201106 To ICO Re Highways England Pain Gain U-Turn

06/11/2020 to the Information Commissioner’s Office

Thank you for your email which I produce at:

Appendix 1. 04/11/2020 from ICO

Q # 1. Please could you provide me HE’s submissions so I can better understand their position and make relevant, pertinent comment

For the ease of writing, I refer to the ‘‘pain/gain’ share agreement’ as the ‘share’ below.

There are three aspects to what I sought:

A. all information upon which you are relying to negate the original request (2016), the response,

B. to include the detail about the ‘share’ process and

C. the termination of this due to insurers unwillingness to meet the costs.”


A. 2016 Information


With regard to ‘A’, I am in agreement with your comments, I do appreciate them. The Authority has:

a) Considered what was originally conveyed – they will posses the request, response and all information that was received/considered
b) Reviewed this which would require consideration of the 2016 reply and investigating to determine what was held, why (contrary to their 2016 statement) this was not held. My suspicion is that they have not made enquiry because the share exists (existed) but they do not wish to disclose the information. Much as with DCP rates, when caught out they opt for ‘does not exist’
c) Reached a decision, negating the original response. They have compared the response of 2016 with records of the period to determine their original response was untrue.

I stress the Authority has again brought this issue upon themselves. They volunteered the existence of the share and then provide varying, opposing answers. They are unreliable. They are vexatious. Indeed, as per the Judgement (ICO Reference: FS50703446 Appeal EA.2018.0088) the Authority provides inadequate/inaccurate responses and wrong information. It remains a concern that the ICO has not heeded the statements by a Judge who overturned both the Authority’s and your position with out understanding the extent of the conduct.

I cannot see the original 2016 request asked about the share, the process, it appears to have been a genuine attempt by someone at the Authority to be helpful. But that when the response discloses impropriety, the Authority seeks to shut down the issue.

The history of the share responses is :

  • 1. DO EXIST: in response to a FoIA request, FOI 743,153, Highways England raised the issue of the ‘share’ share, volunteered that such an arrangement existed.

2018 (late) I learned that Kier Highways was presenting false claim information to Highways England.

By use of unauthorised, overstated rates, Kier was conveying a high attendance/repair cost when billing Third Parties which was not recovered in full i.e. they reported incurring a loss. In reality, they were profiteering on every claim – they attended over 5,000/annum, likely 60% involving an identified culprit to whom an exaggerated, contract non-complaint invoice was presented in the name of the Authority, with Highways England’s authority to issue pursue the monies.

Drivers, fleets, hauliers or their insurers were misled, courts were told the contract was complied with, as were we. But it was not. Having strong-armed monies form these third parties, Kier then set about misrepresenting facts to the Authority – though how Highways England failed to spot this remains a mystery. The deceit involves the subject matter, the ‘share’.

‘share’ & Rates

Here this request touches upon, is linked to other issues (as do many), specifically; the existence of a schedule of rates and the rates being used by Kier Highways. I take a moment to add a comment from a recent Judgement which I believe, when considered logically, impassionedly, sheds further light on the conduct of Kier being permitted/aided by the Authority. Kier has been adding unauthorised uplifts to rates being charged to Third Parties.

This is another way of saying Kier was not charging ‘cost’ + ‘TPCO’ i.e. they were acting outside of the contract, utilising cost+TPCO+more. It is the ‘more’ that I identified years ago yet the Authority permitted this to continue to the detriment of Third parties presumably, understanding the ‘share’ submissions must be flawed.

To admit there is a ‘share’ or was a ‘share’ is to admit that there are rates and that Kier has been permitted to act contrary to the contract.

This ‘overstatement’, contract non-compliance and demand for excess (‘more’) money is not (on this occasion) my fact-based statements conveyed to the Authority in person during 2017. It is the findings of an independent Judge who reviewed in detail sample claims, para 26 of HHJ Harrison’s judgement:

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 (Kier Highways employee).
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.

Furthermore, the Authority and Kier accept this has occurred. Admittedly, it is a little difficult, when your own witness (‘Cairns’) acknowledges/admits this, to then deny what has occurred. The 20 stayed (Cardiff Court) matters we are handling are all being re-priced using lower rates. This should not be necessary, we alerted the Authority to this years ago, however, a Judge has supported our stance.

It is possibly worth noting, to reinforce the poor conduct of the Authority that the process to be used, set out in Appendix A to Annex 23, was kept secret. The Authority wrote about this 03/2017:

Kier never complied with this.

