The Commissioner accepted that the details at issue, while historic, could enable the calculation of current estimates relating to the various Transport 21 projects and thus would effectively disclose positions relevant to related negotiations. She considered section 21 to apply, accordingly, and that the public interest was best served by withholding the details.

Case Summary

Whether the Department is justified in its decision in reliance on section 21 of the FOI Act to refuse access to records relating to the Transport 21 programme, as sought in a request under section 7 of the FOI Act.

Date of Decision: 27.07.2010

Review Application under the Freedom of Information Acts 1997 & 2003 (FOI Act) to the Information Commissioner.

Background:

The Applicant's initial request of 2 November 2005 sought all documents, including letters, memos, emails and submissions relating to the Transport 21 Investment programme and the cost estimates for its individual elements. On 11 November 2005, the request was narrowed to, "in respect of the period since last year's budget:-

A. Records concerning the justification/cost-benefit analysis for:

1. Metro North/Metro West (including records concerning passenger projections for these lines and the reasons NOT to run metro southwards to Sandyford);
2. Luas extensions (including records relating to the reasons NOT to serve the large swathe of Dublin between Tallaght and Sandyford);
3. Rail Interconnector;
4. Electrification of suburban rail (including records concerning the decision to finish electrification at Hazelhatch);
5. Re-opening of Western Rail Corridor.

B. Records explaining the reasoning behind the level of funding for buses and the projections that bus passenger numbers would rise by only 80,000 a day despite a doubling of QBCs."

The Department issued its decision on 3 January 2006. The 18 records dealt with therein concerned the Metro and Luas elements of the request, of which 6 were fully released, one released with deletions and the remaining 11 withheld. On 10 January 2006, the applicant sought an internal review of the Department's refusal to release these records and, pointing out that other elements of the request had not been addressed at all, sought to reinstate the terms of the original request. The Department's decision of 27 February 2006 upheld its earlier decision regarding the Metro and Luas records, and said the other aspects of the request would be dealt with separately. On 12 March 2006, the applicant sought a review by this Office of the Department's decision on the Metro and Luas records and again sought to reinstate the request in full, given that the Department had still not issued any decision in relation to the remainder of the request.

On 18 May 2006, the Department notified the applicant of its position on records concerning the Rail Interconnector, the Electrification of Suburban Rail and the re-opening of the Western Rail Corridor (WRC). It withheld both records it considered relevant to Suburban Electrification, released seven of the 12 records relevant to the Interconnector, and released 18 of the 22 WRC records. On 23 June 2006, the Department notified the applicant of its position on the Dublin Bus records, releasing one in full, two in part and fully withholding the final two.

In the course of this Office's review, the Department deemed further records to be of relevance to the "Metro/Luas" element of the request. It also revised its position with regard to all records of relevance to the request, including the records relevant to the "Bus" element of the request, all of which have now been released.

In conducting my review, I have had regard to the Applicant's original request, application for internal review and application to this Office. However, I note that the Applicant did not respond to the preliminary views put to it by Ms Anne Moran, Investigator, on 11 January 2010. I have had regard to that letter and to various correspondence sent by Ms Moran to all parties to the review. I have also had regard to the relevant submissions of the Department, Iarnród Éireann and the Railway Procurement Agency (RPA). I have also had regard to copies of letters sent to the RPA by KPMG, Booz and Co, and the National Development Finance Agency (NDFA), which were provided to this Office by the Department. The views of Iarnród Éireann and the RPA were sought by this Office in the course of my review as third parties whose interests might be affected by my decision. While, as previously explained to the Applicant, the arguments and explanations made by the division of the Department responsible for the Metro/Luas and by the RPA are somewhat more detailed than those made by Iarnród Éireann and the division of the Department responsible for heavy rail, it is reasonable to assume that the totality of the arguments are of equal application to all the records at issue.

Finally, in arriving at the findings and decision set out hereunder, I had regard to the remaining elements of the records at issue (copies of which have been provided to this Office by the Department for the purposes of this review). While the FOI Act requires me to provide reasons for my decisions, section 43(3) of the FOI Act requires that I take all reasonable precautions to prevent disclosure of information contained in an exempt record during the course of a review. This is in order to preserve any party's right of appeal to the High Court on a decision I might make that particular records are not exempt.

