190424 FoIA Contractor Charges, Recoveries & Lump-Sum Payments for DCP Works

24/04/2019 FoIA Request 770,263 / 770263

Dear Highways England Company Limited,

I understand there exists a relationship between the amounts charged & recovered by your contractors and the monthly lump-sum they are paid by Highways England; that all contractors reconcile their costs annually against their recoveries. If the proportion of recoveries exceeds expectations an assessment would be made and the Lump Sum payment would be reduced. This necessarily relates to sub-threshold (£10,000 matters).

I ask to be provided all information in respect of this arrangement and it application since 2012 to include, but not be restricted to:

1. The areas in which this arrangement exists
2. All information about this process; the contract extracts relating to the methodology, the calculation, how it is applied etc.
3. What information the contractor is to submit for reconciliation and the description of said data i.e. whether this comprises ‘defined costs’ (a.k.a. ‘base rates’ or DCP Rates’ of ‘notional rates’), the Third Party Claims Overhead etc.
4. How Highway England determine the submitted information is correct, true and accurate
5. The last submission, reconciliation and assessment for each area

Specifically, with regard to Area 9:

6. The investigation and reconciliation of the figures passed to your Green Claims manager insofar as the submission of figures by Kier Highways was concerned, namely:
a. Defined cost
b. TPCO
c. Total
d. Recovery
e. remarks

Specifically, with regard to HE references: 767723:

7. How the information was reconciled, considered to be accurate prior to disclosure
8. The action taken subsequently to determine the accuracy (or otherwise)of the records.


14/05/2019

Dear Mr Smith

Thank you for your request of 24th April where you asked several questions relating to Contractor Charges, Recoveries & Lump-Sum Payments for DCP Works. During the tender process for Asset Support Contracts a Lump Sum payment is bid by suppliers to cover third party damage where the driver remains unidentified. At the point the contract is awarded to a service provider this sum becomes contractual and the payment remains part of the Lump Sum payment for the duration of the contract, with changes only made relating to normal annual adjustments to the Lump Sum for example, to account for inflation.

Your remaining numbered questions have not been responded to as they are based on an incorrect premise.


14/05/2019 to Highways England

the premise upon which i am requesting information is that related to the pain / gain arrangement and the need for your contractor(s) to submit claims costs and recovery amounts for reconciliation. As an example of the basis upon which I have made this approach, please see the below FoIA reply extract issued by Highways England.
The submission of costs and recoveries is clearly required by Highways England and there is obviously reason for this.

Mr P Swift

Highways England Ref: FOI 743,153 / 743153
All contractors reconcile their costs annually against their recoveries. 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 and there are various factors for this. The main one being not all damage linked to a driver is reported by the driver.


12/06/2019
Dear Mr Swift
Thank you for your request of 14th May where you asked the following:
‘’the premise upon which I am requesting information is that related to the pain/gain
arrangement and the need for your contractor(s) to submit claims costs and recovery
amounts for reconciliation. As an example of the basis upon which I have made this
approach, please see the below FoIA reply extract issued by Highways England.
The submission of costs and recoveries is clearly required by Highways England and
there is obviously reason for this.

Highways England Ref: FOI 743,153
All contractors reconcile their costs annually against their recoveries. 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 and there are various factors for this. The main one being not all
damage linked to a driver is reported by the driver.’’

You will be aware NEC Option C Target Price with a pain/gain share is used by
Highways England for most scheme work although not used for Green Claim repairs.
This was a direct result of challenge by insurers who were not prepared to accept
any pain/gain approach in their payment of claims for damage repairs from negligent
drivers. NEC Option E cost reimbursable (or Defined Cost plus Fee) approach is
therefore used for DCP repair work.

I refer you to a previous FOI 738,640 of 13 July 2016 published on the .GOV website
at the following link

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/539497/FOI_738640_redacted_FINAL.pdf

In FOI 738,640 (738640) the relevance of the 1153 Traced-identified and Un-identified incident numbers for tender purposes in Area 3 Asset Support Contract was explained in detail i.e. “This was a notional number that the tenderers used to build up their tender submission for the sub £10,000 claims. It was not envisaged as the actual future number of claims but simply a benchmark for submitted tenders by Highways England.”

Also, that ‘’the 1153 number was used by KHL as a basis for averaging
some cost elements. As stated, this process has now been reviewed and revised.
For clarity, it is understood that any contentious or unsettled claims – priced under
the old methods – have been resubmitted under the new process, as agreed with the
insurance industry.”

It is not practical for Highways England nor our contractors to establish a precise
number of damage incidents on our network and hence the proportion of incidents
caused by traced and un-identified drivers. While some un-identified driver damage
incidents can be obvious, many others by their nature are not and the damage to the
asset may not be established until sometime after the event. Un-identified driver
damage incidents tend to be those causing the least obvious damage to both our
asset and also the vehicle involved as evidenced by the fact the vehicle has driven
way from the scene and off the network unnoticed.

