191118 Clarification re NSoRC FoIA

18/11/2019 to Highways England Company Limited – FOI 100236 (ICO FS50880989)

From: Philip Swift
Sent: 18 November 2019 07:51
To: ‘FOI Advice (FOIAdvice@highwaysengland.co.uk)’ <FOIAdvice@highwaysengland.co.uk>; casework@ico.org.uk
Subject: FoIA WDTK submission FOI 100236 & ICO FS50880989 IR clarification

24/06/2019 National Schedule of Repair Costs for Network Damage (Green Claims) @ https://www.whatdotheyknow.com/request/24062019_national_schedule_of_re#outgoing-929553

Dear Sirs

To assist you to locate the information, to address your ‘commercially sensitive’ exemption and to seek the material as yet not addressed at all, I advise as follows:

I asked:

  1. all exchanges with your contractors regarding the new process.

28/10/2019, the ICO wrote ‘I have written to the public authority reminding them of their responsibilities and asking them to respond to you within 10 working days of receiving our letter’.  Despite the ICO’s intervention, you have not addressed this aspect, ‘5’ above.  Please do so by return.

With regard to the responses received, in addition to the assistance I provided  29 October 2019 (copy below), I make the following comments:

1.All rates and other information used to calculate and/or substantiate the schedule provided 24/06/2019.

I remind you 04/01/2019, I spoke with your CEO who was clear:

… 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 published by Kier, so that this thing is transparent.

I expect to be provided this schedule of rates Kier’s schedule of rates, which has, to date, failed to materialise.  I also remind you that the Judgement (https://www.englandhighways.co.uk/release-the-rates/ ) relates to a 2017 request for DCP Rates which, on 15 occasions[1], you stated were HELD.

Now, in response to ‘1’ (above) you state the rates are commercially sensitive.  This cannot be correct.

The NSORC rates are NOT contractor rates per se, they are AVERAGES (see ‘3’ below). On 04/07/2019, I spoke with NSORC and your general counsel and was informed:

‘ …  we’ve used those resource rates averaged from what we have received on various the contracts from the contracts from five regional areas  in England.’

There, I expect to be provided the AVERAGE rates applied to each of the ‘resources used to support this Schedule can be made available’, the costs associated with each individual element of the 100 components making up the schedule, the first 7 of which are:

  • VRS Supervisor
  • VRS Operatives
  • Plant Operative
  • 3.5T Excavator
  • Barrier Rig
  • Welfare Van
  • Grab wagon

The information will indicate which of the elements changed of the following months giving rise to 2 further versions of NSoRC.

The rates used to develop the NSoRC are NOT commercially sensitive because they are not rates specific to any contractor. This is also evidenced by the introduction you provided about NSoRC:

‘The National Schedule of Repair Costs have been derived from competitively tendered rates from across England. In arriving at the National Schedule of Repair Costs we have taken in to account other information available to us to ensure that they can be substantiated as being reasonable costs.’

These are rates from varying sources.

You have not explained why the rates are considered commercially sensitive.  Please populate the spreadsheet provided with the rates.

  1. All information giving rise to the discovery the original rates were incorrect and

The costs were ‘cast in stone’ according to your general counsel.  They were derived from rates following months of work by a team.  The planned rates were considered to be very reasonable, and you would be surprised and disappointed  if anybody disagreed.  Indeed, your general counsel was clear; it was not a trial but a roll-out, “basically, this is it’.  Yet, as a result of our submissions the process was suspended, withdrawn.

It matters not whether  reviews were regularly exercised, the specifics resulted in 2 subsequent issues.  It is the differing figures I am seeking; which of the 100 items changed and by how much.

It is concerning that a Public Authority would dispose of information giving rise to amendments, that the evidence to support alteration was disposed of.

  1. All rates and other information used to calculate and/or substantiate the schedule appearing ‘Version 1.1 from 23 July 2019’

The NSORC process was implemented 24/06/2019, within 4 days, having reviewed the proposition/process, I spoke with Highways England in a pre-arranged phone call.  I was concerned NSoRC was flawed and lacked the assured transparency.  It was acknowledged that I probably know more about the history leading up to NSORC than the HE team. Additionally, the queries I had ‘quite rightly’ raised to that date had given rise to the process.

