National Highways has ordered all its main contractors to detail their anti-fraud and corruption policies amidst an increasing number of allegations about potential fraud or impropriety on major road projects.
Malcolm Dare, National Highways executive director of commercial & procurement, has written to 12 major Tier 1 contractors, expecting them to provide details of their economic crime policies and supporting documentation by July 22.
National Highways said that, to date, no evidence has been substantiated of the law being broken, but also warned that going forward it will carry out spot checks from time to time to ensure policies are being enacted on site.
In the hard-hitting letter to National Highways’ main contractors, Dare said: “Following several recent audits undertaken by our assurance services and corporate compliance teams we have identified some areas at the Tier 1 level where there are potential weaknesses or poor practices being applied.
“In recent years we have also noted an increase in the number of allegations of potential fraud or impropriety raised with us, focussing on a failure by our contractor or their supply chain to procure in line with National Highways contracts.”
Examples of weaknesses or poor practices highlighted in the letter include:
- Purposely over applying for payments in the hope costs that suppliers are not entitled to will “go through” unnoticed or missed by checks.
- Cost for ‘ghost’ employees and plant being applied for at either the subcontract or main contract level
- Discrepancies between the direct fee percentage stated in the draft contract and fee applied within applications for payment
- Weaknesses in the review of plant accruals and off-hiring of plant
- Potential for suppliers or individuals within suppliers colluding with labour suppliers when agreeing rates or supply
- Staff costs and timesheets; irregularities or lack of supporting evidence (potential claims of false records)
- Escalating supplier costs post-award
- Significant changes to scope to that tendered post-award
- Favouring certain suppliers (potential bribery)
- Ensuring professional standards are applied to tender evaluations following prescribed procedures
- Compliance with the requirements to obtain three or more quotations for subcontract work, where applicable
In a statement to Infrastructure Intelligence, Dare said: “National Highways is entrusted with billions of pounds of public money and it’s only right that we make it clear to contractors that they have a duty to maintain the very highest standards of governance and record-keeping.
“We thoroughly investigate all allegations of fraud and to date no evidence of improper activity has been substantiated. We regularly challenge suppliers when appropriate to ensure that payments are fair. This is a normal process when dealing with such contracts.”
The National Highways statement went on to say that:
"This is not a smart motorway issue and relates to all contracts / suppliers."
"National Highways has a team of highly-trained, accredited counter fraud professionals who undertake investigations into all aspects of financial crime."
"All matters brought to our attention have been fully investigated in a timely manner and no evidence has been found of the law being broken or that these invoices were issued to us fraudulently."
"Our contract payments are cumulative in nature allowing any corrections necessary as a result of findings from ongoing audits to be implemented and payments adjusted. Millions of pounds has been recouped in recent years."
"We regularly review our investigative approach to ensure we are continually improving our processes and practices to prevent the loss of public money."
"We have a suite of economic crime policies and a well-established whistleblowing procedure to allow individuals (internal and external) to raise concerns with us in confidence that their identity will be protected throughout the investigation."