The Lump Sum in Asset Support Contracts remains unchanged throughout the life of
the contract apart from annual adjustments due to indexation and other factors (eg
tendered efficiencies, etc.).

DCP cost and recovery information is provided by suppliers when required in line
with the contract but this is not generally provided on an incident by incident basis


15/06/2019 to Highways England  Highways England Ref: FOI 743153

I am seeking an internal review of your response 14/05/2019.

Whilst I thank you for your reply of 12/06/2019, this raises more questions than it answers. I note you hold information pertinent to my request of 24/04/2019. Yet 14/05/2019, you refused to address the questions stating they are based on an incorrect premise.

Your latest response indicates my premise was / is sound.

I accept question ‘1’ is in the present tense i.e. I asked about the Areas in which this process EXISTED and the correct answer, by reference to your latest reply, is it NO LONGER does. However, as there WAS such an arrangement, my subsequent questions are, in the main (save some should be past-tense) valid.

For example, whether or not the process is CURRENTLY in place, it WAS and Q5 seeks ‘The last submission, reconciliation and assessment for each area’. You hold information in respect of this. As at 25/10/2016, the process was in place, as evidenced by your FoIA response FOI 743,153. Therefore information should have been provided.

Q6 similar requires no amendment to avoid semantics.

I asked ‘ to be provided all information in respect of this arrangement and it application since 2012 i.e. I have sought historical information.

The process was in place until at least 10/2016 when a previous FoIA response (to which I have referred) disclosed this.

Why have I been provided no information from the contract commencement to the date the process terminated?

I ask to be provided all information in respect of this arrangement and it application since 2012 to include, but not be restricted to:

1. The areas in which this arrangement existED
2. All information about this process; the contract extracts relating to the methodology, the calculation, how it is applied etc.
3. What information the contractor WAS to submit for reconciliation and the description of said data i.e. whether this compriseD ‘defined costs’ (a.k.a. ‘base rates’ or DCP Rates’ of ‘notional rates’) , the Third Party Claims Overhead etc.
4. How Highway England determineD the submitted information WAS correct, true and accurate
5. The last submission, reconciliation and assessment for each area

Specifically, with regard to Area 9:

6. The investigation and reconciliation of the figures passed to your Green Claims manager insofar as the submission of figures by Kier Highways was concerned, namely:
a. Defined cost
b. TPCO
c. Total
d. Recovery
e. remarks

Specifically, with regard to HE references: 767 723:

7. How the information was reconciled, considered to be accurate prior to disclosure
8. The action taken subsequently to determine the accuracy (or otherwise)of the records.


22/07/2019 to Highways England

Please advise by what date I can anticipate receiving a response – the review is overdue



26/07/2019 to Highways England Company Limited,

I am awaiting a response to mine of 15 June 2019. On the basis you may, or could, have interpreted this as a new request, this should be considered a request for an internal review; you have not replied within the statutory 20 working days.


17/08/2019 to Highways England Company Limited,

you have not provided information in response to my FoIA

You have not provided the outcome of your internal review

please advise by when I can expect to receive the information sought.


21/08/2019

The appears to be a great deal more to the pain/gain share and my requests than meets the eye. Possibly this will demonstrate my logical, cross-referencing approach and why I can become frustrated

In response to FoIA 743153, 25/10/2016 Highways England conveyed the existence of the pain/gain relationship. It should be remembered that in 2016 HE was saying DCP rates were ‘held’ but ‘you cannot have’, you had yet to lose the ‘commercially sensitive’ shield, had yet to change tack and use the ‘not held’ exemption.

in respect of this request, as at 14/05/2019, there was no reluctance on the part of HE to answer my request, no suggestion I was being vexatious, you simply ‘put me in my box’ by stating I had misunderstood, I had approached the issue from an incorrect premise. The reply is above.

However, I do not believe this to be correct. I was aware of a 25/10/2016 response in respect of the pain/gain share. I therefore pointed out what you had previously conveyed.

Using the limited but pertinent information I possess about pain/gain, this contractual arrangement can be applied to Area 9. A brief timeline is as follows:

01/07/2014 Kier commenced the Area 9 contract. That is to say, Kier was subject to the pain/gain share for over a year, at least until:

25/10/2016 the ‘pain/gain share’ existed and was applicable, it was conveyed in a FoIA response of that date. BUT … ‘no contractor has ever been in the position where the proportion of traced claims exceeds these assessments’

In order to state no contractor had met the threshold (I paraphrase) it follows:

• The statistic was monitored
• Figures were provided
• Figures were supplied on an annual basis
• Consideration was given to the:
o Number of claims
o Costs
o recoveries

Where is this information which is captured by my FoIA request?

