COMMERCIAL CONFIDENTIALITY AND INFORMATION
SUPPLIED IN CONFIDENCE
58. Public authorities hold a large amount of information
about commercial and other organisations which, if revealed, might
well affect their commercial interests. The following are, broadly,
the types of information held:
- Information gathered as a result of regulatory
functions, or given by organisations to the authority for monitoring
purposes. Some of this may be required under various statutory
provisions; some of it has been supplied on a voluntary basis.
- Information relating to contracts let by the
authority concerned.
- Information relating to the commercial activities
of the authority itself.
"Commercial confidentiality" and "Information
supplied in confidence" are two of the proposed specified
interests in the White Paper. "Substantial harm" to
either of them may justify the withholding of information from
a requester.
59. The need to maintain the confidence of the private
sector (and other) organisations with which they deal is a majorprobably
the majorconcern of most of the government departments
and organisations from which we received evidence. The DTI say
that "it will be important to ensure that the new provisions
on access to information, particularly information of a commercially
sensitive nature, help to reinforce, and not detract from, the
frank and open relationship which exists between the department
and the business community".[90]
The White Paper balances the need for a relationship of "two-way
openness and trust" between public authorities and the private
sector against the public's right to know. But it seems to argue
for the balance to be weighted towards the latter:
"We believe that openness should be the guiding
principle where statutory or other public functions are being
performed, and in the contractual arrangements of public authorities.
For example unsuccessful bidders need to know why they were unsuccessful
and how they could succeed next time. For the public, it is important
to know how much central government services cost, no matter who
provides them".[91]
Information gathered for regulatory
or monitoring purposes
60. Some departments and bodies fear that Freedom
of Information will cause great damage to their ability to carry
out their regulatory or monitoring functions effectively. ECGD,
for example, explained its own concerns:
"in order to assess the risks associated
with insuring business in particular markets, we receive information
in confidence from other Governments, International Finance Institutions
such as the International Monetary Fund and World Bank, other
Government Export Credit Agencies. If these organisations thought
their information might be revealed, they might not be so forthcoming
in future. This would have consequences for the robustness of
our risk assessment processes and our obligation to safeguard
public funds"; "in our role as insurer, there would
be implications for the UK's relations with overseas trading partners
if we released information showing that we have refused cover
because of our doubts over the creditworthiness of the overseas
borrower. Similarly, UK exporters might be less willing to provide
detailed information about the overseas projects they are asking
us to insure, thereby making it more difficult for us to assess
the risks of particular transactions".[92]
61. Some of the material concerned is already protected
under various statutes. As explained below (para. 91) the White
Paper proposes that these should be repealed or amended to bring
them into line with the harm and public interest tests.[93]
We accept that some bodies cannot carry out their regulatory,
monitoring or enforcement roles effectively unless they can keep
the information supplied to them confidential. But we note the
comments of OFTEL: "the exemption categories in the FOI White
Paper should not allow regulated companies with market power to
prevent OFTEL disclosing information that will, in the regulator's
view, help competition develop or benefit consumers ... For information
held by the regulator on telecom companies with market power there
should be a presumption in favour of disclosure".[94]
There may in other cases be a balance to be struck between preserving
the ability of a public authority to function effectively, and
information which is important to the public. Where statutory
bars to disclosure are replaced by the Freedom of Information
Act, it will become possible to test how that balance is struck.
We deal with the way the existing statutory provisions should
be reviewed below (paras. 91 to 97).
