Anyone receiving a Kier Highways Ltd (Kier) demand for payment in Area 9 (West Midlands) needs first to understand:
- the route a bill takes – subject to value
- that there are two sets of rates; ‘mates rates’ (to Highways England) and higher rates to Third Parties (drivers, fleets, hauliers and insurers) – but there should be one set.
- there are rules that should be applied when billing. These are set out in a brief document – Appendix A to Annex 23 – within the contract.
The process is complied with, 1,000’s of Third Parties are overcharged and this occurs with the knowledge and assistance of Highways England. To enable the practice to occur and continue, false information is provided to the public …
Do not be fooled or bamboozled by Kier Highways or Highways England. There are many facets to a claim, lots of figures, much documentation but most issues come down to the basic COST of a component whether it is an Operative (person on the ground), Staff (office worker), Plant (vehicle) or Material (barrier, nuts and bolts etc.). Highways England recently compared the composition of a road to cake-making, we tend to think of the components, the street furniture, as a giant sized Meccano set – particularly the TCB (tension corrugated barrier) and the like.
Pricing is NOT complex. You take the components used and you apply a process:
Cost + uplift = charge
There is a cost that should be applied when billing a Third Party and Highways England (it is the same to both – or should be). There is a percentage uplift added to the costs. This results in the total charge. Simple.
But Kier and Highways England are aware the process is not applied but rather the process is confused and / or hidden. Third Parties are overcharged, they are not charged in accordance with the contractually agreed system (above – cost + uplift).
APPENDIX A to ANNEX 23
The section of the Area 9 contract (and other Areas) relating to the charging of Third Parties (drivers, fleets, hauliers and insurers) is Appendix A to Annex 23. This sets out how Third Parties are to be charged ‘no more than‘.
Appendix A to Annex 23 is a Third Party’s shield … or should be. But what use is a shield you do not know exists or cannot locate when required? Appendix A should be the protection that sets out how the contractor reaches the MAXIMUM they are to be charged.
- Appendix A has applied since 01/07/2014 – we challenge you to find it
Is it coincidence that this small section has been hidden and Kier have failed to comply with it from day one?
Highways England know it is not complied with, we sat down with Sarah Green, their claims manager 22/06/2017 and explained this, providing documentary evidence of non-compliance.
For more about Appendix A, see ‘contract’ below.
We comment upon the above Freedom of Information Act request as follows:
The request has been avoided and we make the following observations based on information we possess and the documentation the requester sent us about a late 2015 Area 9 claim:
AIW’s. Kier call their first response staff AIW’s (Asset Inspection Watchmen). This are the operatives that attend emergencies.
We do not wish to confuse matters with historical charges but, overnight since 10/2015, AIW’s are (for no good reason provided) charged at a lot more per hour. In 2015, Kier Highways were forced to abandon their nationwide ‘1153’ methodology that saw gross exaggeration between 07/2014 and 10/2015. The process should never have commenced, it did not accord with the contract – Appendix A, was based on flawed figures which, to this date, have not been evidenced.
- Highways England failed to address the ‘1153’ contract non-compliance, we did so.
In or about 10/2015, Kier adopted their current approach. Odd, because since 01/07/2014 they should only have one, the contractually agreed process – Appendix A to Annex 23. But the new (current) process, whilst purporting to be contract compliant, is not, it is exaggeration in another guise.
As of 10/2015, overnight, Kier began charging more than £70 / hour for an AIW, they abandoned 1153 because we caught them out and demonstrated it resulted in more than 5x exaggeration! But 1153 should not be forgotten; unlike now when Kier and Highways England do their utmost to keep data from us, pre-10/2015 Kier gushed with figures as 1153 was supported with great detail – see 1153 Charge Components. For example, Kier provided the annual costs of AIW’s and their vehicle (plant):
|Asset inspection watchmen||38||Labour||£2,750,935.90|
|4×4 AIW vehicle||19||plant||£440,183.25|
Some simple math’ based upon the above:
- each AIW costs £72,393.05 / annum
- each vehicle costs £23,167.54
AIW’s work 9 hour days, so that’s:
- £1,392.17 / week
- £278.42 / day
- £30.94 / hour
The above, using ‘1153’, includes any uplift and profit. Note – ‘1153’ does NOT accord with Appendix A to Annex 23.
