The Senior Investigator annulled the Council's decision and found that the relevant records should be released.

Case Summary

Whether the Council is justified in its decision to refuse access to certain parts of tender documents on the grounds that they are commercially sensitive and therefore exempt from release in accordance with section 27 of the FOI Act.

Date of Decision: 12.07.2010

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

Background:

On 26 February 2009, the Applicant requested under the FOI Acts details of all plant hire contractors who had submitted tenders to the Council and also details of the tendered rates for various motorised vehicles in the years 2006, 2007 and 2008.   The Council in its decision of 30 march 2009, agreed to release the names of the relevant contractors but withheld the "tendered rate amount"on the grounds that the information is commercially sensitive and that section 27 of the FOI Act applies. On 19 April 2009, the Applicant sought an internal review of this decision and in support of his appeal stated that the information related to past years and is not therefore commercially sensitive and that in the interests of transparency, accountability and value for money the information should be released.  On 12 May 2009, the Council in its internal review decision released additional information to the Applicant consisting of the total monies paid to individual contractors but it again withheld information relating to tendered rate amounts, again quoting section 27 of the FOI Act.

On 9 October 2009, the Applicant requested a review by the Commissioner of the Council's decisions, quoting the arguments he had previously made in his request for an internal review decision by the Council.   The Applicant in a phone call to this Office on 8 December 2009, confirmed that he accepted the Council's exemption of information provided by tenderers who were not subsequently engaged by the Council and that he solely required access to the tender rates of each successful bidder.   This was confirmed in a subsequent phone call on 16 December, 2009.   On 11 December 2009, this Office issued its preliminary views on the issues to each of the affected contractors and confirmed that it considered that the records should be released.  The contractors involved were invited to submit their views on the issues and many of them did so.  This Office received a total of 10 submissions with five contractors agreeing to release of the records and a total of nine objecting (one submission represented 5 contractors).   However, in deference to the Council and to those contractors who, as is their right, did object to the release of the records, I am now proceeding to a formal binding decision on the matter.

In carrying out my review, I have had regard to the above correspondence, to the submissions of all parties including those of the contractors to whom the requested information relates and also to the provisions of the FOI Acts.

Preliminary matters

While I am required to explain any decision I might make regarding access to records, section 43(3) provides that I must not reveal the content of an exempt record in providing such explanation. This is to preserve the right of appeal of all parties to the High Court in cases where there is disagreement with a decision I might make. In the circumstances of this case, section 43(3) requires me to exercise caution in relation to the description I can give of the records at issue.   However, I consider that I can say that the records involved relate to the hourly rates applicable to different services tendered.

I would also like to emphasise that under section 34(12)(b) of the FOI Act, a decision to refuse to grant access to a record is presumed not to have been justified unless it is shown to the satisfaction of the Commissioner that the decision was justified.  This provision has the effect of placing the burden of proof for refusing access to a record on the public body. 

Conducted in accordance with section 34(2) of the FOI Act, by Sean Garvey, Senior Investigator, who is authorised by the Information Commissioner ("the Commissioner") to conduct this review.

Scope of the Review

My review is confined to the sole issue of whether or not the Council's decision to withhold the successful tendered hourly rates for labour and for supply of specific machinery is in accordance with the provisions of the FOI Act.  These rates are contained in summary spreadsheets prepared by the Council and the Applicant has confirmed he is happy to accept the information he requested in that format.   The relevant exemption quoted by the Council is section 27 of the FOI Act.

Submissions

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Findings

Section 27

Section 27(1) of the FOI Act provides that, subject to the public interest, a head shall refuse to grant a request for a record if the record concerned contains

"(a) trade secrets of a person other than the requester concerned,

(b)  financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected tresult in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation, or

(c) information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates."

Section 27(1)(a)

In relation to section 27 (1)(a) the crucial question is whether or not the information withheld qualifies as a "trade secret".  In previous decision (see case no 98049 and 98188 on this Office's website: www.oic.gov.ie) the then Commissioner accepted that a trade secret is information used in the trade or business which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret and that the owner must limit the dissemination of it or at least not encourage or permit widespread publication.

Applying these principles, the then Commissioner found that a strong case could be made that tender prices were trade secrets during the currency of a tender competition, but that only in exceptional circumstances would historic prices remain trade secrets and concluded that the successful tender prices then at issue did not qualify for exemption under section 27(1)(a).  On the same basis I find that the records now under review are historical and therefore do not satisfy the criteria or tests outlined above, nor has the Department provided any evidence to substantiate a claim that they constitute trade secrets.  Accordingly, I do not accept that a valid case has been made to justify invoking section 27(1)(a) and I find that it does not apply to these records.

