Select Committee on Public Administration Third Report


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 major—probably the major—concern 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 disclosed—although 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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