schedules of rates for repairs carried out as a result of damage
to the network caused by negligent drivers. We consider that the lack of transparency
applies equally to above threshold claims (i.e. those above £10,000) claims as well as
claims below threshold.

To address the transparency issue, as part of a root and branch review to improve the
end-to-end process for the recovery of Green Claims generally, Highways England
decided that schedules of repair costs for typical repairs to the infrastructure should be
created and published. The schedule of repair costs will apply nationally to Green Claims
brought for or on behalf of Highways England (bearing in mind that the new Asset Delivery
Contracts remove any distinction between above and below threshold claims). The
schedule of repair costs will reflect Highways England’s view, informed by service
providers and insurers, of what constitutes a “reasonable” cost for a typical repair.

The new schedules of repair costs will be launched in Areas 3, 6, 7, 8 and 9 from June,
with a view to rolling them out nationally after three months. We are currently engaging
with the insurance industry and suppliers to finalise the schedule. Once the schedule of
repair costs is finalised it will be published, it will not be commercially sensitive. This
increased transparency should enable claims to be processed more quickly, with less
room for argument and fewer court proceedings.

Kier have initially agreed to temporarily hold all new claims since January 2019 and to
apply the National Schedule of Repair Costs to those claims.