190802 FoI Area 10 Schedule of Rates – Contradictions

HE ref: 770,722 / 770722

Between 2012 and 04/2019, Highways England’s appointed contractor Balfour Beatty Mott MacDonald (BBMM) oversaw Area 10. As with many contracts, where a vehicle caused damage to the highway following collision, fire or fluid spill:

  1. if the cost of repairs was over £10,000, BBMM billed the Public Authority who paid and then sought recovery of their outlay from an at-fault Third Party i.e. driver, fleet, haulier or more commonly, their insurer
  2. if the cost of repairs was under £10,000 BBMM received nothing from Highways England:
    • if the culprit (Third-party) was unknown, the cost was addressed by the monthly lump-sum payment BBMM received
    • if the culprit was known, BBMM sought payment from this party or their insurer

Each Area is subject to its own unique features and one in Area 10, possibly because it was an early ASC (Asset Support Contract) is the use of two very different sets of rates:

  1. Over £10,000 (‘1’ above), BBMM use a ‘secret’ set of rates to bill their employer principal, Highways England
  2. Under £10,000 (‘2’ above), BBMM use CECA rates

The use of CECA is claimed to be agreed with Highways England. However, no one has provided the agreement and a FoIA request of the Authority revealed they hold no supportive information.

Now, some 7 years after the agreement commenced, Highway England claims there is no agreed schedule of rates for claims above threshold (£10,000) … yet BBMM state there is!

02/08/2019 FoI response from Highways England:

I am writing to confirm that we have now completed our search for the information, which you requested on 4 June 2019. Please accept my apologies in the delay in responding to you. For ease of reference I have set out each of your questions below in italics and included Highways England’s response to each below in bold.

1.Please provide all information held by your contractor. You have not supplied the information held by BBMM. Please provide this information along with a copy of your request and their response

This information is not held. Highways England has not requested this information from BBMM and therefore a copy of the request and response is also not held.

2. The Judgement to which I referred you was provided by your contractor. It is the document upon which BBMM have been and are relying. It appears BBMM could be approached for the information (and see ‘1’ above). Why has this not occurred? When will it occur?

Previously it was indicated that Highway’s England did not have a copy of the Judgement, this was incorrect, and a copy was held. Please accept my apologies for this oversight but the fact that a copy was held negated the need to approach BBMM for a copy and therefore no approach has or will be made. The copy of the judgment which Highways England has obtained is attached.

3. An issue relating to Area rates is subject to appeal. This request stands on its own Were it not, I feel sure you would have cited duplicity or repetition to exempt a reply. The request differs from others in that it deals with a set of rates stated to a Judge to exist and for above threshold only. Please explain your stance given, as advised, your contractor states the rates exist. As at ‘2’ above: have you approached your contractor for the information? Please provide a copy of the approach and their reply

The existence of a schedule of rates relating to damage caused by third parties is a repeat request which is the subject of a current appeal. A hearing date is now set for 12 November. Therefore, under Section 14(2) of the Freedom of Information Act we will not be responding further to this repeated question. An approach to BBMM has not been made.

4. There is and must be more to add. A definition is one thing, the ‘numbers’ are another. You have specifically referred to ‘costs’ and it must surely be obvious that having agreed a definition, to output a charge, to apply the definition, there must be numbers. It appears Highways England are being deliberately obtuse in their hackneyed referral to the Defined Cost ‘definition’. I am aware of the definition, which provides a meaning, I am seeking the applied figures. The act of defining should make something definite, distinct, or clear. Your response appears intended to obfuscate and do anything but make matters transparent.

Please explain the reference to ‘costs’ and how the definition is applied.

Contractors have been invoicing using the methodology since 2012, at the commencement of any contract the compilation of a rate charged was clearly based on something; what? This is clarified, progressed in point 5:

As previously advised the calculation for third party claims is contained in Annex 23 of the respective area asset support contracts. This is a repeated request which has already received a response however in order to close out this request we confirm the position. A schedule of rates in relation to third party repairs does not form part of any of the ASC contractual or operational documents. Prior to the introduction of the new National Schedule of Repair Costs in June 2019 HE did not routinely hold a document or documents with a list of cost and rates for third party claims.

The model ASC contracts publicly available online (LINK ).  Please note that the various ASCs whilst based on the model documents may differ in some respects as they have been individually negotiated and varied over time.

The term ‘Defined Cost’ refers to a definition in the contract, the contract does not contain a schedule of Defined Costs. The Defined Cost is calculated in accordance with the definition. This is based on actual costs incurred by the service provider and there is not pre-set schedule of defined cost, or other schedule that is used. The definition is contained at clause 11.1 and is stated as follows:

(27) Defined Cost is

  • the amount of payments due to Subcontractors for work which is subcontracted without taking account of amounts deducted for
    • payments to Others and
    • the supply of equipment, supplies and services included in the charge for overhead costs incurred within the Working Areas in this contract and
  • the cost of the components in Schedule 1 for other work less
  • the cost of preparing quotations for compensation events where the work affected forms part of the Lump Sum Duties and
  • Disallowed Cost.

In the Conditions of Contract Schedule 1 contains the Schedule of Cost Components, which can be found at page 101 (LINK). This schedule does not contain any figures or rates but sets out the heads of costs that may be recovered by the service provider.

The Pricing Schedule, including Appendices A, B and C, does include rates. These rates are the rates tendered by the service provider during the procurement process. The purpose of these rates is to build the target cost model which is used during the operation of the contract as a basis for calculating the pain gain share. We have previously advised that these rates are exempt from disclosure as the conditions under s43 of the Freedom of Information Act 2000 are met. This was recently upheld by the First Tier Tribunal in the complainant’s appeal against the Information Commissioners decision – tribunal reference EA/2018/0104.

The process for administering Third Party Claims is covered in Annex 23 Third Party Claims (LINK). 

The principles under Appendix A of ASC identify three heads of cost items (a, b and c) which are established by assessing Defined Costs (i.e. in effect the actual cost of a given incident) and four items (d,e,f and g) are included in the Third Party Claims Overhead which is a percentage applied to the sum of a+b+c.

However, even where the ASC specifies that the repair work is to be charged by reference to the Defined Cost plus overhead, there is no schedule of defined costs. Each case is treated on its own merits i.e. the Defined Cost being the cost to the service provider of inspecting the damage and having the repair carried out.

ASCs require the service provider to undertake repairs and to recover the costs directly from third parties in respect of claims under £10,000. The work involved in an emergency response is determined by the nature, scale and urgency of the incident and repair, and consequently the repair costs are a bespoke calculation.
The schedules of rates specified in the ASCs are not used to work out the Defined Cost, or for assessing the reasonable cost of repair in respect of third party claims, whether above or below £10,000.

We are not aware of, and do not hold, any supporting documents used to aid the calculations. As stated above the calculation for each repair cost is a bespoke calculation.

This is considered a repeated request, whilst we have provided a response on this occasion we reserve the right, under Section 14(2) to refuse future identical or substantially similar requests.

5. Please explain the calculation, form where the figures are obtained and how the output (sum) is arrived at.

The calculation has previously been explained and copies of Annex 23 of the asset support contract provided.

This is considered a repeated request, whilst we have provided a response (in question 4 above) on this occasion we reserve the right, under Section 14(2) to refuse future identical or substantially similar requests.

If you are refusing to do so, as appears to be the case, please confirm asap.

Please response to Q5.

A response to the above which is being progressed via the WhatDoTheyKnow web site and can be found here.

Related information:

Area 10 Charges above the threshold are unaffected by the monthly lump-sum payment

05/02/2019 To BBMM re CECA and Rates to Third Parties