National Schedule of Repair Costs for Network Damage (NSoRC)
For years, Highways England contractors have retained some claims following Damage to Crown Property (DCP) billing the Third Party and pursuing recovery of the money themselves. Under HE’s Asset Support Contracts (ASC) these DCP claims are mainly dealt with in two ways:
- if the value of the damage is under £10,000, the service provider is responsible for the damage and the recovery of costs from the third party.
- if the value of the damage is over £10,000, the service provider(contractor) carries out the repair, bills the Authority who pursues the claim against the Third-Party.
The pricing/billing process is good BUT … it is NOT complied with. The process is used when billing the Authority, but not when billing a Third Party. This results in excessive claims submitted to Third Parties; drivers, fleets, hauliers and their insurers.
Under HE’s newer Asset Delivery (AD) contracts, the repairs are carried out by the service provider and ALL claims are managed and pursued by Highways England. This, and that the Authority is only recovering £1 in every £5, appears to be the reason Highways England desire a friction-free process.
The ASC process (above) has given rise to many disputes with some matters currently the subject of a ‘stay’ in South Wales courts. We are therefore encouraged by the Authority’s intention to engage particularly with regard to:
- the insurance industry (Third Parties) receiving the benefit of the rates that the Authority has been able to secure in a competitive market.
It is early days and there is much work to be done to ensure a workable solution is provided. The relevant history is as follows:
2013 – Kier Highways incident attendance costs are submitted at about £125. Within 6 months, £1,500 was presented
01/07/2014 – Kier acquire Area 9 and implement their contract non-complaint ‘1153’ process that sees attendance charged start at £4,700 / incident (£2,700 for operatives/plant, £2,000 admin’)
10/2015 – We raise concerns about contractor pricing with Highways England – 88-page report submitted.
01/2016 – The Authority Audits Kier Highways, find no issue and report Kier are charging Highways England £73.05/hour for an operative and £35.53/hour for the vehicle. This is incorrect, the figures were approx. £25/£13.20 respectively.
21/06/2017 – we meet Highways England and provide documentary evidence of:
- contract non-compliance
- gross exaggeration
- false statements to Third Parties and the Courts
The Authority appoints KPMG to audit Kier (‘Project Verde’).
15/11/2017 – we convey an account of the above concerns to KPMG
02/2018 – Area 10, Balfour Beatty Mott MacDonald (BBMM) give evidence at Court; there IS a schedule of DCP Rates for above-threshold claims, but costs are subsidised.
- Note: a subsequent FoIA reveals there is no subsidy on above-threshold charges to the Authority.
02/2018 – Government Legal Department state the KPMG audit is complete finding no issues. Highway England deny having said this, the report is not (apparently) completed.
09/2018 – Highways England’s state the Project Verde report is complete. No disclosed issues have arisen. Contracts are reminded to justify their costs and not overstate.
- it appears not to have been noted the ASC’s have no schedule of DCP rates
13/12/2018 – A Tribunal finds against Highways England and the ICO. A response to a request for ‘defined costs’ (the price list for damage repairs) is to be provided.
This and the Authority explaining the charges are ‘DCP Rates’ which are NOT ‘commercially sensitive’, appears to be the trigger for the Authority’s use of the subsequent ‘not held’ exemption when asked for a schedule of DCP Rates.
2019: Highways England ‘we have no schedule of rates for any ASC (contract) against which to check the bills presented by contractors‘ but if we did ‘it would be too expensive to check them‘. However, the Authority acknowledges they have, on at least 15* occasions, stated the information is ‘held’.
*source – 12/11/2019, Authority’s legal team
04/01/2019 – we discuss the issue of the rates with Highways England’s CEO, Jim O’Sullivan. We are assured, “the very minimum that is going to happen as a result of this call, or certainly as a result of the judgment is that we will have a schedule of rates um published by Kier, so that this thing is transparent.”
- A year later … they have yet to materialise.
Highways England commence the compilation of a new set of rates, drawing on various sources of information.