I was informed:

  1. you had referenced CECA and
  2. other documents such as the working rule, national working rule agreements for labour rates
  3. you have looked at some of the claims history and the claims that have been settled. You did quite a bit of analysis,  took a sample of around 100 claims (actual and paid) above & below threshold and
  4. also some history and, and information around tendered rates for those work elements from our contractors.

The ‘work elements’ being DCP (damage to Crown property) it appeared you had reviewed schedules of DCP rates.  You had also looked at

  1. M and R contracts

I was informed you have looked at a very broad set of data and lots of information to determine as and when you are repairing damage to the network what is the actual costs of that repair.  You, therefore, appear to have ‘actual’ rates.

  1. (210) I was informed the charges used are an average, that you have taken the bids in these areas, the successful bids,  for the, the equipment and your labour, etc and taken the, the mean of those bids as the basis for building up each activity rate.

Therefore, if this is in fact accurate, each component is not an actual rate but the mean/average of many rates.  I, therefore, do not accept any figures are commercially sensitive as they are not specific to a company, not a rate used by any contractor.

I asked about

  1. Area 9 damage to Crown property rates, their defined costs and whether Highways England have a schedule of rates.  The response was ‘we do’.

Indeed, I asked again, the questions and answers being:

  1. So, presumably you, you have a copy of the Area 9 damage to Crown property schedule of rates?
    A: the team will have somewhere, yes. 
  2. Could I have that?
    A. I’m not sure. I just need to cross-check and make sure, ’cause they, they do get a little bit tetchy over confidentiality …
    I just need to just double check on that but in principle assuming our legal team say yes, then that’s fine, then no reason why we can’t do that.

I asked whether there was any chance somebody could get those DCP rates to me in the next week or so to which NSORC replied ‘the simple answer is I don’t know … but I will ask the question … leave that one with me.’

We were to speak again 12/07/2019, possibly meet.  However, we heard no more and the Area 9 schedule of DCP Rates was not forthcoming.

I await the Area 9 schedule of DCP Rates.

Area 9 is not an AD contract but an ASC, Kier Highways Ltd appointed to maintain 07/2014.  The schedule of rates is, therefore, reflective of the rates charged to Highways England (and should be identically presented to Third Parties) daily, the figures appearing in Cost Breakdown Documents, they are not commercially sensitive (source – Highways England[2]).

I asked why Highways England did not use the Area 9 schedule. I was informed:

‘because Area 9, versus all the other areas in the country, are all different because they’re all competitively tendered at a particular point in time and what we were looking at was to try and come up with a standardised cost on a national basis for a whole myriad of reasons.’ 

The rates clearly exist.  I was informed Area 9 DCP rates would not be used in isolation for NSORC.  The NSORC team also thought Area 9 rates were fixed for the contract period but that  there might well be some inflationary adjustments.

Not all the rates used to develop the NSoRC are Commercially Sensitive. I wish to be provided with the information requested and an explanation for what is not made available i.e. what has been withheld and why.

Information is held at a granular level. It is held by reference to claims; operatives, plant and materials.

It does not appear I am to be provided accurate responses but that there remains an intention to keep the rates secret.

Your general counsel stated, with regard to ‘reactive rates’:

(86) there’s not a specific calculation which lies behind it  … it is double the planned rate

(88) it’s considered to be a reasonable rate but it is not derived from rates which were bid on as part of the contract

This cannot be correct.  There are two schedules of rates used for NSoRC; ‘planned’ and ‘reactive’.  As ‘reactive’ is simply a doubling of ‘planned’, the specific calculation occurs with regard to ‘planned’.  There is a direct relationship; reactive rates ARE the result of a specific calculation!  To reiterate,  (229) ‘planned works’ is based on the average rates i.e. it is a very specific calculation, the average of multiple rates[3]. ‘Reactive’ rates use these average rates; the specific calculation is

  • planned rates x 2 = reactive rates

The ‘reactive rate’ is simply (another) finger in the air, guestimate, a further unsupportable number.

