Public sector procurement and the Freedom of Information Law

Read our article in the Cayman Financial Review Magazine, eversion 

Government’s procurement practices have received a lot of attention in the press recently, but one aspect that has not yet been discussed is the way the tendering process interrelates with the Freedom of Information Law.

The interaction of procurement and FOI raises a number of issues and questions that are, so far, not very well understood in the business community. This article explores some of the ways in which FOI impacts on the procurement process, and addresses some of the concerns bidders may have.  

The Freedom of Information Law (2007) has established the general right to access records and information held by public authorities in the Cayman Islands. The Law came into effect in January 2009 and applies to central government, as well the statutory authorities and government companies.

Whether a record is “held” depends on a number of things, but it will cover both records that were created by a public authority and records received from outside of government.

Whether access must be provided is decided on a case by case basis by each public authority’s information manager, who may apply a number of exceptions and exemptions to withhold disclosure.

If an applicant is not satisfied with the response he is entitled to an internal review of the decision, and if still not satisfied, he may appeal to the information commissioner for mediation and a formal hearing. In the final instance, the commissioner has the power to issue a binding order in the matter.

 In general terms, therefore, bids submitted to government for consideration in response to an invitation to tender are covered by the provisions of the FOI Law, even though they may not have to be disclosed because one or more exemptions apply.

1. How is government communicating the application of the FOI Law to tendering documents to its private sector partners and suppliers?
Procurement is governed by the provisions of the Public Management and Finance Law (2010 revision) and the Financial Regulations (2010 revision). In practical terms, the procedures applicable to procurement worth more than $250,000 are defined by the Open Tender Process Guidelines (OTP) of the Central Tenders Committee (CTC).

The OTP guidelines provide very specific procedures for the handling of tender documents in each consecutive stage of a bid, from bid receipt, opening, evaluation, recommendation and award to contract negotiation and management. They highlight the need for careful procedures and strict confidentiality during the bidding process, and focus on maintaining the secrecy and integrity of the bid information, and the impartiality of the evaluation and awarding process, while these processes are ongoing. But what happens after the bid is closed?

The OTC guidelines indicate that the laws of the Cayman Islands apply to tenders, but they do not specifically mention the FOI Law, except in stating that:

“The release of information to bidders and the general public is being reviewed as part of the Freedom of Information implementation project. Until the guidelines and policy have been developed, all bid information other than the successful bidder’s name and bid amount shall remain confidential1.”

This statement is in urgent need of updating in order to inform bidders that the FOI Law applies to all the information they provide, and that their bid may, under certain circumstances, be disclosed under the Law. The Information Commissioner’s Office is working with the Central Tenders Committee to update the guidelines.

2. How is sensitive commercial information protected under the FOI Law?
An FOI exemption may apply to a whole record, or to part of a record, and public authorities have a legal obligation to release as much of the responsive record as they can, while redacting any exempt matter. Not all information that is included in a bid is by nature sensitive or commercial. For instance, tenders may include general information on the bidding company, or information that is already publicly available elsewhere.

There are a number of exemptions that may apply to a bid, but only two are briefly discussed here, namely the (often overlapping) exemptions dealing with confidential and commercial information. See Figure 1.

The exemption on confidential information protects records, the disclosure of which would “constitute an actionable breach of confidence”. However, just because a page is marked as “confidential” does not make it so; neither does the inclusion of a confidentiality statement in the bid guarantee that the exemption applies.

For a record to be exempt it must meet the common law test of confidence, ie it must contain information of a confidential nature that is communicated in confidential circumstances, and its disclosure would cause harm to the bidder. Even where these criteria are met, the record may still be disclosed in the public interest, for instance where there is a credible suspicion of wrongdoing.

The second exemption protects information of a commercial nature such as trade secrets and information with a commercial value, and generally any information that concerns the commercial interest of an individual or organisation. However, it is not enough for the information simply to be commercial in nature, it is also necessary to demonstrate what harm would result from disclosing the information.

3. What, if anything, can a private company do to protect its information, and what are its legal rights under the FOI Law?
Public authorities are under no legal obligation to consult with, or inform anyone when they receive a request for third party commercial information. This approach is notably different from the rules on disclosure of third party personal information under the FOI Law.

However, in practical terms many public authorities will seek the input of a private sector bidder, partner or supplier when they are deciding how to respond to an FOI request for commercial information. If so, the third party only acts in an advisory capacity, with the final decision remaining firmly in the hands of the public authority.

When a third party is asked to advise a public authority, it should provide as much relevant insight as possible, possibly after seeking legal advice, including:

  • whether (and why) the information should be considered confidential, and for how long;
  • whether the information contains any trade secrets or information with commercial value;
  • whether (and why) such value would be diminished if the information was disclosed;
  • which part of the record would not be subject to access restrictions.

4. How does the public interest come into play?
Even where information is clearly confidential and/or commercial in nature, it could still be released in the public interest, either under the common law of breach of confidence or the FOI Law’s own public interest test.

The test may be determined in all three consecutive stages of the FOI request: the initial decision by the information manager, the internal review by the chief officer and the appeal heard by the information commissioner.

The public interest test seeks to weigh all arguments for and against disclosure. The strong societal interest in maintaining confidentiality and ensuring that commercial interests are properly protected, must be balanced against countervailing factors such as those identified in the FOI regulations, including the promotion of greater understanding of government’s decisions, accountability for public expenditure and deterrence of wrongdoing or maladministration.

 In conclusion, private companies that enter a bid in a public sector tendering process should be aware that the information they provide to government is subject to the provisions of the Freedom of Information Law. However, this should not deter the private sector from participating in the process as there are also a number of strong defences that can effectively be employed, where applicable.
 

For more information, please contact the Information Commissioner’s Office.

Endnotes 

1 Central Tender Committee Open Tender Process Guidelines p.29 available at: http://www.centraltenders.gov.ky/portal/page?_pageid=2122,1&_dad=portal&_schema=PORTAL

PublicSecSm.jpg