Malcolm Dare, commercial director at National Highways, has given Tier 1 contractors just 14 days to provide copies of their current economic crime policies and associated supporting documents.
He also wants contractors to confirm the processes and procedures they use to ensure compliance across their supply chain teams.
The crackdown follows mounting concern surrounding allegations of potential fraud and failure to procure subcontractors along agreed guidelines.
There have been investigations by the agency’s counter fraud unit into claims of corrupt practices on some smart motorway schemes where costs have spiralled.
To date, National Highways said that no evidence has been substantiated of the law being broken.
In an explosive letter to National Highways’ main contractors, Dare writes: “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 observed by National Highways
- 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
Dare writes: “In light of recent high-profile cases, and to provide additional assurance to the National Highways’ CEO, executive and board, we are undertaking a review of checks that are in place with our Tier community to minimise the threat of economic crime.”
In the light of events in Ukraine, the roads agency is also calling for copies of contractors’ modern slavery polices and evidence of how these are being implemented at scheme level.
National Highways is also warning that going forward it will carry out spot checks from time to time to ensure policies are being enacted on site.
In a statement to the Enquirer, 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.”