03/12/2020 email updated 16/12/2020 to MP Tom Tugendhat re Kier Highways and Highways England ‘exaggeration & fraud on an industrial scale’ and ‘Temporary VRS (vehicle restraint system) abuse’.
We do not believe it appropriate for the enquiry to delay. It appears the matter is being confused with other issues before the PHSO
The particular complaint to you/DfT is in two parts:
- the reinforcement of what we have been saying for years – Kier has been applying unauthorised uplifts; ripping of drivers, fleets, hauliers and their insurers (Third Parties) by using contract non-compliant and fraudulent uplifts. This has been enabled and permitted by Highways England.
- the misrepresentation by Kier to HE of claims recoveries
- Exaggeration & Fraud
Para. 36 of the Judgement (https://www.englandhighways.co.uk/200821-judgement-re-kier-rates/) sees the Judge cite the Authority’s witness, Greg Cairns:
‘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.’
Kier has been charging Third parties using their own concocted, misrepresented and fraudulent (uplifted) rates. Highways England have been aware of this for years. The Authority failed to address the issue which differs to the matters before the PHSO. The exaggeration is a ‘live’ issue with HE responding (to https://www.englandhighways.co.uk/201104-reimbursement-of-unauthorised-payments/) 27/11/2020:
‘We do not intend to carry out recalculations of previous claims for Areas 6, 8 and 9 in the manner you have suggested’
Drivers, fleets, hauliers and their insurers are owed £millions.
We alerted Highways England to the conduct in 2015. Despite:
- 01/2016 audit overseen by Tim Reardon (Attorney General @ HE),
- 21/06/2017 meeting with Highways England’s soon to be head of claims, Sarah Green, (providing documentary evidence – https://www.englandhighways.co.uk/example-of-area-9-exaggeration/)
- 12/2016 Jim O’Sullivan’s assurance ‘Nick and Tim’ (HE managers) were putting ‘a lot of effort’ into the past costs
- 11/2017 audit (‘Project Verde’) by KPMG (transcript of the issues: https://www.englandhighways.co.uk/kpmg-overview/)
- 01/2019 an assurance form Jim thatKier rates would be published
… no change – the unauthorised overstatements and fraudulent uplifts continued. The Authority has refused to supply the KPMG audit. Indeed, the above failed to identify Kier and the Authority had no agreed rates, but this too is a misrepresentation.
In 2020, rather than have Kier comply with the contract, the Authority changed the contract to assist their contractor to charge higher rates.
Highways England has been complicit in the abuse of the contract, the non-compliance. From day-one (01/07/2014) the Authority kept the section of the contract that set out the pricing process for Third Parties secret – Appendix A to Annex 23 (https://www.englandhighways.co.uk/wp-content/uploads/2017/03/Area-9-Appendix-A-to-Annex-23.pdf). Appendix A sets out how a Third Party was to be charged ‘no more than’ but was hidden from the very people who needed it – drivers, fleets, hauliers or their insurers (Third parties).
It appears the authority could careless, they were being charged in accordance with their agreement by use of ‘cost’ plus a fee percentage uplift; it is more difficult and inadvisable to bite the hand that feeds … Kier could overcharge the Authority by other more subtle means.
If a vehicle causes damage to the SRN (strategic road network) the driver, fleet, haulier or their insurer could expect a bill for attendance and repair. The attending operatives generally attract a rate of about £24/hour plus an uplift <10%, a totasl of about £27/hour. This is what the Authority is charged (example of rates from 03/2019 Area 7 – Kier to HE). To the Authority the rate is ‘flat’; a fixed hourly rate no matter what the time of day.
But from 10/2015 until 2020 (when presumably things were started to become a little concerning) a Third Party could expect to see the £27/hour operative charged to them at £65+/hour to £73/hour from 8am to 5pm. However, this was just the start of the profiteering. Kier claimed their operatives worked 8am to 5pm after which they were the subject of an uplift:
- 50% from 8am to 5pm of a weekday – £97.50/hour
- 100% of a weekend – £130/hour
But the operatives told us they worked shifts, they were not paid the uplifts and even overtime was at a flat rate. The definition of fraud is:
2. Fraud by false representation
(1)A person is in breach of this section if he –
(a)dishonestly makes a false representation, and
(b)intends, by making the representation –
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2)A representation is false if-
(a)it is untrue or misleading, and
(b)the person making it knows that it is, or might be, untrue or misleading.
(3)“Representation” means any representation as to fact or law, including a representation as to the state of mind of—
(a)the person making the representation, or
(b)any other person.
(4)A representation may be express or implied.
(5)For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).
How does making a claim for a cost not incurred (but stating to the contrary) not fit the above?
Para 86 of the HHJ Harrison QC judgement suggests the application of ‘multipliers’ is generally not understood:
‘In particular he concluded that the figures for the hourly rate to be charged were within reasonable boundaries and that the labour uplifts (1.5 in the Tesco case and 2 in the Booth case) were consistent with industry antisocial hours rates.’
Trusting & Unprotected Victims of Highways England
How has Highways England ‘served the public’? They entered into agreements with contracts ‘ASC’ (contracts) that were to be self-policing, involve ‘trust’. But from day-one (Area 9 – 01/07/2014), Kier ignored the contract and charged Third-Parties what they could get away with. When rumbled, they changed their process (10/2015) utilising exaggeration in another guise and fraud (above), placing matters with lawyers to pursue inappropriate costs.