But, overnight, in or about 10/2015, after a year of aggressively defending their charging Kier threw in the towel. But their new rates saw an AIW charge increas from about £30 / hour to over £70 / hour. AND … as of 10/2015, Kier started charging multipliers! Prior to 10/2015, these alleged uplifts (we do not believe they are a cost incurred – see below) formed part of the total annual cost, there was no charge for ‘after 5pm’ working and all additional costs made up the total displayed in the 1153 figures.
Now compare the 1153 figures that indicate the cost + profit of an AIW is £30 / hr (07/2014 to 10/2015) with the figures detailing the base rate or defined cost of an AIW at £58.32 post-10/2015
- how is the base rate (pre-profit) £58.32 / hr unless Kier were operating at a loss when charging Highways England <£30 / hour, or the figures are false, intended to deceive?
In a recent (05/2018) FoIA response, the defined cost of an AIW during 2015, the charge to Highways England, was LESS THAN £25 / hour. A Third Party is to be charged by use of the same defined cost – see below.
Highways England appear to be avoiding the questions at ‘Kier Highways Ltd INCIDENT RESPONSE‘.
Based upon the information in our possession, drivers, fleets, hauliers and insurers are being systematically overcharged and this is known by Highways England.
22/06/2017, we met with Sarah Green, Highways England ‘Green Claims’ (claims against drivers) manager – Mrs Green is also head of Dart Charge. Area 9 was to be investigated as confirmed in an FoIA response which can be read here – FOI JSmith HE investigate Area 9, the MS Word version is here – 170700 FOI JSmith
Grant Thornton were to be appointed to undertake the inquiry but eventually, KPMG contacted us and we spent almost an hour conveying our concerns in 11/2017. It took more than a year for Highways England and / or KPMG to conclude their ‘investigation’ of the concerns we evidenced 22/06/2017, in a meeting of about 3 hours; on 21/09/2018 Jim O’Sullivan, Chief Executive of Highways England, was dismissive and referred those with concerns to the courts – the response can be found here.
It appears the intention is to obstruct, confuse and prevaricate to enable the over-charging process to continue, to enable profiteering. We believe exaggerated invoices are being issued at the rate of 3,000+ / annum – or more than 12 every working day (5,400 incidents / annum, 60% culprit identified, 260 working days).
Anyone presented a bill from Kier Highways should, at the very least, consider the following examples of anomalies, avoidance and excess:
- The extract from the contract
- Cost of an AIW; ‘defined cost’ + ‘TP Claims Overhead’
Within the FoIA reply of 14/11/2018, Highways England refer to the contract but do not assist by identifying which section and where this can be found! Highways England make no reference to Appendix A to Annex 23. We suspect this is because they are aware it is not complied with – they refer to a contract which is not enforced, ignored by both Kier Highways and Highways England.
Highways England placed the contracts and annexes on line but not the Appendix …
the very section that relates to and ‘protects’ drivers, fleets, hauliers and insurers (Third Parties) by setting out how they are to be charged ‘NO MORE THAN’, is kept secret, hidden from the people who need it.
In no correspondence since 2014 have we seen mention of Appendix A from Highways England or Kier.
- How did we learn of Appendix A to Annex 23? By luck …
In early 2017, we attended a Court hearing. Highways England were the claimant and giving evidence for them was Kier’s former claims manager, subsequently referred to by Highways England as a ‘silly little girl’. The statement of the witness was accompanied by exhibits, one of which was Annex 23 of the contract and on the end of this, little more than an A4 page, was Appendix A. We had not seen this before and it has not been produced as an exhibit since!
- 02/2019 update – Highways England place Appendix A to Annex 23 online, more than 4 years after it came into effect – conveyed in a WhatDoTheyKnow FoIA response – click here
Time and time again, Highways England explain to people that if they have an issue, ‘take it up with a Court’. But how can a Third party do so effectively, meaningfully when:
- Highways England and Kier keep them from the pertinent section of the contract
- Kier, on behalf of Highways England (and in the name of), are prepared to misrepresent facts …even to a Judge?