Sections 27(1)(b) and (c)

These exemptions are to protect against potential harms that release of certain information may cause.  The tests in 27(1)(b) and (c) are based, not on the nature of the information, but on the nature of the harm which might be occasioned by its release. The standard of proof required to meet these exemptions is relatively low in the sense that the test is not whether harm is certain to materialise, but whether it  might do so.

27(1)(b)

Again, in case 98049 already quoted, the then Commissioner allowed that in tender cases such as this he could envisage that a prejudice to the competitive position of the successful tenderers could arise by virtue of the fact that each of the tenderers put forward its price in the expectation, however ill-founded, that it would not be disclosed.  He accepted, and I agree with his analysis, that the price quoted in such circumstances might differ from that quoted to other customers and knowledge of this could disrupt these other business relationships and, perhaps, cause some customers to seek other suppliers. In that scenario the only parties who would suffer are those whose prices were disclosed. Competitors who, for one reason or another, had not tendered, would not suffer from the same difficulty.  In this scenario disclosure could prejudice the competitive position of the parties whose prices are disclosed.  While the then Commissioner entered the caveat that he considered this possibility as unlikely, since other customers of successful tenderers are likely to make their purchasing decisions on the basis of their perceptions of the best value for money, he nevertheless conceded that the only requirement to be met is that disclosure "could prejudice the competitive position" of the person concerned which, in his view, was a low compared to the standards of proof required in other exemptions.  Accordingly, he accepted that section 27(1)(b) applies in such cases and I agree that it applies in this case.

27(1)(c) 

The records in this case are historic and the matter at issue is detail relating to specific hourly rates for labour and the use of specific machinery, as the totals of how much each contractor and supplier was paid has already been released. 

Neither the Council nor the third parties have provided this Office with any evidence of negotiations of the successful tenderers that  would be adversely affected by release of the relevant records.  Therefore, in line with the provisions of section 34(12), it has not been demonstrated to my satisfaction that release of the relevant records would "prejudice the conduct or outcome of contractual or other negotiations" as provided for in this section.

I consider that any current or future tendering process will still be conducted in confidence with the same impetus on the Council to secure value for money and on the competing contractors to secure the contracts.

The public interest

As was pointed out in this Office's preliminary view letter even where I am satisfied that the records did disclose matter which would qualify for exemption under section 27(1)(a), (b) or (c) on account of damage to the financial or competitive position of contractors, I would still have to consider the public interest under section 27(3). I consider that the openness and accountability of a public body in the expenditure of public monies represents a very strong public interest argument in favour of release.  I accept the Council's argument that existing systems of audit and scrutiny provide certain safeguards, but this is not an argument against further such safeguards, including public disclosure of the details of monies paid.

This was commented on by the previous Commissioner in Case Nos. 98049, 98056 and 98057 [Henry Ford & Sons Ltd, Nissan Ireland and Motor Distributors Ltd and the Office of Public Works] when he stated:

"Such openness is a significant aid to ensuring effective oversight of public expenditure, to ensuring the public obtains value for money, to preventing fraud and corruption and to preventing the waste or misuse of public funds.   Motor Distributors Limited has argued that there are existing mechanisms to ensure accountability and that these are adequate.  It is not for me to comment on the adequacy of such mechanisms.  I do not accept that the existence of current safeguards in relation to public expenditure means that there is no public interest in creating further safeguards.  The very existence of secrecy carries with it the scope for abuse.  In contrast, openness in relation to public expenditure is an important additional safeguard against fraud, waste and misuse of funds.  I consider that the public interest in openness about public expenditure is of very great significance."

The public interest factors in favour of disclosure have to be balanced against the public interest served by non-disclosure. A main consideration against release is the public interest in enabling businesses to operate without undue difficulty or unfair competition. The extent of any harm which might result from disclosure and the likelihood of its occurrence are relevant factors here. There is a legitimate public interest in persons being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result.  It is this public interest which section 27(1) seeks to protect.  However, there is also a very strong public interest in government being open and accountable and the FOI Act, both in its Long Title and in individual provisions, recognises such wider public interests.

As stated in previous decisions by this Office, knowledge by future tenderers of historical prices does not automatically provide any advantage given the inability to predict the behaviour of competitors. In balancing the public interest, a prejudice which is no more than a mere possibility has to carry a great deal less weight than a prejudice which is more likely to occur. In the circumstances, I find that the advantages in terms of openness and accountability of disclosing the withheld information outweigh any possible harm and I believe that the public interest in this case is better served by release.

On account of the foregoing I find that the Council is not justified in its decision that section 27 applies and I decide accordingly.

A record found to be exempt under section 27(1) may be released in accordance with section 27(3) if the public interest would on balance be better served by granting than by refusing to grant the request.

Decision

Having carried out a review under section 34(2) of the FOI Act, I hereby annul the decision of the Council in this case and direct that the records at issue be released.

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.

Seán Garvey

Senior Investigator

12 July 2010