Third Parties were easy game; unaware of the ‘rules and rates’, they were presented spurious charges, misled and the victim of profiteering on a grand scale. We suspect this is why Highways England is powerless, unable to address the issue; party to the non-compliance and fraudulent uplifts, standing by silent, they are complicit, so compromised as to be ineffective.
This does not bode well for large contracts/projects such as SmartMotorways, HS2 or the Stonehenge Tunnel which, we suspect are being overseen/orchestrated by contractors, not the Authority. We question whether what is being presented to the DfT is the Authority’s considerations or those of contractors. In turn, we suspect the DfT understands the implications … a daunting task to be avoided.
When confronted with concerns, the DfT initially accepted the Authority’s ‘the matters are with our lawyers’ response from Highways England as a reason to avoid involvement. Yet this proved to be incorrect; the lawyers were not considering the issues. We have yet to receive an explanation for this misleading response and the DfT’s questioning of the conduct.
The DfT’s second bite at the ‘avoidance’ cherry; ‘ the PHSO is involved’. This is correct but not with regard to these matters. Furthermore, we question whether these serious issues fall within the remit of the PHSO … who will take 4 months simply to assign the complaint!
This is a common ploy we encounter; place distance between an event and the attention (speed x time = distance) so as to dilute the importance when ultimately (if ever) investigated and to provide the ‘suspects’ time to put a new process in place and claim ‘but we put our own house in order’;
That the DfT are seeking to delay any enquiry, put off any examination suggests they are troubled by the issues
Abuse of the Public Purse
Kier Highways have provided false recovery data to Highways England.
Additionally, why is this accepted by the Authority? We alerted Highways England to the issue, set out the facts yet no action has been taken (to our knowledge). The example we presented can be found here: https://www.englandhighways.co.uk/false-information-supplied-to-highways-england/ and relates to an 11/2016 claim.
If the provision of correct information would have no effect, why would Kier not provide accurate data?
Kier has been applying and supplying Highways England with the ‘unauthorised uplift’ (see above) rates and ‘multiplier enhancements’, as though these costs were contract-compliant ‘defined costs’. Kier has been misleading Highways England. We have been advising the Authority of this for years – see above.
A potential reason for this deceit is to create a false impression of suffering a loss, of not profiting from claims.
2016, we learned that the contracts contain a pain/gain share; that if a contractor, such as Kier, were to recover above a threshold, their monthly lumpsum payment would be reduced. We were informed no contractor has ever achieved this. How could Kier not have done so?:
- 07/2014 to 10/2015 Kier were using their 1153 process that saw gross exaggeration – 5+-fold uplifts because Kier was dividing their total incident attendance costs by the annual number of incidents (1153), but they actually attended over 5,000 incidents/annum.
- 10/2015 to 2020, Kier used their ‘CBD’ (Cost breakdown Document) process that saw inflated/concocted rates and fraudulent uplifts charged.
The 2016 information appeared researched; it related to the ASC (contracts), referred to contractors reconciling their costs annually against their recoveries – the DCP (damage to Crown property) process – unconnected with scheme/pre-planned work. The Authority wrote:
‘If the proportion of traced incidents exceeds expectations an assessment would be made and the Lump Sum payment would be reduced. However, no contractor has ever been in the position where the proportion of traced claims exceeds these assessments …’
This is the ‘pain/gain share’. But when we cited the example (above 11/2016), alerting the Authority to the misrepresentation of rates, the false information and what appeared to be an abuse of the public purse, Highways England U-turned (again); there was no pain/gain share, the Authority responding:
09/2019, Our FOI Response 743,153 in 2016 describes a process that has never been part of any Asset Support Contract (ASC) and the description of this procedure was provided in error.
Unreliable responses are a trademark of the Authority and we question what confidence can be placed in any information emanating from them. We were subsequently again informed there was a pain/gain share, then not … the responses can be found here https://www.englandhighways.co.uk/201005-there-is-a-pain-gain-share-no-there-is-not-yes-there-is/ or on the WDTK site, here: https://www.whatdotheyknow.com/request/contractor_charges_recoveries_lu
It appeared, much as with ‘defined costs’, the schedule of rates for DCP works, they existed until such time as the Authority was caught out at which time they volte-face and the information is ‘not held’.
According to the ICO, an Authority cannot be deemed vexatious! The matter will progress to an Information Tribunal.
The public purse appears to have been abused – Kier’s profiteering should, under a pain/gain share, likely have seen their monthly lumpsum reduce.
Can’t Beat ’em, Join ’em
The contract between Kier and the Authority was simple; the same base rate to be charged to the Authority and Third parties, different uplifts. But this meant the benefit to Kier Highways could be measured; it was the difference between the percentages, about 17%:
- 8% to Highways England
- 25% to a Third party
But Kier never complied with this, first engaging their phenomenally excessive ‘1153’ procedure, so obviously contract non-compliant as to be farcical – that the Authority did not identify and stop it immediately. Their next ‘CBD’ procedure, or exaggeration in another guise, also contract non-compliant, deceptive.
All the Authority need do was instruct Kier to comply with the contract but it appears this was not an option. In 2020, rather than protect those they are to serve, seemingly unable to have Kier comply, Highways England altered the contract to assist Kier to charge Third parties higher rates.
This flies in the face of the ‘common rates to the Authority and the public judgement of HHJ Godsmark QC who, at para wrote:
It would be odd if a tortfeasor was liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and in a different sum if sued by Highways England via (a contractor)
But the situation is ‘odd’.