170412 Highways England ‘Overlook’ Evidence

12/04/2017 to Tim Reardon @ Highways England
Your Ref: Kier Highways Ltd GC\25891 Our Ref: U02A472

Loss date: 5/08/2016 – damage to Crown Property
Claim value: £4,165.27

Mr Vardon of CMA has recently drawn my attention to an email you sent him in which you appear
to have overlooked the evidence he has sent but referred him to your audit of 01/2016. The audit
was obviously lacking*, flawed. You also advised Highways England pay the same as Third Parties
for AIW’s (emergency attendance staff) – see Appendix I. We have, on a number of occasions,
evidenced that your understanding is patently wrong.

*later confirmed by Sarah Green of the Authority

I draw your attention to this claim which Mr Vardon has raised with me. The incident occurred
08/2016 i.e. at a date at which you state Highways England are paying £70.32 / hour for an AIW
(Appendix I). The AIW staff attending the incident at 6:30am were Mr ‘A’ and Mr ‘B’:

IMF supplied (redacted)

The claim has been presented to insurers, with each AIW being charged at £73.05 / hour with a
multiplier of 1.5x bringing the total to £109.58 / hour.

CBD supplied (redacted)

The above should be compared to a claim presented to Highways England following an incident a
week earlier, our reference U04B286 your reference HE112/009/SG753. The AIW staff attending the incident were again Mr ‘A’ and Mr ‘B’:

IMF supplied (redacted)

However, they are charged to Highways England at £23.71 / hour plus 7.38% fee i.e. £25.46 / hour:

TP Claim Labour supplied (redacted)

It will be noted that on both occasions, the AIW’s were working outside of ‘Core Hours’, defined by
Kier as 8am to 5pm. Kier are keen to convince Third Parties that their AIW’s work this 9 hour shift
producing their ‘Guide’ the relevant extract from which appears at Appendix II.

Ms Granville of Kier has stated to a Court that AIW’s work 8am to 5pm and if they work outside of
this they are paid the multiplier charged. We believe this to be a false statement.

It is evident from the IMF’s (above) that the AIW’s were working outside of core hours on both occasions:

05/08/2016
Location when contacted: M6
responded 06:00hrs
arrived 06:30hrs

29/07/2016
Location when contacted: M6
responded 21:20hrs
arrived 21:30hrs

the AIW’s were on duty, outside of core hours on both occasions.

Highways England have not been charged a multiplier. The AIW is one small facet of the claim, the
excessive charging applies to all aspects.

Appendix A of Annex 23

On 06/03/2017, a copy of Appendix A to Annex 23 was placed in the public domain and sets out
the principles to be followed when calculating the maximum amount to be claimed for damage to
Crown Property when the Provider is pursuing a claim against any third party to recover the costs
involved in the name of the Employer (Highways England). The amount to be claimed is no more
than:

Total Defined Cost for Items plus:
Third Party Claims Overhead.

Therefore, the charge to third parties for an AIW should be:

£23.71 plus
Third Party Claims Overhead.

Ms Granville has stated to a Curt that the above process is followed. It is not.

Ms Granville has stated the Third Party Claims Overhead is 20.58%. the AIW should therefore be
charged to third parties at £23.71 plus 20.58% i.e. £28.59 / hour, not £109.58 / hour.

It is evident:

1. Charges to TP’s (which includes insurers) are baseless and have been misrepresented.

2. Highways England lack understanding of the processes and rates:

a. The rate charged to HE is not understood by HE
b. The audit failed to identify non-compliance with the contract

3. Appendix A of Annex 23 which dictates the process for charging TP’s in Area 9 has not been
complied with since the inception of the contract 07/2014

4. The application of multipliers is wrong. KHL are charging, as an example, 1.5x for an
operative working out of ‘core hours’ (8m to 5pm) claiming they pay staff this. The
evidence in our possession evidences:

a. The staff working out of core hours routinely, operating a shift pattern
b. The staff being paid no more for working outside of core hours

If any aspect of the above is found to be correct (and we believe we can evidence beyond
reasonable doubt the conduct) it is hard to conclude how the conduct is anything short of
fraudulent.

Please:

A. Reprice your claim in accordance with the contract (ASC).

B. Provide the defined costs

C. Confirm the Third Party Claims Overhead.

In the absence of ‘B’, the basis of the calculation i.e. not commercially sensitive but a necessary
disclosure, we are unable to determine the total cost, we cannot make an informed calculation.
We believe ‘C’ to be 20.58%.

Using known costs to Highways England and applying these to the claim, we believe (admittedly a
guestimate) the total defined costs to be £1805.06. Assuming the TP claims overhead to be 20.58%,
the claim is for £2,176.54*

*£4,165.27 claimed i.e. almost 100% mark-up on costs already subject to a 20.28% mark-up

I refer you to your email of 11/04/2016 (Appendix II), specifically:

In over-threshold claims, Highways England seeks to recover the actual costs of undertaking
the repair.

We wish to pay you the ‘actual costs of undertaking the repair’:

D. Why Highways England you seeking more than this?

Please:

E. Confirm this sum is agreed in full and final settlement


3 years later … 2020 – Judge Harrison:

Furthermore, for the purposes of assessing the extent of Kier’s authority within Area 9 (Area 6/8) the court cannot ignore the evidence given on behalf of the claimant by Mr Cairns. In summary, on this issue his evidence was to the effect that the costs calculated for the purposes of the claim did include uplifts for which he was unable to find authority within the contract