Summary of Exaggeration & Fraud

Continued from ‘State enabled exaggeration and fraud on an industrial scale‘:

Claims made against at-fault drivers, fleets, hauliers or their insurers (Third Parties) following collisions, spills or fires – events that cause Damage to Crown Property (DCP).

Kier Highways Area 9 (and others) since 07/2014

  • Contract Non-Compliance, Exaggeration & Profiteering

The Area 9 agreement (Asset Support Contract) between Highways England and Kier Highways, contained protection for Third Parties at Appendix A to Annex 23.  This states the contractor recovers NO MORE THAN cost plus 25.28%. 

From day one of the contract Highways England kept the process secret and Kier Highways failed to comply with it.  The Authority, made aware of the conduct, failed to put a stop to it.  Between 07/2014 and 10/2015 we estimate Kier’s profiteering earned them well in excess of £10 million from Third Parties (drivers, fleets, hauliers or their insurers).  The Authority was made aware of this 06/2017 when we reported the issues to their then claims manager demonstrating the above by reference to an example and subsequently to KPMG who was to investigate / audit (Project Verde). 

To this day, all claims are exaggerated using an undisclosed (more than ‘cost’) schedule of rates[1].  A new, contract non-compliant process, commenced following the failure of ‘the NSoRC‘ (31/10/2019).

Rather than address the exaggeration, the Authority’s latest approach is to vary the agreement to assist Kier Highways to charge well in excess of ‘cost’.

  • Fraud

In addition, Kier added ‘multipliers’ (uplifts) to some already exaggerated rates.  For example, Keir state to Third Parties and the Courts, their emergency incident attendance operatives (AIW’s) work ‘core (office) hours’ of 8am to 5pm (are not shift workers) and after 5pm of a weekday are paid a 1.5X uplift, 2x of a weekend.  However, AIW’s do work shifts and are not paid the uplift.  Even overtime is at flat rate.

How are these claims for multipliers, other than fraud?

Balfour Beatty Mott MacDonald (BBMM) Area 10 from 2012 to 2019

Sub-threshold, BBMM charges Third Parties by use of the Civil Engineering Contractors Association (CECA) rates, the ‘Dayworks Schedules’.  BBMM stated to a Court[2] that above the threshold, when billing the Authority,  they use a schedule of rates.  The Judge commented:

‘It would be odd if a tortfeasor (TP) was liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and in a different sum if sued by Highways England via BBMM (contractor).’

Yet this is what is occurring.  The Judge, seeking an alternative measure, referred to above threshold rates but BBMM explained these were subsidised, artificial and therefore did not represents a true comparison.  But the rates are not subsidised.  Now, the Authority states there is no such schedule.

However, 31/01/2020, BBMM, in a statement for Highways England, explain the judgement is not an accurate account.

Pain / Gain & Contractors

In 2016, Highways England explained the ‘pain/gain share’ relating to repair costs and recoveries. If the contractor recovers above an (unknown) threshold, their monthly lump sum payment would reduce.  The Authority added, no contractor had achieved this.

Kier Highways have provided false cost data to Highways England giving the impression they incur a loss. It appears the contractor is also fleecing the public purse.  Highways England have been alerted to the conduct but to date, it appears they have failed to act.

Highways England and BBMM (31/01/2020) now claim there is no pain/gain share blaming insurers unwillingness to accept this for the demise of the process.  This is illogical, not accepted and the Authority has failed to evidence the statements[3]. Once again, the Authority has failed to comply with the law[4].

Comment

  • The Authority claim, since 2012, they overlooked including a price schedule for DCP works. It appears they prefer to be considered reckless rather than provide a schedule identifying exaggeration of 1,000’s of invoices.  Seemingly, not one of the 1,000’s of invoices issued by contractors, presented to Highways England, were able to be checked pre-payment – they were rubber-stamped for settlement from the public purse. 
  • The sums involved are many, many £millions, owed to Third Parties; drivers, fleets, haulier and insurers who have been the subject of profiteering in the name of Highways England.
  • It appears the Authority is compromised such that it has no control over its contractors and therefore ineffective.

The situation does not bode well for HS2 and Smart Motorways; projects that involve contractors and £multi-million budgets.

[1] Example – https://www.englandhighways.co.uk/example-of-area-9-exaggeration/

[2] Judge Godsmark https://www.englandhighways.co.uk/15-02-2018-derby-county-court-bbmm-for-highways-england/

[3] https://www.whatdotheyknow.com/request/pain_gain_share_arrangement_dcp_2#comment-90691

[4] https://www.englandhighways.co.uk/release-the-rates/