Birmingham Council Contract with Kier Highways Ltd (FoIA)

02/11/2020 FoIA request to Birmingham City Council.


02/11/2020 The Request


I ask to be provided, with regard to damage to ‘street furniture’

1. a copy of the contract with Kier Highways Ltd for damage to street furniture attendance and repairs
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

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

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/inflati…
6. a copy of any insurance you possess for damage to such property
7. a copy of the authority in place permitting Kier Highways to commence proceedings in your name and
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.


25/11/2020 Birmingham Council Response reference: 18993085


Request Response

1. a copy of the contract with Kier Highways Ltd for damage to street furniture attendance and repairs

  • Schedule 15 (note: reference to Amey is due to the nature of an old contract but the obligations are inherited by Kier) regarding the claims process following damage as well as an extract from the services specification covering Routine and Reactive Maintenance.

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

    • Kier Highways applies for payment against actual costs incurred for staff, labour, plant, materials and subcontractors (or Third Parties) in delivering the works. For delivering the works, Kier Highways are paid a fixed Management Fee.
    • Kier Highways do not use CECA rates and the costs for staff and labour are predominantly those of the TUPE workforce.

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

  • Note response 2.

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

Any fault, errors, negligence etc. by Kier or a Kier Third Party/Subcontractor would be a disallowed cost under the Kier Contract and will not be paid to Kier. The Council or other parties would seek recovery from Kier or Kier’s Third Party/Subcontractor for any loss or costs incurred.

  • Kier will pursue Third Parties (including insurers) for recovery of costs incurred from having to repair the network.
  • Any costs recovered are returned to Birmingham Highways and not held by Kier.
  • The process and costs are fully transparent to the Council and Birmingham Highways.

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-to-makea-profit/

There is full transparency with the Kier contract and the way Third Parties and subcontractors are being dealt with. There is not an opportunity for Kier to generate a profit from claims. Note response 4.

6. a copy of any insurance you possess for damage to such property Birmingham Highways has the following insurances and policies in place:
– Construction All Risks
– Third Party Liability
– Environmental Impairment Liability

  • For each insurance there is a deductible at £50,000 for example (i.e. an excess). This would mean that anything up to the deductible value is a cost to Birmingham Highways.

7. a copy of the authority in place permitting Kier Highways to commence proceedings in your name and

  • Kier have authority and permission to act on behalf of the Highway Authority regarding proceedings under the Contract (Schedule 29 as attached).

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.

  • Kier Highways are a national provider to numerous local authorities, Highways England, the government as well as the private sector. Kier engage Gallagher Bassett who are an experienced company specialising in the handling of claims. Gallagher Bassett and Kier both act fairly and reasonable whilst ensuring that the true costs are recovered thereby ensuring value for Birmingham Highways. Birmingham Highways and Birmingham City Council require Kier and Gallagher Bassett to operate courteously and within standard industry practice in dealing with Third Parties.

26/11/2020 to Birmingham City Council, reference number 18993085.

With regard to my request:

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.

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

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

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.

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).

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/inflati…

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

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

Thank you.

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.

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 with a non-profit, at cost process.
With regard to Kier operating within standard industry practice in dealing with Third Parties. Please:
b. Provide the industry practice referred to.


14/01/2021 Birmingham Council 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 was 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.


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