However, as reactive rates are not derived from the rates bid as part of the contract, it follows ‘planned’ rates were not.

Contract (ASC / AD) rates fro pre-planned works are commercially sensitive BUT as these have not been utilised planned & reactive rates are NOT compiled from commercially sensitive rates.

  1. All information about the rates you, the Authority, will be pay; whether they are identical rates to those a Third Party is to be charged and if not, how this differs and why.

Confirming whether you pay the same as Third Parties is NOT ‘commercially sensitive’; it is a ‘yes’ or ‘no’ response. It is a question your NSoRC staff and General Counsel struggled with during our conversation, I raised a contradiction about this when we spoke. 

If you are ‘giving insurers the benefit of the rates that you’ve managed  to secure’ why would they be different to the rates you are charged.  Your response does not inspire confidence in the answers provided or an intention to be transparent.

The rates are NOT commercially sensitive; these figures are apparently being used by your contractors to charge you.  Admittedly, your NSoRC staff / General Counsel struggled with this which gave the impression Highways England either did not understand their own process or were misleading me (there were contradictions). I was informed:

  • the planned rate is what Highways England will be invoiced
  • these rates are the rates Highways England have agreed with the contractor

However, on the one hand I was informed (as above) you and Third Parties were to be billed the using the same rates, on the other there might be some areas where Highways England are paying less, and there may be some areas where you are paying more.  I question the accuracy of the information imparted.

  • Feedback

You state with regard to the initial NSoRC published 24/06/2019 ‘the costs were issued as a pilot to engage the industry with a view to obtain feedback. Aspects of the NSoRC were amended following analysis with additional data. Since these reviews were regularly exercised, the specifics requested cannot be provided since updates at this granular level of detail are not routinely kept and/or the requested data is Commercially Sensitive’.

The initial NSoRC published 24th June 2019 was not issued as a pilot to engage the industry with a view to obtaining feedback. Highways England thought these rates are very reasonable, that the planned rates are very reasonable and would be surprised and disappointed if anybody disagreed.

It was not a trial,  just phase 1.  It was the rollout. with Highways England’s General Counsel stating ‘basically this is it’.

You also stated questions and answers would be placed on line.  They were not.

Yours faithfully,

 

 

  1. Swift

 

29 October 2019

 

My request relates to the information provided at https://highwaysengland.co.uk/thirdparty in which it is stated:

 

‘The National Schedule of Repair Costs have been derived from competitively tendered rates from across England. In arriving at the National Schedule of Repair Costs we have taken in to account other information available to us to ensure that they can be substantiated as being reasonable costs.’  I asked to be provided:

 

  1. All rates and other information used to calculate and/or substantiate the schedule provided 24/06/2019.

 

The online schedule of rates has changed since they were first posted and now display a new set of charges ‘Version 1.1 from 23 July 2019’.

 

I ask to be provided:

 

  1. All information giving rise to the discovery the original rates were incorrect and

 

  1. All rates and other information used to calculate and/or substantiate the schedule appearing ‘Version 1.1 from 23 July 2019’

 

I ask to be provided:

 

  1. All information about the rates you, the Authority, will be pay; whether they are identical rates to those a Third Party is to be charged and if not, how this differs and why.

 

Please could you also provide the following information:

 

  1. all exchanges with your contractors regarding the new process.

 

It may help to be aware that the request follows and is based upon information and assurances received during 2 phone calls:

 

28/06/2019: Martyn Gannicott Commercial Director @ Highways england

04/07/2019: Tim Reardon General Counsel @ Highways England & others

 

28/06/2019

 

Martyn was forthright and reassuring; one of the reasons for NSORC was the queries I had raised about the existing process – Martyn believed I had ‘rightly’ raised the issues.  This was good to hear, albeit belated –  after 5 years!

 

There had been an internal exercise looking at all sorts of different data sets, claims history, claims that have been settled, tendered rates for those work elements from your contractors.  The ‘work elements’ are DCP as opposed to ASC (contract pre-planned rates) and Martyn gave an example; the cost of repairing a barrier for example, or replacing a barrier.  This is a DCP task.

