NSORC General Observations

Shortly after the introduction of a national schedule of repair costs for network damage (Green Claims), NSORC, we spoke with the Authority about the rates. We noted the Authority’s stated intentions:

  • transparency
  • Highways England is giving the insurance industry the benefit of the rates that it has been able to secure in a competitive market.

To date, transparency has been lacking and has yet to improve.  The assurances we have been provided about the supply of information, the addressing of our questions have yet to be kept and it appearing there was an intention to withhold, we made a FoIA request a copy of which can be found here.  The Authority is currently in breach of the Act; they have failed to respond within 20 working days.

As for the rates Highways England are employing, these raise numerous questions and appear to pose problems for Highways England:

  • Why bother?

A simple question ‘why the new process?’.  The Authority has a perfectly good system in place:

‘defined costs’ (base rates) + uplift % = maximum cost

But what is good for the goose is not for the gander; Kier Highways apply the process when billing the Authority but as for Insurers … Highway England kept the contractually agreed process secret, did not enforce it and Kier did not comply. Instead, the contractor used their own profiteering processes.

It appears NSORC has nothing to do with transparency and benefit to insurers, rather it is Highways England trying to convince Third parties they are putting their house in order because the Authority is bringing claims in-house and will not have a contractor to hide behind.

  • Defined Costs

The Authority has for years withheld ‘defined costs’ or base rates for DCP (damage to Crown property) attendance and repairs claiming they were ‘held but commercially sensitive’. However, since 11/2018 when an Authority employee told a Tribunal DCP rates are NOT commercially sensitive and their protection of the figures fell away, Highways England apparently ‘discovered’ they have no schedule of rates … 5+ years, 175 FoI requests and reviews responding ‘held’ and then … no such thing.  Of the 1,000’s of invoices raised and paid to contractors, the Authority could reconcile not one!

Seemingly this was also missed by the National Audit Office.

So what rates are the Authority using for NSORC?

The answer, bizarrely, is DCP rates! We asked the Authority whether they had looked at the Area 9 contract and their damage to crown property rates, their defined costs.  We were specific aksing ‘you have a schedule of rates?’.  The response was ‘we do’. We were informed the team would have a copy of the Area 9 damage to crown property schedule of rates.  However, when we asked for them, the team would need to ask as ‘they do get a little bit tetchy over confidentiality‘.

Why be concerned about the confidentiality of rates which are NOT commercially sensitive? Why claim there are no schedules of DCP Rates on any ASC when there are  – a copy of AOne+’s DCP rates can be found here.

However, AOne+ appears to have taken a different approach to the new process ‘coincidentally’ as of 24/06/2019, applying a new set of rates, a copy of which can be found here – 190624 AOne+ Schedule of Rates – the management costs have seen a staggering increase!

  • DCP Rates vs. Planned Rates

It should be noted that we are comparing the new, 24/06/2019, rates with known DCP rates, the ‘defined costs’ or base rates we have collated over the years. The Authority appears to be using ‘planned’ or scheme rates, those costs which relate to known work, as opposed to emergency incident response & repair rates.  ‘Planned Rates’ are understood to be lower than those associated with emergencies.  A reduction in cost is, therefore, anticipated.

Indeed, the Authority would apparently struggle to use ‘DCP rates’ when compiling the new schedule – they do not possess any! (see above).

  • Composite Rates

We have gone full circle.  10/2015, Kier Highways had to abandon their ‘1153’ process that saw the contractor bundle up costs into an average figure.  They got away with this for just over a year during which time they aggressively protected the procedure costing Third-Parties many £millions.  When they threw in the towel Highways England undertook a superficial audit (01/2016). missed the issues (and apparently the lack of DCP rates – see above) but appeared pleased to note the new methodology displayed ‘granularity’.

24/06/2019 … no more granularity!

  • The Process

There is a lack of detail and questions have not been answered, for example, the brief request of 03/07/2019.

Questions presented under each head of claim can be found on the table of charges – here.