Highways England is investigating allegations that Kier made “inflated claims” to insurers on one of its long-term maintenance contracts.
A Freedom of Information request, seen by Construction News, revealed Highways England started looking into the allegations “in relation to the costing of Kier’s claims in Area 9” – which covers the Midlands – in July.
Highways England confirmed to CN that KPMG is examining the claims as part of its Area 9 audit.
Under Kier’s Midlands deal, the firm’s operatives are required to carry out repair works on road furniture following incidents, such as car accidents, on the UK’s road network.
As Crown property, drivers deemed responsible for accidents are required to cover the cost of the damages and work carried out, including labour and vehicle costs, and often do this through insurance companies.
If the cost of work is greater than £10,000, Kier presents costs to Highways England which Highways England will recover from the insurer.
However, if the work is valued at under £10,000, Kier is expected to recover money from the insurer directly.
Highways England confirmed to Construction News that it had received allegations regarding claims over road repair jobs carried out by Kier.
A Highways England spokesman said: “We take the suggestion that our suppliers may have submitted inflated claims for Crown property repairs very seriously and are now looking into the allegations.”
A Kier spokeswoman said: “Under our contract, we are entitled to recover the costs we incur in repairing the damage.
“These costs are then typically reclaimed from drivers, who may in turn pass the claim to their insurers.
“Some insurers appoint claims management companies to attempt to achieve a reduction in those costs, via a number of methods.
“If we’re unable to reach agreement with an insurer/claims management company, the claim is decided by a court.
“The judge has found in favour of Kier in all such cases in recent years and the contract is subject to a periodic external audit.”
In 2013 EM Highways won the £600m asset support contract covering road improvements in the Midlands. EM Highways was subsequently taken over by Kier in 2015, as part of its £265m deal to buy Mouchel.
The contract was initially signed by EM Highways as part of five-year deal up until July 2019, with the option to extend it until 2022.
Kier is currently Highways England’s biggest maintenance contractor and holds similar deals across Area 3, covering Hampshire, Area 1 covering Cornwall and Area 13 covering Cumbria.
Earlier this year, the firm was also handed the maintenance deals for Area 6 (covering East Anglia) and Area 8 (covering Cambridgeshire, Hertfordshire, Bedfordshire and parts of Suffolk) after Amey had its deal terminated early by the client.
Amey’s contracts had been expected to be worth £200m each through to 2019 but were ended two years early, as revealed by Construction News in November last year.