Canadian Consulting Engineer

Government Transparency

Anumber of recent high-profile controversies over government spending have led to the public scrutiny of government procurement processes.

March 1, 2008   By Kathryn Frelick Miller Thomson, LLP

Anumber of recent high-profile controversies over government spending have led to the public scrutiny of government procurement processes.

In 2005, for example, the Information and Privacy Commissioner of Ontario’s Annual Report called for greater transparency in government procurement and contracting. It was the Commissioner’s view that the public’s right of access to government records was essential to holding public officials accountable, and that this right should not be lost when the government uses external, private sector individuals or organizations to provide government services.

The Ontario privacy commissioner called on the government to make it clear to consultants and contractors that the default position should be that financial and other pertinent information relating to a contract will be made publicly available, except in rare cases.

Similar positions have been taken at the federal level and by other provincial information and privacy commissioners in relation to government procurement processes and access to information. While this article focuses on Ontario legislation, the same trends can be seen across other jurisdictions.

Recent decisions by the Ontario Privacy Commissioner and the courts relating to public access requests through the Freedom of Information and Protection of Privacy Act (FIPPA) and Municipal Freedom of Information and Protection of Privacy Act (MFIPPA), have demonstrated a shift towards greater transparency in government procurement processes, particularly with respect to the disclosure of government contract documents. These decisions have also examined the basis on which certain types of third party information that have been provided in the government procurement process could be excluded from the legislative requirements for disclosure.

Most consultants and contractors who take part in government procurement processes (including bidding and tendering, and requests for proposals) assume that the information they submit as part of their bid, and where they are successful, the contract terms, will be kept confidential. Indeed, the accepted basis for an exemption relating to third party information is that organizations that provide information to government institutions should be allowed to protect their commercially valuable “informational assets.” Although one of the central purposes of the legislation is to shed light on the operations of government, the exemption serves to limit the disclosure of confidential information belonging to third parties that could be exploited by a competitor in the marketplace.

In this respect, disclosure of business secrets through freedom of information requests would be contrary to the public interest for several reasons. If a business is required to disclose information it obtained for a substantial capital investment, then that disclosure could discourage other firms from making engaging in such an investment. In other words, a competitor company would have access to the information without having to pay for it.

Further, it is in the best interests of the public to encourage businesses to invest in creating better facilities. The disclosure of confidential business information could result in a loss of confidence in the process and discourage organizations from competing. If the private sector chooses not to compete for government contracts, or if they compete on a more limited basis, there is concern that the quality of government facilities or services could suffer.

Exemptions test

Ontario’s FIPPA and MFIPPA set out a three-part test for determining whether information provided by a third party to government ought to be exempt from disclosure to the public under the third party information exemption:

1. Type of Information — the record must reveal information that is a trade secret or scientific, technical, commercial, financial or labour relations information;

2. Supplied in confidence — the information must have been supplied to the government authority in confidence, either implicitly or explicitly; and

3. Harms — the prospect of disclosure of the record must give rise to a reasonable expectation of harm, specifically, prejudice to competitive position, a public interest risk that information will no longer be provided to the government institution, or a risk of undue loss or undue gain. There is a need to provide detailed, convincing evi- dence in order to demonstrate the potential harms.

The main issue of recent orders from the Ontario Privacy Commissioner and court decisions has focused on whether the information was “supplied in confidence” to the government institution. It has been emphasized that contract documents, for example, are the product of negotiation and therefore do not contain information that was supplied in confidence. Further, to the extent that a tender or bid is incorporated into a contract, this information may not be protected from disclosure.

In contrast, there tends to be a greater expectation of confidentiality relating to information provided as part of bidding, tendering and the request for proposal processes. However, the third party must still satisfy the “supplied in confidence” test and each situation is examined individually.

Strategies for protection

There are strategies that organizations can employ during the procurement process in order to try to balance the need to protect their confidential informational assets, while at the same time allowing government institutions to be accountable to the public:

• The organization should be as specific as possible about information that is being “submitted in confidence.” Such information should be clearly labeled and identified when submitted to the government institution.

• Broad assertions of confidentiality and trade secrets are generally not of assistance. Courts have held that exceptions to the right of access should be “limited and specific.” Protection should not be sought for information that is otherwise publicly available.

• There is also the ability to sever information that is considered to be confidential or proprietary from a document.

Public access requests may stem from procurement projects that date back a number of years. The parties may have had different expectations relating to the confidentiality of that information. With the trend towards greater transparency, organizations are encouraged to identify information on a go-forward basis that fits within one of the protected types of information and to ensure that they assert protection for that information from the outset.

Kathryn Frelick is a partner with Miller Thomson, LLP in Toronto.

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The accepted basis for an exemption is that organizations should be allowed to protect their commercially valuable “informational assets.”


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