210114 Birmingham & Kier FoIA Response (2)

14/01/2021 from Birmingham Council, Corporate Information Governance Team

Response

1. a copy of the contract with Kier Highways Ltd for damage to street furniture attendance and repairs
a. please supply the full contract insofar as it relates to damage to property by drivers.

There is no specific ‘contract’ relating to damage to property by drivers. Schedule 15 which has already been provided covers all relevant third party claims information.

2. the schedule of costs for works on the highways i.e. staff, operatives, plant and materials charged to the Council and; a. whether the Council is charged, for any works, by Kier Highways by using CECA rates
a. Please provide the schedule of rates. It appears this is ‘actual costs’.

These rates have been confirmed by the First Tier Tribunal (EA/2018/0104) to be commercially sensitive and therefore under section 43 FOIA will not be disclosed for the reasons stated below.

b. How are actual costs arrived at and verified by the Council

There is a monthly commercial, valuation and assessment process that takes place between BHL, BCC and Kier with full transparency of costs incurred and forecast.
This monthly process includes the necessary due diligence and verification prior to payment being made to Kier as part of the contract.
The rates and costs agreed with Kier at the outset originated from those presented and submitted as part of the competitive tender in late 2019 and early 2020.

There are generally, two scenarios involving contractor assets (staff, labour, plant, materials) following an incident causing damage and reinstatement:

  • A negligent party is identified and pursed for attendance and repair costs
  • A negligent party is NOT identified and presumably either the contractor is compensated by way of fixed fee agreement or invoices the Council for the works

c. Please explain the process and if the council is invoiced for the works per incident, provide the schedule of rates utilised by Kier.
It is noted Kier Highways do not use CECA rates and the costs for staff and labour are predominantly those of the TUPE workforce.
d. Please provide the rates utilised by the workforce pre-Kier appointment. It is understood this will be Amey rates

These rates have been confirmed by the First Tier Tribunal (EA/2018/0104) to be commercially sensitive and therefore under section 43 FOIA will not be disclosed.
Costs for staff and labour are those that form part of the competitive tender submitted and agreed with Kier in addition to those of the TUPE workforce (including a combination of historical Amey and BCC employment).
Detailed applications for payment are submitted by Kier on a monthly basis, which includes all of the necessary substantiation and detail for the costs incurred as well as the detailed cost transaction report for all levels of activity and associated costs.

3. the schedule of costs for works on the highways i.e. staff, operatives, plant and materials charged to Third Parties

Please see ‘2a’ above. response 2 does not provide the schedule of rates – see above. These rates have been confirmed by the First Tier Tribunal (EA/2018/0104) to be commercially sensitive and therefore under section 43 FOIA will not be disclosed for the reasons stated below.

4. The basis upon which Kier Highways Ltd is to charge at-fault Third Parties for example: a. cost-plus uplift, b. using the same base rates as charged to the Council in the event a culprit is unidentified.  This request relates to damage/repairs resulting from drivers, not any fault, errors, negligence etc. by Kier i.e. Third-Party claims (as opposed to ‘other than’ or contractor negligence).
It is noted that this is a ‘cost’ process, not ‘cost-plus’. In turn, Kier remits all / any costs recovered from at fault drivers, fleets.
a. If I have misunderstood, please clarify
b. Please provide a copy of the contractor’s last notification to you of all Third-Party Claims, the last quarterly basis return (schedule 15, 3).

Notifications and reports are continuing to occur, including the quarterly Third Party Claims data.
This is confidential information and will not be disclosed for the reasons stated below.

5. The protection the council put in place to prevent Third Parties being overcharged i.e. the agreement that prevents the practice of Kier Highways profiting from claims – see: https://www.englandhighways.co.uk/inflating-costs-tomakea-profit/
a. How do Kier profit from attendance/repair works?

An element of business is profit and a reasonable uplift /return would be expected.

b. What is the benefit to Kier if an ‘at cost service is provided?

The Kier contract as competitively tendered is an NEC4 standard form contract, amended to suit the Birmingham Highways project. Kier receive a Management Fee for their services at the agreed amount when within scope of the contract or a fixed percentage uplift when out of scope of the contract.
All other costs and cost components are reimbursed at cost and on an incurred basis.
It is understood that any profit Kier will achieve from this project is included as part of their Management Fee or percentage uplift.
The council does not hold this information.

c. In what respect (how) is the way Third Parties ‘transparent’?

There is a monthly commercial, valuation and assessment process that takes place between BHL, BCC and Kier with full transparency of costs incurred and forecast.
This monthly process includes the necessary due diligence and verification prior to payment being made to Kier as part of the contract.
The rates and costs agreed with Kier at the outset originated from those presented and submitted as part of the competitive tender in late 2019 and early 2020.

6. a copy of any insurance you possess for damage to such property

Schedule 6 of the PA covers the necessary project insurances that are in place, including Contractor’s All Risks Insurance, Third Party Liability Insurance and Environmental Impairment Liability. These insurances are held by Birmingham Highways Ltd, not the council and the council does not hold this information.

7. a copy of the authority in place permitting Kier Highways to commence proceedings in your name
I note Kier have authority and permission to act on behalf of the Highway Authority regarding proceedings under the Contract (Schedule 29 as attached).
a. What section of ‘schedule 29’. This does not appear to reference claims or proceedings.

There is no specific reference to claims or proceedings but Schedule 29 references all delegation of responsibility or power from Birmingham City Council to BHL/Kier

8. the process agreed with Kier highways and/or their lawyers, for approaching Third parties, many of whom will be your constituents, for reimbursement such that they are treated fairly, reasonably and not subject to unreasonable processes or costs.
The request relates to Third-party claims/incidents.
Kier Highways handle claims. Indeed, Kier Highways:
* appoint lawyers to progress the claims for the outset
* add a 10% administration fee to claims
* charge interest on the claimed sums from the date of incident/loss
The above appears to be at odds with charging ‘cost’ and not profiting. Please:
a. confirm the above are authorised, agreed processes/charges and explain how they are consistent

Similarly to other responses, there is a monthly commercial, valuation and assessment process that takes place between BHL, BCC and Kier with full transparency of costs incurred and forecast. This monthly process includes the necessary due diligence and verification prior to payment being made to Kier as part of the contract. The rates and costs agreed with Kier at the outset originated from those presented and submitted as part of the competitive tender in late 2019 and early 2020. The process, quality, supply chain and costs are consistent. There is no prejudice.
I can confirm that the remainder of the information you have requested is held by Birmingham City Council, by law. However, I’m unable to give this to you.

We consider that the qualified exemption set out in Section 43 (Prejudicial to commercial interests) subsection 43(2) exempts information whose disclosure would, or would be likely to, prejudice the commercial interests of any person (an individual, a company, the public authority itself or any other legal entity). A public authority may refuse to confirm or deny that it holds, applies to the information requested. Therefore, we have decided to withhold the information.

In applying this exemption, we have had to balance the public interest in withholding the information against the interest in favour of disclosure.

Factors in favour of disclosure
The factors in favour of disclosure would be the Council has committed to be transparent and open.

Factors in favour of withholding
A disclosure will prejudice the commercial interests of both the authority and a third party, and the disclosure could damage relationship between the Council and its third party suppliers.
In all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

Please quote the reference number 19626589 in any future communications.