How does Highways England think anyone can best present this matter at Court, put an informed case and obtain a fair hearing, when they hide the very section required, relating to charging and know it is not complied with?
So, yes, ultimately it may be for the Court to decide what is reasonable and it is open to the owner/driver of the vehicle concerned or his/her insurer to challenge the costs being charged in Court. But what if there are rules agreed at the commencement of the contract that relate to an owner / driver that a Third party does not know about and even if they did, Highways England present a witness who will not convey fact?
How can the layman understand what is a ‘reasonable’ cost and why should they have to? Highways England addressed this within the contract; the MAXIMUM a Third Party is to be charged is:
defined cost (£) + Third Party Claims Overhead (%)
Kier can charge a Third party less, but ‘no more than‘ the base rates, nominal charge or defined cost (£) to which is added an uplift (%), the TP Claims Overhead (TPCO). But Kier have not complied with this and a Third Party will not be told the base rates. Good luck at Court – Highways England are sending you to a gun fight armed with … not even a knife!
- Where in the reply received is there reference to the contract section – Appendix A to Annex 23?
- Why is there no reference of the very section that addresses the query?
Where is the open-handed approach of Highways England, a balanced, fair reply, the evidence they are serving Third Parties, their public?
The figures, the MAXIMUM:
For a late 2015 incident, the claim papers we were asked to review display a charge £73.05 for an AIW. To this £73.05 is added a 1.5x uplift as the incident was of a weekday, after 5pm. An example of such a bill, an extract from Kier Highways ‘Cost Breakdown Document’, is:
The Cost Breakdown Document (CBD) extract (above) displays no breakdown of ‘defined cost‘ and no mention to the percentage uplift, or the Third Party Claims Over-head. Instead, the above appears to indicate there is an hourly ‘base rate’ – and as a Third Party is kept from the ‘defined cost’ + TPCO process, why would they think otherwise?
However, when a bill is presented to Highways England they see charges separated out as ‘rate’ (defined cost) and ‘fee’ (their uplift). In this 02/06/2018 Area 9 claim, the labour, to include AIW’s are charged using a ‘rate’ to which a fee (uplift) is added of 7.41%:
It appears Kier have gone to the trouble and / or expense of setting up 2 processes to enable a Third Party to be duped. Note: not one operative above is charged at more than £23.19 / hour to Highways England … yet a AIW’s base rate, defined cost, is said to be over £58 / hour!
Returning to the colorful CBD extract (above), note ‘BASE RATE’ is used to describe the hourly rate. This is NOT the base rate – the base rate or ‘defined cost’ is explained below. The contract (Appendix A to Annex 23) says there is to be a base rate + uplift … where is the uplift in the above document, where is the percentage added, the TPCO? There is none therefore, if the contract is complied with, the ‘base rate’ must be the defined cost + TPCO i.e. it is not a ‘base rate’. But it is also not the defined cost + TPCO!
As explained below, ‘base rates’ are the same to Highways England and Third Parties, or they should be. Logic also dictates this – the base rate of anything does not change subject to who is billed – an operative, plant or material costs no more simply because it is charged to a Third party.
What should have been charged in the above CBD extract for an AIW, if complying with Appendix A to Annex 23, is not £73.05 / hour but:
25.29% of £23.71 is £5.93. The calculation is therefore £23.46 + £5.93 = £29.39 / hour.
- Why have Highways England not disclosed this?
- Why is it for us to set out the facts?
If you don’t believe the above is correct, ask Highways England to confirm – the Freedom of Information Act should prove a simple means by which to ascertain the facts. There should be no issue; both the figures (defined cost and TP claims overhead) have been supplied in response to FoIA requests, are in the public domain and linked to (above).
- the ‘base rate’ is NOT a base rate. It is said to be the base rate (defined cost) plus TPCO – see breakdown here – this was also explained to a Judge.
- the base rate of £23.46 (above) is NOT used – but rather the base rate or ‘defined cost’ is claimed to be over £50 / hour – breakdown.
- If the ‘cost’, the base rate before profit, is over £50 / hour, why are Highways England paying less than £30 / hour?
