Public Procurement and Freedom of Information

Anderson Strathern

11 February 2010

Public Procurement To disclose or not to disclose?

                                           

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Legal Framework• Treaty

• Directives

– Directive 2004/18/EC (the Public Sector Directive)

– Directive 2004/17/EC (the Utilities Directive)

– Directive 2007/66/EC (the Remedies Directive)

• Regulations - Scotland

• Public Contracts (Scotland) Regulations 2006

• Utilities Contracts (Scotland) Regulations 2006

• The Public Contracts and Utilities Contracts (Scotland) Amendment Regulations 2009 (as amended) – implementing the Remedies Directive

How is confidentiality treated in the Directives and Regulations?Directive - Article 6“ Without prejudice to the provisions of this Directive, in particular those

concerning the obligations relating to the advertising of awarded contracts and to the information to candidates and tenderers…..and in accordance with the national law to which the contracting authority is subject, the Contracting Authority shall not disclose information forwarded to it by economic operators which they have designated as confidential: such information includes, in particular technical or trade secrets and confidential aspects of tenders”

Regulation – Article 43

“ Subject to the provisions of these Regulations, a Contracting Authority shall not disclose information forwarded to it by an economic operator which the economic operator has reasonable designated as confidential”

Competitive Dialogue

Directive - Article 29(3)

“The Contracting Authority may not reveal to the other participants solutions proposed or other confidential information communicated by a candidate participating in the dialogue without his agreement”

How the ECJ has approached disclosure of confidential information

Varec SA v Belgium (2008) 2 CMLR 24, in the context of review procedures,

(1) It is important that contracting authorities do not release information relating to contract-award procedures which could be used to distort competition; and

(2) Given that contract-award procedures were founded on a relationship of trust between the contracting authorities and participating economic operators, contracting authorities are obliged to respect fully the confidential nature of any information furnished to them and have the discretion to withhold certain information from an eliminated tenderer where its release would prejudice the legitimate commercial interests of particular undertakings or might prejudice fair competition.

Candidates’ rights to information – standstill period• Where practicable the score obtained by

– The party to whom the notice is sent– The party who is being awarded the contract or becoming a

party to the framework agreement

• The name of the party being awarded the contract or becoming a party to the framework agreement

• Where the notice is being sent to an unsuccessful party– a summary of the reasons why the party was unsuccessful

(includes any reason why the tender did not meet the technical specifications, performance or functional specification)

– The characteristics and relative advantages of the successful tender

Freedom of Information – Legal Framework in Scotland

Freedom of Information (Scotland) Act 2002 (FOISA) provides for:• General right of access to any recorded information held by a public

authority in any form, subject to stated exemptions (s1);

• Pro-active publication of information through a statutory requirement to adopt and maintain a publication scheme (s23);

• Duty to give advice and assistance to applicants or prospective applicants (s15);

Environmental Information (Scotland) Regulations 2004 provide for:

• a right of access to environmental information subject to exceptions;

• active and systematic dissemination of environmental information;

• a duty to advise and assist applicants or prospective applicants.

Supplementary Codes give best practice guidance on how Act should be implemented by public authorities.

Procurement Law and Freedom of Information

• Both legal frameworks appear to recognise a public interest in the disclosure of information in the interests of transparency, accountability and in relation to use of public funds, amongst other things.

• Pro-active publication and reactive disclosure requirements more extensive under FOISA than under procurement law.

• Each legal framework carries its own restrictions on disclosure.

• Article 6 of the Public Sector Directive (already discussed) does not appear to alter the application of the common law of confidentiality in the context of information in a tender marked as confidential by a bidder.

• However, the section 60 Code under FOISA and other guidance also makes clear that information should not be designated as confidential where it does not have the necessary quality of confidence.

Key FOISA exemptions relating to procurement

Exemptions appearing to be used fairly regularly to try to withhold procurement information (on the basis of cases referred to the Scottish Information Commissioner) are:

• Section 33(1)(a) (trade secrets) and (b) (commercial interests)

• Section 36(2) – confidential information • Section 38(1)(b) – third party personal data

Key exemptions in relation to procurement

• Section 33(1)(b) - substantial prejudice to commercial interests• Public authorities can have commercial interests – where information

relates to the ability to participate successfully in a commercial activity such as the sale and purchase of goods and services. No requirement for activities to be profit-seeking.