The very (small) section of the contract designed to protect Third-Parties from unscrupulous contractors, was not uploaded with the rest of the contract. Neither the Authority nor Kier throughout our dealings with them mentioned its existence, that it was the conditions agreed to, the procedure to be followed. I am accused of writing in detail. I also met with parties and spoke with them in phone calls – no one mentioned Appendix A. I stumbled upon it, tagged onto the end of an exhibit 01/2017 and this added impetus to my requests. I also circulated the document (Appendix A) – we have a philanthropic approach and the Appendix soon came to be in the public domain.

The procedure was to be as follows:

• Kier was to use ‘cost’, as a common base rate (starting point) when billing Third Parties. ‘Cost’ is made up of multiple components and is a pre-profit figure. I stress:

o This is a process I have always embraced, I have only ever sought to engage with this procedure
o I consider the methodology logical, reasonable and straightforward who would argue that charging ‘cost’ was wrong – it is clearly a sensible staring point.

• To ‘cost’ was to be added an uplift (the Third Party Claims Overhead – TPCO)

o ‘Profit’ is not a dirty word but a necessary component of business
o I may take issue with the amount of the uplift, but one was clearly required
o 25.29% was cited in Area 9. I thought this high but mindful of a Judgement (‘Coles v Heatherton) and the 25% uplift considered reasonable by the Court, far be it for me to argue with a learned Judge – and the Area 9 being 25.29% … the HE/Kier process appeared to fit almost perfectly

• But Kier was not using the agreed rates/process. ‘Kier’s authority to bring a claim based upon a “defined cost” definition that includes “uplifts” to reflect for example an element of profit’ (para 35 Judge Harrison 2020 ).

I also feel it worth pointing out the sums involved. This was not a few £ on each claim but £1,000’s. Currently, Kier charges a still exaggerated rate for attendance (operatives + plant) £1229.98/shift, or £614.99 for a half-shift of about 4.5 hours. The majority of sub-threshold (£10,000) claims require a couple of hours attendance – about £300 on the above rates. Kier was charging £2,700/incident. The claim was obviously wrong, as we later discovered, they were dividing annual cost by the number of incidents, claimed to be 1153 , in fact, they attended more than 5400. We estimate a sum in excess of £10million between 07/2014 and 10/2015.

To tie the issue of the share with rates, I need to refer you back to the purpose of the share – to determine whether Kier’s monthly lump-sum payment should be maintained or reduced; have they gained by recovering more than anticipated or is there a pain because of a shortfall?

To ascertain whether there is pain or gain requires figures and these the Authority receives in the form of an Annex 19 report :

Third Party Claims handled by the Provider Service Information Chapter 1.9 & Annex 23 Report detailing, for each claim:

• the amount claimed from third parties,
• a calculation of Defined Cost and resulting Third Party Claims Overhead,
• the amount recovered,
• an explanation of any differences between any of these amounts, and
• explanation of why any loss greater than Defined Cost has been claimed.

I attach an FoIA response relating to the subject at:

Appendix 2. Annex 19 – 170322 FOI 748 674 Annex 19

The report reiterates the Appendix A process – that a Third Party is to be charged cost + uplift (TPCO). But Kier, as I have been raising with Highways England since 2015 (in person and to KPMG in 2017) have NEVER complied with the methodology. HHJ Harrison heard this from the horse’s mouth Mr (Greig?) Cairns of Kier, as above – unauthorised uplifts.

Why was the Authority unable to identify this?

Years of gross overstatement, contract non-compliance which we explained in person, in detail to Mrs Green, the former head of Green claims, providing a clear example and a long conversation with KPMG . Neither addressed the conduct. It was permitted to continue. Possibly KMPG supported our concerns. The Authority has suppressed their report – refused to provide it. The matter is with the ICO, Case Reference: IC-40443-T6L2

Kier never used the contractually agreed rates, the ‘cost + uplift’ (‘cost’ being what they charged the Authority and was to be the same to a TP), instead, to hide their profit(eering). Therefore the rates conveyed to the Authority, the costs were the exaggerated figures, not the agreed ones – the rates contained the ‘unauthorised uplifts’.

It appears the misrepresentation was to protect their monthly lump sum payment i.e. they misrepresented sums to convey a loss. Whatever their reason, the FACT is they gave false information to the Authority … why?