The fact is, an AIW should be charged at about £30 / hour. They are not. To justify the price presented Kier Highways must misrepresent facts. They have done so to us, to Third Parties and to the Courts. The conduct is enabled by and undertaken in the name of, Highways England – in whose name proceedings are issued.
UPLIFT / MULTIPLIER
Kier say that their AIW’s work 8am to 5pm, core hours. Kier tell us, Third parties and the Courts this. They have nailed their colours to the mast and set out the charging rates in their insurers Guide 2 the relevant extract from which is:
If a company tells you and the Court that they are charging a 1.5x multiplier because it is a cost they incur but it is not, how is the conduct other than dishonest? To put it another way…
if someone dishonestly (knowing it to be untrue) makes a false representation and intends, by making the representation, to make a gain for themselves or another or to cause loss to another (such as a Third party) or to expose another (such as a Third party) to a risk of loss, are they committing a fraudulent act?
We have been informed by AIW’s that they DO work shifts and are NOT paid the uplifts. You would expect them to know! We posses time sheets for some of them – they work shifts and the time sheet (Daily Time Costing Sheet) has a check box for ‘day’ or ‘night’ shift. But working shifts and not being paid the uplift is in contradiction of:
- Statements made to us by Kier management
- A statement of truth
- Statements made to the Court
- Kier’s ‘Insurers Guide’
10/2015, Kier charged over £70 / hour for an AIW and additionally added uplifts, claiming:
- AIW’s do not work shifts, but 8am to 5pm weekdays (‘core hours’).
- AIW’s are paid uplifts:
- after 5pm of weekday 1.5x,
- of a weekend 2x and
- of a Public / Bank Holiday 2.5x.
We do not believe the above is true – for more information about the exaggeration, click here. This month, 11/2018, when asked about shifts an AIW explained these ARE worked, specifically:
‘3 rotation of 9.5 hrs Monday to Friday 24 hrs a day call out on weekends’
Asked about whether uplifts (1.5x salary after 5pm weekdays, 2x salary of weekend etc.), were paid, the reply was:
‘no we are on single pay only
even when we are called out’
Another referred to overtime as at ‘flat rate’. However, a Kier witness has made a statement of truth to a Court and given evidence stating:
“Multipliers are used for staff who are called in out of hours.
They cost us the same multipliers“.
In cross examination the Q & A (question and answer) to the Highways England’s witness was:
Q. Do the multipliers reﬂect the overtime that is paid to the accident inspection watchmen?
Q. This multiplier, how are these ﬁgures arrived at?
A. It’s just what, what’s quoted in the contracts in relation to working, your core hours; you’re paid up for your normal rate. You are entitled to overtime and there’s also a stand by allowance if you’re called out, or on a standby rota as well, which we don‘t apply to it.”*
*source – Court transcript
Third Parties are being charged an extra 50% (£36.53) per hour for each of the AIW’s; that’s a 50% uplift on a 100%+ inflated charge.
And if you want further evidence Kier are not complying with Appendix A to Annex 23 just look at item ‘d’,
‘Planning’ is addressed by the Third Party Claims Overhead which Highways England make mention of in their reply.
But the Cost Breakdown Document (CBD) provided (extract above) displays charges under ‘planning’ separately. Why? If Kier have complied with Appendix A to Annex 23, planning costs are catered for in the uplift of 25.29%.
A further example of an Area 9 CBD (Cost Breakdown Document) , the ‘planning’ charges appears here:
The ‘planning’ charges appear separate and total over £600 yet this charge is addressed by the 25.29% uplift that is the Third party Claims Overhead (‘d’ above). The charge appears to be a duplication … on 1,000’s of invoices.
Again, why does the CBD (above) not set out the elements, the Defined Cost and the TP Claims Overhead? It does when Kier submit a bill to Highways England.
Could it be that to do so would clearly identify non-compliance with the contract?
How simple should the process be? Very!
It is Highways England and Kier that wish to obfuscate and frustrate, they make it seem complicated. But there are 2 components you need to know:
- a base rate (%)
- the uplift (%)
Highways England say comparison is difficult, not straightforward. Really … why?
