6 Years of Deceit but ... Got You!
Following a 2 day hearing before an Information Tribunal, whereby CMA had challenged Highways England’s position Damage to Crown Property (DCP) rates were ‘not held’, we are currently awaiting a written judgment. However, the following notes may be of interest to you:
The protocol applied by Highways England for DCP claims is some Areas is generally:
- If the damage is over ￡10,000, the contractor bills Highways England (HE) directly, is paid by HE who seek recovery from the driver, fleets, haulier or their insurer (Third Party) who caused that damage. You would think a contractor would wish as many as possible to be over ￡10k because it is then down to HE to locate the third party and argue about liability, the contractor gets paid irrespective.
- If the damage is under ￡10,000, the contractor repairs the damage (using the same people and equipment as deployed for above ￡10,000 claims), but is not paid by HE, and must recover directly from the Third-Party.
As Highways England appear indifferent to sub-￡10,000 matters, in the sense that they are not concerned if the repair costs are properly incurred, it is here that the contractor can engage in shenanigans. We estimate between 07/2014 and 10/2015 alone, Kier Highways recovered over ￡10million of inflated costs, for which they had no contractual authority. The contract between HE and Kier is typically a ‘costs plus’ structure, which means Kier are entitled to recover their actual costs incurred and a modest uplift, in accordance with a defined equation.
Getting to the true figures for adjustment purposes has, unsurprisingly, been a monumental task. Catching a greased piglet would be much easier.
I personally was convinced HE holds DCP rates, prices for use when costing incidents, which they have sought to withhold. They catalogued 57 requests/reviews (2013 to 2018) that I made, in a variety of ways to try and get at the data so we could validate DCP claims. I am also said to have annotated no fewer than 118 similar requests/reviews on www.whatdotheyknow.com. I have been persistent because I have a nose for a ‘rat’.
The Authority’s stock response to the 175 approaches (57 + 118) was ‘HELD’ (they need to make this determination to satisfy s1 of the Act) but followed this with an exemption, specifically ‘commercially sensitivity’ (s43). So there you have it .. HELD but they are secret.
By 12/2018, the Authority had had enough of me and labelled a request ‘vexatious’ (s14 exemption). I found myself defending my professional reputation and presenting to the first Tribunal, with opposition from a QC, solicitor and witnesses presented by HE. They lost. Not only did the Judge say I was NOT vexatious, he was very critical of HE for not obeying the law, and that the requests had ‘serious purpose’. Result! ... release the rates. So I waited for the information, for the rates. They were not forthcoming. HE was in denial.
Within weeks, not only had HE appealed the decision (they did so twice and lost bot); they did a high-speed U-turn; the rates are NOT held. Wait a minute … you said ‘held’ before … 175 times! The Authority’s position was now ‘oops … we overlooked agreeing any DCP rates in any ASC (contract)’. Why might they take this stance? Probably because in another matter, the ICO had deemed a pay rate applying to a particular category of highway worker was NOT commercially sensitive. They could see their defence was crumbling.
Now, saying that agreed DCP rates do not exist is, to be frank, unbelievable. Who in their right mind would appoint a sole supplier in a contract for hundreds of millions of pounds and not care what they charged when it came to performing their duties? There was also an inconvenient fact that in late 2018 an HE employee had confirmed some information I had produced displayed’ DCP rates’, or that these were ‘rates for DCP works’ … semantics?; accepting such a straightforward statement proved difficult for the Authority!
So, start again, 12/2018, I asked for the DCP rates the HE employee had identified and described. Once again HE said ‘no, we do not hold them’. But I was getting closer, I had learned of a process for compiling rates.
Fast-forward to Monday this week and the Information Tribunal hearing. David (me) versus Goliath (HE); the Authroity's usual QC barrister, a solicitor, and cast of many witnesses. Here is what I believe I can tell you so far:
Area 9 & Birmingham
Area 9 is the Midlands, HE controlled. Birmingham City Council also engages Kier (after their Amey debacle). The areas likely abut i.e. the rates should be about the same. Indeed, Kier uses the same rates in both when charging Third Parties.
- Call them rates, costs … whatever. HE has disclosed Kier’s ‘people rates’ – the method of ‘banding’ them is now known and we have rates from 2016 to 2020 for staff and labour. They were produced for the Tribunal and whether or not they are ultimately deemed to be captured by my request, we possess the data and can start applying these rates to claims. To my mind, this is the critical information which we have always been asking for; the greatest element of all DCP claims is generally labour costs
- For those unaware, as we had been previously assessing, HE admitted that the rates applicable to plant are CECA minus 30%
The Birmingham area has an 'interesting' highways contractor history. They do not like being ripped off. FoIA requests are being progressed and we have raised the issue of contact non-compliance something Kier is known for; applying unauthorised uplifts in Area (as recorded by a Judge). This could be problematic for Birmingham as they are out of the frying pan, into the fire – they had a hard time with Amey and likely are looking to Kier to be their saviour. Oops!
Area 10
My belief is that Area 10 (maintained by Balfour Beatty Mott MacDonald - BBMM) was of similar concern for HE but for differing reasons. Typically, HE’s approach has been one of delay. In the case of Area 10, the contract ended 04/2019. I assume they hoped to be 'saved by the bell’. So this is likely only of interest if you:
- have outstanding sub-￡10k BBMM claims (and we have a few)
- believe there may be an avenue to recover some monies
- want to better understand the environment; the misrepresentation you can expect when handling such claims
In Area 10, claims over ￡10,000 were charged to HE using ‘mates rates’ (below ￡10,000, CECA rates were engaged - substantially higher). We have long asked for these mates rates but they have been withheld. BBMM’s approach has been relatively straightforward, they argued claims over ￡10,000 are presented to Highways England who receive reduced/subsidized rates due to the monthly lump-sum they pay BBMM. Indeed, a Judge (HHJ Godsmark) was told just this in 2018 - the judge was looking for an alternative to CECA to reprice a claim. It appeared above-￡10,000 rates would do the job but BBMM argued ‘no, these are artificial, subsidised …’ and the Judge believed them. Shame.
We have long believed the monthly lump sum payment was unconnected to such matters; that it was, at most, to address ‘culprit unidentified’ claims. Tuesday this was confirmed by HE:
- There are averaged rates produced by BBMM, provided to HE and used for DCP events above ￡10k
- The rates are NOT subsidised by the lumpsum payment
The witness in the above Judgement failed to appear for the Tribunal hearing. I was unsurprised; the evidence now being presented to the Tribunal contradicts the evidence presented to HHJ Godsmark, the case which HE and their contractors have relied upon for hundreds of enforcement cases to justify their overcharging.