 

Repairing damage to the network, actual costs of that repair, you have from your historic records.  This is of interest to me as HE have made it clear; you hold no sub-threshold data i.e. it appeared what you considered were above threshold, DCP rates.

 

I was therefore surprised to learn HE had looked at about 100 claims above and below threshold.  This made no sense to me; why look at below threshold, where did the information come from and what did it highlight? 

 

It struck me that the figures would be skewed … the below-threshold rates are far higher.  It also occurred to me that HE / Martyn would have discovered all was not as it should be ‘defined costs’ are not common, that the contract was not complied with and he would have encountered the fraudulent uplift that are ‘multipliers’.

 

Here I feel I should be a little more general,  step back to try and convey the simplicity of the contract non-complaint issue …

 

Let us agree, for the sake of this example, that ‘defined costs’, which I accept have a definition setting out their constituents, do not exist as a schedule. I stress, I do not accept this but bear with me …

 

We know

 

  1. ‘defined costs’ should be common to above £10k threshold (to HE) and below (to TP) claims – they are base rates. 

 

  1. HE has a fee uplift of about 8% and TP’s a third party claims overhead (TPCO) of about 25%.  Therefore, a TP is charged about 17% more than HE.  I do not necessarily agree with that, but have been able / willing to live with it.

 

Let us say, in Area 9, there are two incidents at the same time on the same day.  One small (attendance and repair costs under £10k) the other big (attendance and repair costs over £10k). Just taking initial attendance for  a moment, an aspect I concentrate upon because it is common to likely every emergency incident, the small one is going to cost less because, being minor, the AIW (operatives) and plant (van) are there for less time than at the bigger incident.  There are no economies of scale because these AIW’s and their van are paid, employed, working no matter what …. Size of incident does not affect their rate.

 

It may be that at one scene it is at a difficult junction, the weather may be adverse / different … all this is inconsequential as it does not affect the RATE the operative & van are charged but the NUMBER of hours they are charged for.

 

But in Area 9 HE is charged £23.71 / hour for an AIW + 8% and a TP is charged £66 / hour. How, if the contract is complied with?

 

It is the math’ that undermines contract compliance, use of defined costs and demonstrates the contractor, in the name of HE, is prepared to misrepresent, even to a Court. 

 

In reviewing above and below threshold matters, Martyn must surely have discovered this. I am after the information he viewed.

 

Then there are the multipliers he will have encountered, the uplifts Kier claim on the £66 / hour because they say AIW’s work 8am to 5pm and after this they are paid the 1.5x uplift and of a weekend 2x.  There being 24 hours in a day, for 2/3rds the higher rate is applied of a weekday (5pm to 8am).  That is a fair chunk of the day and covers the evening rush hour at least. 

 

This uplift will cause the rates to be higher – but only on below threshold matters because HE are not charged the uplift. This is the1st  indicator all is wrong … if a 50% uplift after 5pm is paid to the operative that’s £33 / hour, yet HE are paying £23.71 … they are losing money working for HE.   Then there’s the 2nd indicator … not every element of the £66 would increase after 5pm .. training?  But the 3rd, is the killer, AIW’s say

 

  • they work shifts
  • they are not paid the uplift and
  • even overtime is at flat rate

 

So when Kier tell Courts, Third Parties and us to the contrary, I ask how this is not fraud.  I receive no response … save that I misrepresent and am mistaken.  No explanation, no evidence to the contrary.

 

I have been clear; I do not believe NSORC is required.  If HE was genuinely looking to present themselves as transparent and to give insurers (Third Parties) the benefit of the rates you have secured, use the defined costs!  Add a small uplift.

 

If you believe ‘defined costs’ are a definition, ask Kier to provide the set of rates they would apply to an above threshold claim on 23/04/2019 … the day before NSORC.  They are your contractor, these are rates they bill you …

 

No one will do it because it removes the profiteering or ‘commercial gain’ as Martyn referred to it as.