The BASE RATE is the same to Highways England and a Third Party. Comparison is not simply possible, it is easy as the costs are to be identical! The response received in FoIA request about Area 9 dated 14/11/2018 – Mr Andrew Wright FOI 766 514 (1) – was:
Comparing rates is not always possible in the way you state; as there is a difference between how Highways England and the various service providers present the assessment of reasonable costs.
There is a difference in how Kier present to Highways England and Third Parties. It appears the difference exists to ensure Third Parties do not realise they are being fleeced. The request in question did not ask about different providers but about Kier Highways in Area 9.
Highways England also stated:
It is not a comparison of like for like if the variables to the build-up of the rate in question are different.
But the variables (staff, operatives, plant and materials) are the same and they have the same base rates, notional rates or ‘defined costs’. To a Judge, giving evidence for Highways England, Kier Highways claims manager who apparently put their latest process in place said:
Kier: … we charge a fee to Highways England which is I think on this one was, on that contract at that time was probably 6.5 per cent.
Question: What was the equivalent uplift to insurers?
Kier: 20.58 (percent)
Question: could you just repeat those figures?
Kier. I think, I think off the top of my head it’s 6.5 for area, Highways England area 13 but it’s a fee, it’s not an overhead.
THE DISTRICT JUDGE: The other one is what, 28?
Question. The answer is you do not charge the same, do you?
Kier. Sorry, the base, okay, the base rate is the same
But it is not, the base rate is not the same. The base rate to Highways England is about £24 adding the stated (above) 20.58%* (or about 1/5th), increase the rate by about £4 to £28 / hour … how does this reach £73.05 / hour unless the process which it is stated to a Judge is not followed?
- *the figure of 20.58% appears here and is form Area 13. The figure for Area 9 is 25.29%.
- The 20.58% figure is interesting as we are told Appendix A to Annex 23 (defined cost + TPCO) does not apply there – that it is cited by Kier demonstrates what we have note; Kier use the process throughout their contracts, to include TfL.
- we also question whether Highways England know where Appendix A to Annex 23 applies!
Highways England also replied to the FoIA request:
Due to complexity and nature of the strategic road network it is not possible for all assessment of damage to follow the same format with the same cost items. The requirement is that each claim is supported by sufficient and suitable information.
In Area 9 the claim presentation could follow the same format. It does in Area 3 with Highways England advising they like the CBD. Indeed, we can see as many as 3 differing formats for the presentation of cost to Highways England. However, when Highways England receive a CBD it breaks down Rate and Uplift. For example, in this Area 3, 2016 incident, Highways England are charged for ‘planning’ with columns for ‘base rate’ and ‘overhead’
The above is unclear, such is the quality of documents often accompanying such claims, but as an example, the ‘incident identification’ charge displayed is:
|DCP Technical Assistant||0.25||£15.30||£3.83||£0.25||£4.07|
EXAGGERATION WHEREVER YOU LOOK
This page does not begin the scratch the surface of the evidence we posses of exaggeration and made available to Highways England. What Third party has the time to review such claims and why should they have to … why is their Public Authority not assisting and protecting them?
Take another look at the CBD above, the charge under ‘Incident Identification’ of £4.07 to Highways England; 15 minutes of the technical assistant’s time at £15.30 / hour. Now compare it to the CBD pretested to a Third party:
- A Third party should be charged £18.45 / hr (£15.30 + 25.29%) for a technical assistant
- To a Third Party ‘incident identification’ has taken not 15 minutes but 2.5 hours
- To Highways England the charge is £4.07, to a Third party over £60.
The incident / claim presented to Highways England follows the normal process; it is for over £10,00. The claim to the Third Party is for less than £10,000 which would you expect to involve more administration?
- How have Kier Highways arrived at the above 2.5 hours / £60+ fee under ‘planning’ to a Third Party?
To quote the former claims manager for Kier, the relevant extract from the statement presented to a Court reads:
The time spent on ‘each and every incident across the whole network’ is considered. So the charge is an average.
Clearly this is not a ‘mean’; dividing the sum of the values in the set by their number as Third Parties and Highways England are not charged the same. At 2.5 hours, Third Parties are charged 10x more for what is likely a lesser incident.
Returning to Jim O’Sullivan’s approach, the simplistic and dismissive statement:
The court is the appropriate forum in which to challenge any costs you disagree with.