Sometime between 25/10/2016 and the response above:

12/06/2019 the pain/gain share is said to have concluded (due to insurers)

You state the pain/gain share concluded because ‘of challenge by insurers who were not prepared to accept any pain/gain approach in their payment of claims for damage repairs from negligent drivers.’

Assuming, for one moment, the above is correct and the pain/gain share stopped. When? Clearly it was after 25/10/2016. I therefore expect to be provided all information prior to this date. Indeed, I expect to be advised the date the ‘share’ stopped and supplied all information to that date. It is clearly captured by my request.

But how does the pain gain share affect insurers – does it?

The contract (Area 9 / ASC) simply says a Third Party (drive, fleet, haulier or their insurer) will pay ‘no more than’:

Defined costs, base rates (£) +
Uplift (%)

The pain / gain share is an arrangement between Highways England their contractor. It does not involve insurers.

Insurers see no benefit from ‘pain /gain’; the arrangement is intended to ensure Highway England benefit – if a contractor recovers more than a threshold, likely a percentage of their costs, the monthly lump-sum payment (from the public purse) the contractor receives is reduced. Highway England have met the ‘pain’ aspect under the monthly lumpsum payment – they have never seen the gain.

Insurers having no involvement in the pain / gain relationship, the matter is not believed to have been raised with them (or us) and is not the basis for any alteration to the contract (which it appears occurred).

I am seeking the correspondence relating to the contract amendment such that no matter how much Kier (as an example) recover they would never see their lump-sum reduced.

However, a particular concern is that Kier Highways are misrepresenting recoveries to HE, overstating their costs and understating their recoveries. This is evidenced here https://www.englandhighways.co.uk/false-i…

Yours faithfully,

Mr P Swift


09/09/2016 – From: casework@ico.org.uk
Sent: 09 September 2019 09:26
Subject: Your complaint about Highways England [Ref. FS50868062]

Your reference: https://www.whatdotheyknow.com/request/contractor_charges_recoveries_lu

Information request to Highways England

Thank you for your correspondence dated 21 August 2019 in which you complain about the time taken for Highways England to carry out an internal review that you requested on 15 June 2019. The right to complain to the Information Commissioner is given under section 50 of the Freedom of Information Act (FOIA). However, a complaint may be deemed ineligible under section 50, if for example:

• There is an undue delay before bringing a complaint to our attention, or;
• You have not exhausted any complaints procedure which is provided by the public authority.

Therefore, before accepting complaints, the Commissioner requires complainants to allow public authorities the opportunity to respond to their appeal for a review of the handling of or decision regarding their FOIA request.

Although there is no statutory time set out in the FOIA within which public authorities must complete a review, the Commissioner has issued guidance on this matter. The Commissioner considers that a reasonable time for completing an internal review is 20 working days from the date of the request for review, and in no case should the total time taken exceed 40 working days.

I have written to Highways England to provide them with a copy of your request for internal review and recommend that they issue you with an internal review decision within 10 working days from the date of receipt of our letter. I enclose a copy for your information.

From my letter to Highways England you will see that significant or repeated unreasonable delays in dealing with internal reviews by public authorities are monitored and where appropriate further action may be taken. This case has now been closed, however if you do not receive a response within 10 working days please contact us quoting the reference number on this letter. If you remain dissatisfied after having exhausted Highways England’s internal review process and would like us to look into the matter, please contact us quoting the reference number on this letter and providing us with a copy of the internal review decision.



09/09/2019 – From ICO to Highways England:

Your reference: 770,263
Complaint from P Swift

The Information Commissioner has received a complaint from Mr Swift stating that he has not received a decision regarding the internal review he requested on 15 June 2019. A copy of the internal review request for your information can be found at the link below:
https://www.whatdotheyknow.com/request/contractor_charges_recoveries_lu#outgoing-910137

Guidance

The Commissioner has issued guidance regarding the time limits on carrying out internal reviews. The Commissioner considers that a reasonable time for completing an internal review is 20 working days from the date of the request for review, and in no case should the total time taken exceed 40 working days.

A full copy of this guidance is available on our website (www.ico.org.uk) under the Freedom of Information guidance section.

Enforcement

The Commissioner wants to ensure that a complainant has exhausted a public authority’s internal review procedure, but at the same time the complainant should not be unreasonably delayed in having their complaint considered under section 50.

Internal reviews are referred to in the section 45 Code of Practice, and significant or repeated unreasonable delays in dealing with internal reviews will be monitored by the Enforcement team. In some instances regulatory action may be necessary.

Our Regulatory Action Policy is available on our website here:

https://ico.org.uk/media/about-the-ico/documents/2259467/regulatory-action-policy.pdf

Actions

If it is the case that you have not issued an internal review decision to Mr Swift we recommend that you do so within 10 working days from the date of receipt of this letter.

If you have, in fact, already responded to Mr Swift, and believe that your response should already have been received we would recommend you contact him to confirm receipt if you have not already done so


 

diarised to 24/09/2019