 

There is a lot of detail held by HE. Martyn explained the contrasting of rates on a national basis.

 

The obvious means by which contractors will profiteer when their current arrangement ceases are:

 

  1. HE agree to pay more and the public purse suffers
  2. Exaggeration in another guise will occur

 

I believe NSORC is ‘ii’ but we have rumbled the process sufficiently early to cause its failure.  I am aware of others making FoIA requests – though I have asked those I liaise with to refrain from doing so – hence I like WhatDoTheyKnow; there is no suggestion I am keeping information from those I am informing – bizarrely, HE use this against me ignoring (failing to acknowledge) that the process likely reduces the approaches they receive.

 

Area 9

 

With Martyn, I was specific, intentionally so as you may imagine having put up with 5 years of deceit.  I raised Area 9 because I looked at their damage to crown property rates, their defined costs.  I asked clearly whether you have a schedule of rates and the reply was ‘we do’.

 

I returned to Area 9 during the conversation. I asked whether Martyn would have a copy of the Area 9 damage to Crown property schedule of rates.  I ensured I was clear with my description ‘DCP schedule of rates’. Martyn informed me his team will have somewhere. I pushed my luck asking if I could have it.  Martyn was not sure, he would need to cross check and make sure adding ‘they do get a little bit tetchy over confidentiality’.

 

I was reassured that Martyn would double-check with your legal team and, if they said ‘yes’ , no reason not to.  It appears your legal team said ‘no’.

 

Martyn would only need to ‘check’ if such a schedule existed!  He has produced NSORC, he has reviewed the schedule.  Martyn was going to check with Tim Reardon.

 

I also asked if the DCP rates change annually, if they were reviewed annually.  Martyn thought

the Area 9 ones are fixed for the contract period, with some inflationary adjustments.  He would have  to check in the individual contracts.  His understanding mirrors mine and the information conveyed by others; there are annual inflationary adjustments.

 

04/07/2019

 

Tim asked that notes be taken of my ‘good’ questions to place on the web site – something which has yet to occur.

 

I explained that I need to know the composition and where these rates have come from. Tim appeared to agree commenting it is a useful thing for everybody to know. To this day, I am without them.

 

I was informed the rates used for NSORC were from 5 areas. HE would like the opportunity to explain how these have been built up.  To date this has not occurred.

 

I explained, I would like the information so I could prepare.  A party present (Ramesh?) responded, HE were ‘happy to show me the rates from these contracts’.  Yet to date, nothing.

 

A the conversation progressed it was apparent I was being provided contradictory information.  It appeared HE did not know what they were talking about in some respects. On one occasion I was blunt and stated HE were not answering the question. On another, I explained that HE had misunderstood the situation; they did not understand the environment, processes.

 

Other issues

 

Somewhere along the line, somehow, these rates have been ‘tweaked’ since 24/06/2019, they have been altered.  We are now on the 3rd  incarnation.  Unless they are concocted, baseless and I have bene misled, there has to be data that influenced the changes. Version 1.2 is valid from 12 August 2019 this is the same date as my request.

 

My FoIA request will capture all the data amendment records, the rates and decisions.

 

I also believe it is time HE was frank about the process, the need for NSORC.  This has less to do with helping insurers and more with helping HE.  Your AD contracts see claims coming in-house, handled by HE.  NSORC, a new process, is not about transparency for insurers as demonstrated by the lack to date.  It is not about giving insurers the benefit of your rates – this could have occurred.

 

NSORC, in any form, results because HE is faced with the spectre of having to handle their own claims without a contractor to hide behind.  It is HE who want the process to be smooth and improve upon their £1 in £5 recovery …

 

NSORC has not appeared because HE have no schedules of rates for DCP claims, you do.  I have been raising issues since 10/2015 with HE, there have bene audits, meetings, correspondence, phone calls … and despite all this, HE only discovered a lack of rates when … shortly after they were considered NOT commercially sensitive.

 

 

[1] 12/11/2019 Highways England’s Counsel

[2] Highways England Tribunal 11/2018

[3] Planned are NOT specific but averages ergo they are not commercially sensitive.