14/05/2019 – NAO meets with Highways England to discuss the absence of a schedule of DCP Rates. The meeting note can be read here. There is no absence of rates, these are held!
- Highways England state the NAO have misunderstood – the NAO note is wrong.
24/06/2019 – Highways England introduce ‘a national schedule of repair costs for network damage (Green Claims)‘. Original presentation here & accompanying text for registered users.
- Kier Highways Area incident 24/06/2019 – invoice issued subsequently to include admin’ post-24/06/2019. KHL use ‘defined costs’ + fee to Highways England and NOT NSoRC. The claim:
- includes a 7.4% uplift on base rates i.e. the rates the Authority has been able to secure in a competitive market can be identified as at the commencement of NSoRC (example of pre-NSoRC rates here to the Authority registered users).
28/06/2019 – having reviewed the rates, we identify concerns. We speak with NSoRC (registered users read more here) who confirm they have used schedules of rates from Areas, to include Area 9 i.e. price lists exist.
03/07/2019 – brief email to NSoRC (copy) seeking information
04/07/2019 – 1-hour conversation re NSoRC (notes registered users)
05/07/2019 – (dated 190704) report to NSORC (registered users) and brief email:
As a brief follow-up, the derived rates cannot be commercially sensitive because they are not attributed to any one service provider and they are held out as a market benchmark, much in the same way standard tariffs for credit hire are published. Therefore, they should represent the reasonable market rate for carrying out such works, which is what I am trying to understand; what assumptions have been made, the origin of the rates and the composition which add up to the global figures given.
DCP Rates are agreed not to be commercially sensitive.
Without such scrutiny it is difficult to see how the market upon which they are being imposed will accept them, in the same way that the previous ‘market agreed’ rates proposed by certain contractors were exposed as being a means to subsidise unattributable and non-fault damage.
23/07/2019 – 2nd version of NSORC (v1.1)
12/08/2019 – 3rd version of NSORC (v1.2).
No response to 03/07/2019, no information provided.
- Request progressed by way of FoI.
12/09/2019 – no information provided in response to 12/08/2019 FoIA (above). Request Internal Review.
19/09/2019 – From: Jim.O’Sullivan@highwaysengland.co.uk
RE: information sought in the usual course of business or FoIA pertaining to 04/01/2019 & 15/02/3019 conversations
I am not going to respond on the detail of your email, but on your central point I have always been very clear with you that I share some of your concerns about the transparency of repair costs for damage to the network. By and large, the Asset Support Contracts don’t assist precisely because they do not specify the labour and equipment rates to be used for emergency/unplanned repairs. In those circumstances the legal constraint is that the costs have to be reasonable.
While the situation is improved by the adoption of Asset Delivery, the difficulties of reconciling the different perceptions of what is reasonable for particular repairs in what is in practice a very complex area has led us to publishing a National Schedule of Repair Costs for typical repairs.
We firmly believe the costs set out in that schedule are eminently reasonable. And while the level of granularity in the schedule is something we continue to look at, we do think it provides a level of transparency and consistency which has hitherto been absent.
Jim O’Sullivan, Chief Executive, Highways England
29/09/2019 – Set out why NSoRC holds rates & Information pertinent to the FoIA of 12/08/2019
31/10/2019 – RiP NSORC … process suspended! Our comment here. “It isn’t that they cannot find the solution. It is that they cannot see the problem.” – G.K Chesterton. Just what is the problem … read more here
06/11/2019 FoIA re the NSoRC Outcome – read more here (registered users)
11/11/2019 – FoIA response – refusal to supply Information. No transparency, no means by which to determine whether Third Parties / Insurers are receiving the benefit of rates the Authority has managed to secure. The data is ‘commercially sensitive’, it will not be released; ‘The rates used to develop the NSoRC are Commercially Sensitive‘.
NSoRC component cost construction provided, the items making up each composite rate (registered users)
13/11/2019 – Internal Review (IR) of 11/11/2019 FoIA response sought.
18/11/2019 – clarification of FoIA IR submitted – the data behind the rates (registered users)
02/12/2019 – Highways England drive claims costs up.