Public Procurement and FOI

Here, Allan Donovan examines the impact of The Freedom of Information Act 2000 on public procurement, in the light of recent decisions.

If anecdotal tales from clients and business colleagues are anything to go by, guarding what are perceived as commercial or trade "secrets" and information is a major concern for many businesses that might otherwise consider tendering for local authority and other public body contracts. Are they right to be so concerned?

The Freedom of Information Act 2000 (the Act) is a major piece of legislation and has a huge impact upon all local authorities and public bodies, as well as all third parties wishing to contract and do business with those bodies.

The main objective of the Act is very simple and usefully summarised in the first section, so that; "Any person making a request for information to a public authority is entitled to be informed in writing by the public authority whether it holds information of the description specified in the request and if that is the case, to have that information communicated to him".

Some will see this as a useful addition to the checks and balances upon those who govern, whilst others will see an open invitation for unscrupulous or vexatious requests. Hence, the Act contains examples where sensitive, prejudicial, or otherwise harmful information may be considered exempt and therefore, not subject to disclosure.

Herein lays the problem, because the right to have information disclosed under the Act and the right to keep information private under the Data Protection Act 1988 are always going to compete against each other.

Anybody familiar with contracting and doing business with local authorities and other public bodies will recognise these issues, as the contracts they have entered into will, more often than not contain clauses that specifically deal with Freedom of Information and Data Protection. Indeed, the constitution of most local authorities will contain provisions making the inclusion of such clauses mandatory. Plus, of course, any well drafted contract will also contain a substantial confidentiality clause. These are the clauses that are commonly disputed and are, increasingly, being challenged.

One such challenge involved the Department of Health (DoH), following a procurement exercise and subsequent award of contract for an electronic recruitment service to be used by the NHS. A request was made to the DoH under the Act for a copy of the contract. The contract was highly specialised and very lucrative for the successful contractor and would have a major impact upon the process of recruiting NHS staff.

The DoH refused the request claiming that the contract was exempt and cited various exemptions provided by the Act. They also claimed that the working relationship with the successful contractor would be harmed because the contract contained a confidentiality clause.

The complainant then wrote to the Information Commissioner asking for a ruling on the DoH decision to withhold the entire contract. The enquiry was beset by problems including lengthy delays and schedules to the contract that could not be found. Eventually, the Commissioner decided that the DoH should disclose a copy of the contract as requested, dismissing the DoH notion of harm to the working relationship with the contractor on the basis that commercial organisations are aware of the greater presumption in favour of disclosure, whilst at the same time, recognising that the Act contains important safeguards where the public interest lies in maintaining the exemptions.

The DoH appeal to the Tribunal Service revealed some points of interest. The missing schedules had been located by the time of the appeal and it appeared that it wasn't the contractor who was objecting to the partial disclosure of the contract. He, it appeared, had taken an entirely pragmatic approach and was merely concerned that schedules containing commercially sensitive information were not disclosed. That, in essence, was the outcome of the appeal. In another recent decision it is noteworthy that the Commissioner has stated that if it is established that the third party does not raise any concerns about prejudice to commercial interests, the speculative arguments of the public body should not be taken into consideration.

The Tribunal went to great lengths to set out the safeguards that are available to protect sensitive information and trade secrets. And it's not as if local authorities or public bodies are on their own. There was ample reference to the OGC guidance and ever increasing case studies. One has to wonder whether this was a needless appeal and how much of the original decision was a result of the Commissioner's frustration at the way the complaint was handled. (And that is not a criticism of the Commissioner).

One thing is certain; local authorities will have to get their act together. This was not an isolated case of a public body trying to claim a blanket exemption under the Act or hide behind a confidentiality clause. To claim that an entire contract is exempt is an absurdity. And any properly drafted confidentiality clause should always make clear that a public authority's duty to the Act is paramount.

Upon reflection, are the business colleagues and contractors justified to be concerned? The outcome of this case suggests that views expressed to me, whilst not entirely unfounded, may be, perhaps, exaggerated.

There are, however, many lessons for public bodies. These recent cases show that challenges to procurement decisions are gathering pace and increasing relentlessly. Yet another recent decision even suggests that the way a public body reacts to a request under the Act is itself, subject to scrutiny by way of a FOI request. Together with a new remedies regime around the corner, it may be time for local authorities to rethink their approach to openness and transparency required by the Public Procurement Regulations and the Freedom of Information Act and the way they embark upon procurement exercises.

That is not to suggest that local authorities or other public bodies deliberately set out to mislead or infringe. The amount of planning and preliminary work that needs to be done for even modest procurement is vastly underestimated, yet officers happily bumble along almost stumbling into procurement without a second thought. That will only change when officers begin to engage their procurement and legal teams at the outset rather than as an afterthought.

Will we see a change to this approach; perhaps.

Will we continue to see an increase in challenges being made to procurement exercises; guaranteed!

Allan J. Donovan © 2009

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