2013 Onward

State-enabled exaggeration, contract non-compliance, misrepresentation and some fraud …

In some road maintenance/repair contracts with Authorities (Councils or Highways England) a kind of ‘excess’ situation exists, there are two regimes in operation to recover damages in respect of a damaged highway or ‘street furniture’:

  • Where the costs are under £10,000 the contractor undertakes the repairs and must be repaid (recover) from the driver, fleet, haulier or their insurer (Third Party)
  • Where the costs are over £10,000 the contractor is paid by the Authority who recovers from the Third party.
  1. 2013, we noticed EM Highways’ (now Kier Highways Ltd) charges to Third Parties (drivers, fleets, hauliers, or their insurers) for attending emergency, unplanned events had increased significantly from about £125 to £1500.
  2. 01/07/2014, EM Highways acquired Area 9.  This appears to have been the catalyst for further substantial profiteering with the assistance of the Authority. Emergency incident attendance costs escalated to £2700 + £2000 of admin’; £4700 before any work was undertaken.
    1. Unbeknown to anyone, outside of the Authority and their contractor, there was a small section of the contract that provided protection to Third Parties, set out an equation by which a Third party was to be charged ‘no more than’; Appendix A to Annex 23 of the contract.
  3. EM Highways and Highways England appear to have been acting in concert to hide this contractually agreed procedure (Appendix A) that should have seen third parties and the Authority charged using common base rates (defined costs) but a differing percentage uplift.
    1. From day one (07/2014), EM Highways never complied with the contract
    2. Highways England failed to enforce Appendix A and protect third parties.
    3. No one spoke or wrote of Appendix A
    4. unlike the remainder of the contract, Appendix A was not placed on-line. What use was this shield the existence of which was unknown?
  4. For years, we confronted EM Highways ‘unarmed’, aware rates had increased astoundingly, unreasonably and that the Authority was not subject to the same pricing; we saw above £10,000 claims and could compare the rates.
  5. Mid-2015, Kier acquired EM Highways which became Kier Highways Ltd (Kier).
  6. 10/2015 after substantial resistance Kier abandoned the £4,700 process and instigated their ‘defined cost’ methodology.
    1. There was still no mention by anyone of ‘Appendix A’ and
    2. no formal amendment to the contract, for this ‘exaggeration in another form’ coupled with contract non-compliant uplifts for costs not incurred
    3. the absence of a ‘deed of variation’ for this process amendment is likely telling; no one knew the contract addressed the charging methodology (unlike in 2020 – see below), so why formalise a change which could disclose the existence of a term that was not being complied with, secret.
  7. 01/2017, we discovered the secret section (Appendix A); the agreement to utilise an equation by which an at-fault party would be charged ‘no more than’:
    1. A common ‘base’ rate, the ‘defined cost’ (£) +
    2. Uplift (%) =
    3. Maximum (£) to a TP
  8. Obtaining the common rates was all more important; we knew the agreed uplift so, armed with the rates, we could recalculate and demonstrate the Third party overstatement – of £millions (likely £10 million between 07/2014 and 10/2015).
  9. There was not this issue with above £10,000 claims; the Authority ‘knew the rules’ and possessed the rates. Kier was aware of this and therefore had to play by the agreement, at least insofar as the pricing was concerned.
  10. The Authority withheld the rates  stating they were HELD but ‘commercially sensitive’. Many rate-related requests were made (not as many as the Authority cited to try and have the approaches deemed ‘vexatious’ EA/2018/0088). The Authority subsequently detailed 118 requests/reviews on the WhatDoTheyKnow.com web site made by interested parties about DCP rates.
  11. Handling highways claims in this environment, engaging Appendix A, should have been effortless from everyone’s perspective as the hard work had been done; an equation established, common rates agreed. The Contractor, Kier, had signed up to a process that meant simple math’ could occur. But Kier ignored the contract from day-one and the Authority enabled/assisted this.
  12. Neither Kier nor the Authority could release the rates whilst they were being utilised for fear of the gross exaggeration (profiteering), in the name of Highways England, being established and claims undermined, reduced substantially. We encountered obstruction, misrepresentation and intimidation seemingly intended either to put an end to  requests or place time between utilisation of the process and ultimate curtailment. We encountered the ‘give refusal a go’ approach to FoI; the Authority may get lucky and have vexatious upheld.  Why release the rates unless ordered to – and who knows, they may (and did)  dupe the ICO and Tribunals.
  13. Understanding the defined cost (base rate) to a Third Party and Highways England was to be the same, common, the difference in charges result from the difference in percentage uplifts:
    1. to the Authority, a ‘fee’ of 7.4%
    2. to a Third Party, the ‘Third Party Claims Overhead’ (TPCO) of 25.29%,
    3. The difference is 17.89%
  14. Therefore:
    1. An operative charged to the Authority at £23.71 + £1.75 (fee uplift @ 7.4%5) = £25.46 / hour
    2. This operative should be charged to a Third party at £23.71 + £6 (TPCO uplift @ 25.29%) = £29.71 / hour
  15. However, Kier charged a Third Party £73.05 / hour furthermore:
    1. after 5pm of a weekday, Kier stated their operatives (AIW’s) worked 8am to 5pm and were paid a 1.5x uplift, the rates was then £109.57 / hour.  The Authority was charged £25.46/hr
    2. of a weekend, Kier stated their operatives (AIW’s) were paid a 2x uplift, the rates was then £146.10 / hour. The Authority was charged £25.46/hr
  16. Kier’s AIW’s told us they worked shifts, did not receive the uplifts and even overtime was at flat rate.
  17. When billing the Authority, Kier provided a breakdown of ‘cost’ and ‘uplift’, a Third party was presented a flat rate – likely because at that time, Appendix A (the process not being followed) was hidden.
  18. What was the point of the calculation giving rise to an agreed 25.29% uplift to Third Parties if this was never to be utilised?
  19. the contract non-compliance was so obvious – but there are none so blind as those who will not see.
  20. 21/06/2017, we met with the then head of Green Claims for the Authority, Sarah Green and demonstrated the contract non-compliance, provided documentary evidence.
  21. 15/11/2017, we spoke with KPMG for an hour, tasked with auditing Kier (Project Verde)
  22. The meeting and conversations had no effect, the contract non-compliance continued.
  23. Kier Highways (or their lawyers) had apparently agreed with Highways England to put matters on hold – but did not.  Highways England could not say why not, why their own contractor was not doing as asked/agreed
  24. Highways England continued to withhold the Defined Costs claiming they were ‘held’ but commercially sensitive.
  25. 12/2018, a Tribunal (EA/2018/0088) upheld a complaint/appeal about the rates.
  26. Rather than disclose the rates, Highways England u-turned; the rates are NOT held because they do not exist!
  27. 04/01/2019, I spoke with the then CEO of Highways England, Jim O’Sullivan.  i was assured a schedule of Kier’s rates would be provided.  Unfortunately, Jim was not true to his word.
  28. 24/06/2019, opting to stand the ‘not held’ ground, necessitated addressing the failing, the absence of agreed pricing by establishing a set of rates – the National Schedule of Repair Costs (NSoRC) was lunched; a set of reasonable rates
  29. 31/10/2019, the NSoRC failed and was withdrawn.