• Each case will turn on its own facts; evidence needed.• Recent case: Leckie and Leckie and the Scottish Qualifications Authority

(Decision 005/2010). Request was for copy of Pre-Qualification Questionnaire and Tender submitted by Bright Red Publishing Ltd (the successful tenderer) to SQA. Contract related to publication of product to be sold to targeted audience.

• Some information provided; some redacted.• SQA claimed s33(1)(b) exemption for information about technology used,

financial investment of sub-contractor, strategy and proposals for marketing and sales, pricing structure, production and distribution, timescales for implementation and contingency planning.

Leckie and Leckie and the SQA• Section 33(1)(b) subject to a public interest test.• In this case, all parties accepted public interest in transparency and

accountability in the award of a public contract. • However, the SQA, in applying the public interest test noted it had taken

into consideration the openness and transparency of the procurement processes of the SQA. Similarly, in considering the public interest, the SIC noted the mechanisms within the SQA to ensure the fair and appropriate award of contracts and the provision of constructive feedback to tenderers.

• SIC found that SQA had complied with FOISA and correctly applied the exemption. Commercial interests of consortium led by Bright Red Publishing Ltd would have been prejudiced substantially.

• SIC - to rely on this exemption, must demonstrate:– Whose commercial interests would be harmed by disclosure– Nature of those commercial interests– How those interests would be prejudiced substantially by disclosure

• If third party interests involved, their views are relevant and so should be sought and provided, where possible.

Key FOISA exemptions in relation to procurement

Section 36(2):

Information is exempt information if –

(a) It was obtained by a Scottish public authority from another person (including another such authority); and

(b) Its disclosure by the authority so obtaining it to the public (otherwise than under this Act) would constitute a breach of confidence actionable by that person or any other person.

Common law of confidentiality into FOISA in relation to actionable breach:

• Information must have a necessary quality of confidence

• It must have been received from a third party in circumstances giving rise to an obligation to on the authority to maintain confidentiality

• Unauthorised disclosure will result in harm.

Key case

• Decision 088/2007 Mr Alan Keith, Chairman of the Association of Dumfries and Galloway Accommodation Providers

VisitScotland withheld contracts claiming they were covered by the section 36(2) exemption. VS maintained the contracts contained information from third parties.

SIC considered the case of Derry City Council and the Information Commissioner (Appeal No: EA/2006/0014) under the UK Freedom of Information Act 2000 relating to a request for a copy of an agreement.

SIC agreed with UK Information Tribunal’s reasoning in the Derry City Council case. He would not be willing to accept that a contract whose terms were negotiated between an authority and a third party constituted confidential information under a duty owed by the authority to the third party.

Derry City Council case

UK Information Tribunal, referring to the equivalent exemption in the UK FOI Act to the section 36(2) exemption in FOISA, held:

“It might be said that the effect of any contract is that each contracting party informs the other of the obligations which it will undertake and of its agreement to accept the counterparty’s obligations in return. Such a two way flow might be characterised as a process by which a public authority obtained information from the other party. However, we think this imposes too great a strain on the language of the Act and that the correct position is that a concluded contract between a public authority and a third party does not fall within section 41(1)(a) of the Act”.

Overarching relationship between FOISA and procurement law

FOISA and EU procurement law appear to have been able to co-exist comfortably so far.

s26(a) contains exemption for information whose disclosure is prohibited by or under any enactment. Section 26(b) contains exemption if disclosure of information would be incompatible with EU obligations. No SIC decisions to date where section 26 upheld in relation to EU procurement law.

As FOISA is an Act of the Scottish Parliament and procurement law is based on EU law, in the event of a possible conflict between the 2 legal regimes, the Scotland Act would apply.

Scotland Act 1998, s29(a) – Act of the Scottish Parliament is not law if outwith Parliament’s legislative competence; and s29(2)(d) - a provision of an Act that is incompatible with Community law is outwith the Parliament’s legislative competence.

Scotland Act 1998, s101 – any provision which could be read as outwith competence is to be read as narrowly as required for it to be within competence, if such a reading is possible, and is to have effect accordingly.

Contacts

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