I explain this to convey a motive. Possibly it will now occur to the ICO that, in company with DCP rates, all is not right at the Authority and it is time to stop shooting the messenger (me)?

This matter is currently with my MP and the DfT. Having caught the Authority out:

  • 2. DO NOT EXIST. 09/2019, Highways England u-turned; there was no ‘share’ share.

But then they:

  • 3. DO EXIST. 02/11/2019, at Tribunal Appeal No: EA/2019/0119, the Authority’s witness gave evidence about the DCP process, the Decision recording what I noted:

para 15: ‘From the oral evidence, the Tribunal ascertained that contractors, in this case Keir, when undertaking work under their contracts with HE would use the ASC rates (which were updated every year) to work out an estimate on a particular job, and then by reference to that, decide whether it fell above or below the £10K threshold.

If above, broadly speaking, Keir would pass its invoice to HE who would pay Keir, HE is picking up the responsibility for recovery of the costs from the driver or their insurer who incurred the DCP.

The costs charged would be based on the ASC target rates but would then be subject to the ‘‘share’’* adjustment process under the contract.’

*pain/gain

By now, you will appreciate that establishing who was telling the truth and to who was becoming weary. I should not be in this position. It should have come as no surprise that, on learning ‘from the horse’s mouth’ that there was a ‘ share’, I returned to the subject and sought the held information. The response:

  • 4. DO NOT EXIST. 02/10/2020, you have reverted to the ‘not held’ exemption also.

The only consistent party, providing facts and corroboration is me. Yet the ICO repeatedly accepts the unsupported, contradictory statements made by the Authority.

It follows the original response information, the source needs to be provided, the information giving rise to the statements covered by ‘A’ to ‘C’ above and in turn, the information that undermines this.


B. detail about the ‘share’ process


The Authority’s Information Rights Officers ‘direct each request to the business unit within HE that is most likely to be able to answer it, depending on the subject matter of the request’ .*

*source – Sian Jones (Highways England) statement

This request captures the detail about the ‘share’ process, the information sent by the relevant business unit. I have produced the 2016 response at:

Appendix 3. 2016 ‘‘share’’ (FoIA Response 26/10/2016)

In 2016, someone was providing the information rights officer at the Authority information which it was subsequently claimed was 6 years out of date!

My request also captures all information reviewed that enabled the Authority to respond as follows:

The use of the ‘share’ arrangement for third party claim schemes was terminated
very early in the first Asset Support Contracts in 2010. This was the result of
insurance companies not being willing to pay gain shares in the Managing Agent
Contracts that were used prior to the Asset Support Contracts. So, from the earliest
days of Asset Support Contracts the ‘share’ formula used routinely for most
scheme work was not used for third party claim schemes.

The above is, at first blush contradictory and further cause me to believe that the Authority is caught up in its own lies – oh what a tangled web we weave ….

I previously sought to obtain information about the Area 10 ASC, I obtained some pre-contract correspondence from 2011. The contract commenced in 2012. Balfour Beatty’s general manager of Major Projects Highways business, Phil Clifton, is reported to have said:

“We have an in-depth knowledge of Highways England’s Strategic Road Network with a proven ability to manage Area 10 effectively. Since the contract commenced in 2012, we are delighted to have successfully delivered over 500 Highways England renewal and improvement schemes,”

I understand Area 10 was the first ASC.  There was a ‘share’ agreement in an (at least) ASC, it was removed. The above is specific:

• The ‘share’ was terminated early in the ASC

I, therefore, feel compelled to address your statement (04/11/2020):

2016 FOIA response which suggested the arrangement did exist in ASC’s post-2012 and any recorded information HE holds

The response did not SUGGEST the arrangement existed in ASC’s it was unequivocal; this was the case, the share was in more than one ASC. The ‘share’ (the ‘share’) was operating in the ASC, it was part of the contract albeit not for long.

With regard to the 2016 request/response, at some stage, when responding in 2016, someone researched and responded about the ASC, that the contract held a ‘share’ process. This was not simply made up. Indeed, if you look at the original request it does not ask about this aspect, it was volunteered by HE.

The response was factually correct; there was a ‘share’ in the contract. To date, HE has not said when, with regard to ASC’s this ended, therefore, I cannot tell if, as I suspect, the share was in force during 2016, at the time of the original response or had ceased before.