Conducted in accordance with section 34(2) of the FOI Act, by Emily O'Reilly, Information Commissioner.

Scope of the Review

Ms Moran had previously explained to the Applicant that my review is confined to records relevant to matters listed in the correspondence with the Department of 11 November 2005, as created between 1 December 2004 and 2 November 2005. She also explained why my review would not extend to other points raised in the application to this Office.

As noted earlier, the Department has released elements of all the relevant records. My decision will not refer specifically to each withheld detail (which are individually listed in the attached Appendices) but will consider them under the following general headings:

• Details relevant to prospective bids for construction [total and component costs (and details relating to the calculation thereof such as cost inflation/escalations), availability payments (i.e. payments made by the State to a PPP contractor in return for providing infrastructure, which depend on the levels of Government contribution to the capital costs of a PPP project), proposed subvention levels, and details used in NPV calculations];
• Details relevant to managing events arising during the lifetime of a contract [risk estimates and miscellaneous observations]; and
• Details relevant to financing of projects.

Submissions

.

Findings

Section 21

The Department claims that a number of provisions of the FOI Act are relevant to the withheld details, including section 21(1)(c) thereof. Section 21(1)(c) provides that a record may be refused if its release could reasonably be expected to "disclose positions taken, or to be taken or plans, procedures, criteria or instructions used or followed, or to be used or followed, for the purpose of any negotiation carried on or being or to be carried on by or on behalf of the Government or a public body."

My Investigator approached this review on the basis that records dating back to 2004 would, by now, have lost their sensitivity. However, the main thrust of the arguments made by the Department, the RPA and Iarnród Éireann is that, despite the age of the records, release of the withheld details could impact on the ability of RPA and Iarnród Éireann to provide value for taxpayers' money in respect of the overall implementation of the rail projects for which they are responsible. The parties to the review contend that (i) it is best practice that contracts would be competed for and tenders evaluated on both price and technical merit, not technical merit alone; (ii) by applying certain details in the public domain to the costs contained in the records at issue, one can arrive at current prices for such costs, which, given the nature of the market for projects such as those the subject of the request, leads to (iii) an increased risk of inflated tender prices and negotiated contract prices, and other less favourable terms than might otherwise have been necessary. While I accept why it would be preferable for contracts to be competed for on both price and technical merit, I will consider the validity of the other arguments made in respect of each category of information set out above.

(i) Details Relevant to Prospective Bids for Construction

Firstly, the Department states that, even though certain works may have started on certain projects, it is not the case that all contracts for that contract have been signed; "[i]n fact this is rarely the case. The most valuable contracts are usually not entered into until after smaller enabling works contracts have started."

It is also relevant that, of the four consortia world-wide that met the pre-qualification criteria for Metro North, only two have been selected to proceed. The Department and the RPA expect that negotiations regarding Luas projects are also likely to involve just one or two tenderers. They argue that the limited market for complex projects such as those the subject of the records reduces the effectiveness of normal competitive tender processes, which I consider to be a reasonable proposition. I can also accept that current estimates would be useful to any tenderer in developing a pricing strategy - all the more so where only one or two tenderers are involved - and could increase the possibility of projects costing more than they otherwise should have.

However, the details at issue date back to 2004. The Department argues that such details can be used by tenderers to gauge current equivalents and has illustrated how current capital prices for projects such as the Metro, Luas Line BXD and Interconnector can be arrived at from combining details in the records with details in the public domain (such as track lengths, the cost per kilometre of the Red and Green lines, the Consumer Price Index, data from the Society of Chartered Surveyors Index, and other details). It also provided an outline example of how one could arrive at the individual costs of two lines for which a combined estimated total cost is referred to in one of the records at issue.

I have no reason to dispute the examples given. I also note that, while the Applicant was not provided with details of the examples concerned (in line with section 43(3) and given that they refer to certain of the withheld details), he has not raised any objections to the premise that current estimates can be arrived at from the withheld details in the records at issue. Thus, I agree with Ms Moran's view (as expressed to the Applicant) that it is reasonable to assume that one can derive reasonably accurate estimates of current total costs of other light and heavy rail projects referred to in the records.