Information about contracts
62. The Act will, the White Paper says, specifically
cover "information relating to services performed for public
authorities under contract. Appropriate requirements will be included
in the individual contracts between public authorities and contractors".[95]
Some departments and agencies claim that their policy on disclosing
contract terms and prices is already as open as possible. The
DSS say that its procurement policy is already based on a presumption
that all contractual information may be disclosedalthough
it says that it recognises that there will be occasions when information,
including contract prices, may be commercially sensitive and where
insisting on disclosure could result in a loss of value for money
for the taxpayer, "eg because strong suppliers may withdraw
from the competition or suppliers may submit less competitive
bids".[96] Most,
though, argue strongly that the scope for disclosure of contracts
or hire agreements is limited. The Intervention Board says that
"if we cannot undertake to respect commercial confidences,
our ability to secure the best value for money through competition
for our business would be severely damaged." It adds that
"we have always found it a difficult line to draw between
matters which are commercially confidential and those which can
be revealed without significant harm. If a supplier thinks we
have breached a confidence, an important element of trust between
the parties will have been lost."[97]
The financial value of individual contracts "should probably
remain commercially confidential": "to reveal this information
could result in appeals by unsuccessful tenderers being rejected
on grounds other than price, and could complicate future tender
negotiations".[98]
63. Some statutory provisions already apply to the
process of public procurement. EC Directives regulate public procurement
(and relevant contracts made by publicly or privately owned utilities)
in contracts for works, supplies and services. Under these directives,
where public authorities or utilities award contracts above a
certain threshold, there are provisions for the contracting process
to be open and transparent. Unsuccessful bidders, or those not
selected to bid, have to be given reasons for rejection if requested;
contracting authorities have to publish notices in the EC Official
Journal indicating the total procurement they intend to award
in the following year, and information on the results of the award.
Under the Local Government Act 1988, local authorities also have
to provide written reasons for various contractual decisions.
Few of these, though, can be seen strictly as freedom of information
provisions, as they mainly concern the provision of information
to those involved in the tendering process.[99]
64. We believe that there is no reason why public
sector contracts with private sector organisations for the delivery
of goods and services should not be available under Freedom of
Information. As our evidence suggests, some departments and
agencies have no difficulty with this; others seem still determined
to defend from disclosure all information relating to contracts.
The Private Finance Initiative raises some of the issues about
commercial confidentiality in an acute form; in this area, there
may be even greater requirements for openness and more resistance
to it. We also believe that there should be appropriate levels
of openness in the use by government of private sector consultants.
For bidders and contractors the openness requirements will be
part of the cost of doing business with the public sector. For
tendering departments, it may sometimes make it more difficult
to achieve best value for money if fewer suppliers are willing
to bid. On the other hand, publishing details of successful tenders
may encourage new suppliers to come forward with more competitive
bids when contracts are renewed. The new rules of openness governing
government contracts should become widely and generally accepted,
and any claims to commercial confidentiality should be separately
and specially justified.
Commercial activities of public
authorities
65. Many of the bodies covered by the Act will have
their own commercial position to protect. The Home Office gave
the example of the Forensic Science service.[100]
The Environment Agency supplements its income by selling some
of its data, and it argues that there should be a specific exemption
covering intellectual property, as there is under the Environmental
Information Regulations. Existing access to information provisions
do not confer rights to infringe copyright or sell on the requested
information to others. The Act will cover some public sector organisations
run entirely on commercial lines, such as the nationalised industries.[101]
As the Home Office argues, "in this area there is a need
to balance the commercial position of companies and agencies in,
or trading with, the public sector, and the requirement of transparency
in the public sector and the right of the public to know where
and how their money is being spent. The precise definition of
the Commercial Confidentiality specified exemption and of the
substantial harm test will be of crucial importance here".[102]
We do believe, however, that despite the concerns of many government
departments and agencies this is something that the proposals
in the White Paper are well qualified to do.
Conclusion
66. In the future, authorities subject to the Act
will not be able to give absolute guarantees of non-disclosure,
unless statutory provisions continue to apply. The Act should
therefore give sufficient indication to authorities and the Information
Commissioner about the interpretation of the Commercial Confidentiality
and Information Supplied in Confidence specified interests. Nevertheless,
we believe that where commercial confidentiality is claimed,
the public authority concerned must justify it.
90 Ev. p.12. Back
91 para.
3.11. Back
92 Ev.
p.7. Back
93 para.
3.20. Back
94 Ev.
p.96. Back
95 para.
2.2. Back
96 Ev.
p.10. Back
97 Unprinted
evidence. Back
98 ibid;
See also Ev. pp. 14, 28, 36, 52, 59. Back
99 The
various directives are: for public authorities 93/36/EEC (SI 1995/201);
93/37EEC (SI 1991/2680); 92/50/EEC (SI 1993/3228): and for utilities
93/38/EEC (SI 1992/3279). Back
100 Min
of Ev. p.123. Back
101 Ev.
p.57. Back
102 Min
of Ev. p.123. Back
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