Neither Highways England not Kier Highways will support a claim with sufficient and suitable information. Third Parties have been kept from Appendix A to Annex 23 since 07/2014, they will not know that ‘planning’ is addressed in the percentage uplift, they are unaware of the ‘defined cost’ approach, they are told multipliers are paid to AIW’s … and then there’s the charges for debris removal that are almost 4x what Highways England pay and Kier claiming some costs for admin’ staff are ‘averaged’ … it is likely that every facet of a Kier Cost Breakdown Document is seriously over-egged and has been since 07/2014.
- How has your Public Authority, Highways England helped you?
A Court would be appropriate if Highways England and Kier were prepared to act openly, scrupulously. But if they did so, it is unlikely matters would progress to Court.
Directing the ‘victim’ of the above conduct to a Court is akin to ensnaring; they are being led into a false sense of security. Highways England and Kier wish the matters placed before a Judge as a Court is their home ground; they feel confident and secure because they are doing something very familiar to them. Conversely, a Third party will struggle to present sound arguments to challenge the charges because Kier and Highways England have done their utmost to keep them secret … with Kier going so far as to make false statements and Highways England giving wrong information.
A Court is not a level playing field – Kier and Highways England have seen to this and appear to practice opportunism*. Just imagine how difficult it would be for a lay-person, or even an organisation with a legal department, to collate the information above and evidence same while Kier and Highways England seek to obstruct.
*the art, policy, or practice of taking advantage of opportunities or circumstances often with little regard for principles or consequences
And even if you set the above out in a statement, you could be prevented from giving evidence, it may be claimed you are an ‘expert’ … your side of the argument silenced. Directing anyone to a Court appears intended to set them up to fail … hardly the conduct expected of a Public Authority!
- We are prepared to play by the rules that we were not privy to, the agreement between Kier Highways & Highways England; why are they not?
Why should you have to place the matter before a Court … and play into the hands of Highways England, Kier Highways and their lawyers? Not only is the deck stacked against you, they don’t play fair!
HAVE HIGHWAYS ENGLAND LOST CONTROL?
It is possible that the outsourcing of contracts and claims has resulted in a lack of experience and expertise at Highways England in turn that they are beholden to their contractors.
14/09/2017, having raised concerns about Area 9 in our meeting of 22/06/2018, we received an email from Sarah Green, Head of Claims, Recovery and Dart Charge Service:
Subject: RE: Your Ref: TBA Our Ref: S07B451/PBS complaint & T02A444
Good Afternoon Mr Swift
I can confirm that all CMA cases have been put on hold.
We won’t share the terms of reference with you but Grant Thornton will talk you through these when they meet with you.
We relaxed our correspondence with Highways England and awaited the result of their investigation. But Highways England lawyers, Shakespeare Martineau / Corclaim appeared not to have received the message – matters were not placed on hold, proceedings were issued and by Christmas 2017 we found ourselves returning to every claim we were considering. We conveyed the failure of the lawyers to act as agreed with Mrs Green ultimately having a conversation 28/02/2018:
CMA to HE: “we’re told, and I’ve told my client that all matters are on hold, but they’ve issued. Why? I’ve got the email from you, all on hold, 20th October. We weren’t instructed until November, we didn’t write until 27th November, and proceedings have now been issued. “
HE reply: “Right, okay. Well if they’ve issued, I can’t do any … I can have a word with him to say, “Don’t do any more,” but they are, if they’ve issued I can’t pull that, get them to pull that back now.”
CMA: “No, but they’re not doing as they’re told”
HE:” I’m fully aware of that, Mr Swift.”
HE: “If you can give me an answer, then I’d be… I don’t know“
The tail is wagging the dog – the above situation is described in more detail here.
FoIA – Area 9 & Appendix A to Annex 23
Attempts to obtain information about the process are likely to be obstructed. The process is contractually agreed (Area 9 – 07/29014) proving Third parties protection form excessive billing. However, it has not been complied with since day-one.
11/06/2018 – WhatDoTheyKnow – FoIA Request
The present position with regard to this matter can be found here – ICO Case reference FS50741018 Freedom of Information Act 2000
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