Q # 2. What information has HE now located to undermine the 2016 response?
Q # 3. What information does HE possess that identifies the 2016 response was wrong; what has HE located such that they can now say:

a. There was a share agreement early in ASC’s
b. By 2016, when the response was issued, that was wrong

I am going to labour the point because it is important:

The ASC’s commenced 2012, in 2016 the response was there is a ‘share’ arrangement now I am told there is not. Someone has been able to discern that as at 2102 the agreement was in place but that at the time of the 2016 response it had concluded.

Q # 4. How can they say this without knowing when the share was terminated?

Note the response wording; ‘terminated early in the first Asset Support Contracts’ – plural. The 1st contract was 2012 (BBMM Area 10) then, I believe there was Area 3 … EM Highways (now Kier Highways).


C. termination of this due to insurers


The termination occurred on a date as yet unknown, the Authority writing:

• This was the result of insurance companies not being willing to pay gain shares in the Managing Agent Contracts (MAC)

The ‘share’ was used in MAC’s. These pre-dated ASC’s which commenced in 2012 (Area 10). Someone has managed to research the issue and not simply said ‘terminated’ but provided the cause; insurers. This is some ‘recollection’ from 8 to 10 years ago.

Q # 5. Where does this come from?

I suspect it is the usual excuse proffered by HE and Kier:

• 10/2015 Kier’s new process – agreed with insurers. Not according to one of the two cited
• 10/2019 the NSoRC failed due to insurers – really; not that I am aware of and an FoIA has failed to elicit evidence of this

The following is, I believe telling:

• ‘insurance companies not being willing to pay gain shares’

Q # 6. So what; why did it make any difference that insurers were unwilling to pay?

Insurers criticism or unwillingness to pay has not influenced contractor or HE decisions. HE and contractors do not listen to insurers. This is evidenced by the activity over the past years – proceedings are issued and courts make decisions. This is the contractor/HE way.

If the share were a valid head of claim, HE/Kier would stick their heels in. If not, how long had the MAC run such that ‘coincidentally’ just as they were changing, this unwillingness became apparent?

Q # 7. If the ‘share’ was unpalatable for insurers in the MAC, why place them in the ASC? Why create a new contract type and add a ‘share’ that insurers had demonstrated an unwillingness to meet?

But I am being duped, misled … insurers do not pay the share, it is irrelevant to them! The explanation is a nonsense.

Q # 8. What is the share?

According to HE:

The ‘share’ process compares the Outturn Cost with a Target Price of a scheme
and any over or underspend is divided between the contractor and Highways
England according to a set share formula. The Target Price is built up based upon
the Schedule of Rates in the ASC provided at tender stage. The Outturn Cost is built
up from the Defined Cost plus Fee, in effect the actual cost of undertaking the work.

But DCP matters are not schemes, the process said to apply does not fit to a ‘per claim’ environment. A claim for £5,000 (cost) may be subject to a ‘fee’ uplift of say 25% i.e. £1,000.

Q # 9. What is the share on the £6,000 example above (£5,000 cost + £1000 TPCO) that is added which insurers baulked at, how is it calculated and how was it presented to insurers?

The answer, I suggest, it that it never was. The response if ‘puff’; intended to sound reasonable, official, complex and deceive. In reality, the ‘share’ process does not fit DCP incident costing and charging.

The ‘share’ is specifically related to, between, Kier and Highways England. It does not apply to insurers, it is not a ‘charge’ or ‘cost’. Therefore, reference to insurers is a distraction, a ruse.

The ‘share’ is engaged when insurers either over or underpay on a claim, they do not pay the share, it is not presented to them.

The share is engaged if insurers pay below the threshold, if Kier are unable to recover below a specified sum or percentage. It is a payment that either Kier received (the Authority’s ‘pain‘) or it is a reduction is the sum kier receives each month (the Authority’s ‘gain’).

That is the extent of an insurers involvement; their payments have an effect upon the share which is resolved between Kier and the Authority. It is never a cost to an insurer! The ‘share’ is not a sum added to the invoice, it is considered after payment of the bill, does not feature in it. I am pressing this explanation as it appears not to have dawned upon the ICO that the ‘share’ response is nonsensical yet swallowed hook, line and sinker by you. I question why.

Deception

The motive for misleading/distorting and undoing the 2016 statement is the association of what appears to be fraudulent misrepresentation.

The ‘share’ works with rates, to support their ‘no rates’ stance, the Authority must now backtrack on the ‘share’ arrangement. Clearly, given the contradictory responses, not everyone got the message

Yours sincerely,

P. Swift