Both the Department and RPA contend that if total capital costs were to be released, the resulting tenders are more likely to be structured towards the top end of the budgets, increasing the risk of cancellation or deferral of the projects, while re-running a tender would delay the projects, cost more (and not necessarily result in lower bids), impact on the credibility of the awarding authorities, and further reduce the pool of candidates. I understand that total budgets provide for additional costs of integration, project management, and risk events that may not even occur. It is argued that, if aware of a budget, tenderers will bid up to that amount to ensure that they have not overlooked particular cost factors, in the belief that the project will go ahead so long as the tenders fall within estimated costs and on the assumption that their works account for a greater portion of the budget than is actually the case. The RPA has also provided evidence of its contention that tender prices on various capital projects have been significantly influenced by the market perception of budget figures that found their way into the public domain. I accept the arguments concerned.

(ii) Details Relevant to Management of Events Arising in the Lifetime of a Contract

I understand that the Department had released total costs for lines B1 and C1 prior to settlement of final accounts, on the assumption that the procurement processes for these projects were sufficiently advanced for the details to have lost their sensitivity. While I note that details of the relevant risk allowances for lines B1 and C1 were not released, the Department submits that release of the total costs have caused it some difficulty when dealing with contractual claims that subsequently arose and that it is reviewing its approach to the timing of release of such details.

The Department argues that, given the matrix nature of the cost tables in some of the records under consideration, and with knowledge of details elsewhere in the records and in the public domain, it is possible to calculate component costs, operating budgets, risk allowances, etc from overall capital estimates. It provided an example of how the total Capital Cost of the Metro can be combined with data in the public domain, such as the Direct Construction Cost and general rules of thumb for quantity surveyors etc, to arrive at a reasonably accurate estimate of the project's risk allowance.

It has been argued that "[e]ven when a contract is signed, it is not the case that no further negotiation takes place in relation to it." I understand that, while contracts for the relevant projects apportion responsibility for risk between the client and contractor, it is not possible to anticipate and document in contracts all risks and their allocation at the contracting stage. It is reasonable to accept that if all risks are transferred to a contractor, the prices quoted would include the costs of such risks, regardless of whether or not they arise. Thus, I understand that the State (via the RPA/Iarnród Éireann) takes on a certain amount of risk to ensure that prices quoted by the contractors would not be prohibitive, with an appropriate contingency sum being factored into the total capital costs estimates. Should the risk event occur, the contractor can seek compensation from the State, at which stage negotiation as to monetary impact and responsibility is necessary.

Thus, both the RPA and Department argue that until final accounts are settled, the RPA remains exposed to the risk of commercial loss through inflated claims from contractors if budgets (particularly any remaining analysis, and quantification, of risks therein) are known. It is reasonable to assume that similar arguments apply to the heavy rail projects, as argued by Iarnród Éireann, which submissions refer to the NDFA's views that the relevant details will remain sensitive until at least such time as the construction is complete and final accounts settled. A letter sent by the NDFA to the RPA, copied to this Office, makes similar comments in respect of the Metro and Luas projects.

Having regard to the submissions made, I accept that knowledge of the withheld qualitative and quantitative analysis of a project's risks would assist tenderers either in formulating tenders or in any negotiations that may arise after a contract has been awarded. I also accept the argument that disclosure of such details could increase the chance of claims being made in the first place, by tenderers underbidding to win contracts and then seeking to recover extra monies through contractual claims submitted after the contract has been awarded and construction begun.

(iii) Details Relevant to Financing of Projects

Ms Moran advised the requester that the details concerned pertain to security for loans relating to Line B1 and the options that would be open to the NDFA in the event of default on NDFA funding due to failure to collect levy income for that line. She explained that it had been argued that the details concerned, although relevant to Line B1, could assist lenders in the construction of tenders, or in negotiations, concerning financing for various projects and that their release would compromise the RPA's ability to negotiate a funding/security package on best terms in favour of the taxpayer. Like Ms Moran, due to the requirements of section 43(3) of the FOI Act, I cannot go into any detail of how this might occur as to do so would effectively reveal the nature of the withheld material. However, I concur with Ms Moran's views and accept the arguments made.

Application of section 21 to Details at Issue

As set out above, I accept that the details in the records at issue, although dating back to 2004 and 2005, can be used by third parties to inform their positions when submitting initial bids, when engaging in procurement or financial negotiations, or when seeking to resolve any contractual disputes that may arise in the various Transport 21 projects. It follows that I concur with Ms Moran's view that the remaining details at issue in this case are exempt under section 21(1)(c) of the FOI Act. I note that the Applicant did not dispute Ms Moran's views to this effect in any way.

There is no need for me to consider any other provision of the FOI Act, accordingly. However, 21(2) requires me to consider whether the public interest in the release of a record to which section 21(1) applies outweighs the public interest in the record's release.

Public Interest

Ms Moran's preliminary views acknowledged the Applicant's argument that the public interest, in ensuring openness and transparency in the Government's decision to commit taxpayer monies to these projects, warranted the release of the records. I note that she agreed that there was a public interest in ensuring the accountability of Government for decisions involving large sums of public monies, particularly when cutbacks have been made in all areas of Government expenditure. She also said she considered there to be a public interest in demonstrating how the costs, risks and benefits to the taxpayer of the projects were assessed and noted that, while not painting the full picture of how decisions were made in respect of the Transport 21 projects, these public interests would indeed be served by the release of the details at issue.

However, she also outlined her view to the Applicant that there is a public interest in ensuring value for money in the improvement of State infrastructure, particularly when public finances are constrained, and thus in minimising the risk that more taxpayer money might be spent on the projects than would otherwise have been necessary. She also said that she considered there to be a further public interest in ensuring the construction of necessary State infrastructure (which would not be furthered if projects were cancelled or deferred due to high costs). She indicated that, on balance, she considered the various arguments made in support of the withholding of the remaining details to outweigh those in favour of release.

I agree with Ms Moran's views in this regard. I accept that information at issue would, by its nature, enable public debate and analysis of the estimated costs upon which decisions were made to proceed with the various projects. This would further the public interest in ensuring value for taxpayer money, by highlighting any excessively costly projects and requiring analysis of whether there may be more economically viable ways of achieving their aim. It would also further the public interest in ensuring accountability for the decisions taken in respect of Transport 21 plan, such as decisions to select and prioritise particular projects in the light of costs, benefits and other factors.

However, I also consider it reasonable to accept that release of the details as contained in the records would be to the advantage of the tenderers involved, particularly where the effectiveness of normal competitive tender processes is likely to be reduced by the limited number of tenderers that would be capable of progressing such large scale and complex projects such as those the subject of the records. In this regard, it may be worth reiterating that only four consortia world-wide met the pre-qualification criteria for Metro North.

As set out earlier in this decision, despite the fact that the records at issue in this case can be seen as historic, I am satisfied that tenderers could derive current total capital costs by combining details in the records with other details in the public domain, which could result in tendered prices that are towards the top end of the budgets concerned. I have also, as set out earlier, been satisfied that tenderers would be similarly able to arrive at current component costs (such as operating budgets and risk allowances). Particularly where quantitative and qualitative assessments of risk allowances are concerned, I have been satisfied that such disclosure could lead to a greater risk of inflated compensation claims from contractors than might otherwise be the case (such risk being likely to exist in respect of the Transport 21 projects until final accounts are signed off). I have also been satisfied that disclosure of details relevant to the financing of the Line B1 project could compromise the RPA's ability to negotiate the best possible terms for funding and security packages for other Transport 21 projects. Overall, I accept that scenarios such as the above could result in the various Transport 21 projects becoming excessively expensive, which is not in the public interest of ensuring value for taxpayer money for that overall investment programme.

Thus, having considered the public interests in favour of and against release of the details at issue, I find that it is appropriate for me, in the circumstances of this case, to find that the public interest in favour of withholding the details outweighs the public interests in their release. I find, accordingly, that the remaining details should not be released further to section 21(1)(c) of the FOI Act.

Decision

Having carried out a review under section 34(2) of the Freedom of Information Act 1997, as amended, I hereby affirm the decision of the Department in respect of the remaining details at issue in this case and direct that they should be withheld.

Right of Appeal

A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such a review must be initiated not later than eight weeks from the date of this letter.

Emily O'Reilly

Information Commissioner

27 July 2010