Commercial secrets and the public sector

Many commercial contracts have provisions on confidentiality. Many contracts include them as a matter of course, as they have become standard “boilerplates”. Indeed, many standard form contracts contain much more extensive confidentiality provisions than may really be needed by the parties for a given commercial relationship. However, this does in part reflect the reality that much of business is private, and a matter for the commercial parties themselves.

When contracting with the public sector, however, there are different considerations. Firstly, public sector bodies are guardians of public money, and may not necessarily conduct themselves in private, or indeed be expected to. A good example of this is the usual requirement for procurement processes to select suppliers of larger contracts. Secondly, is the application of the freedom of information legislation to the public sector, a point not always considered by those doing business with them. The main legislation governing the release of ”information” is the Freedom of Information Act 2000 (FOI), Environmental Information Regulations 2004 (EIR) and the data protection regime under the GDPR and Data Protection Act 2018.

The freedom of information legislation can be complex, especially where information requested contains a mixture of personal data (which should not be released under the FOI or EIR), commercial information (which may be exempt) and information which would ordinarily be disclosable under the FOI.

In short, the FOI sought to reverse public sector “secrecy” by making a broad presumption that information requested by the public should, if not exempt or too costly to provide, be confirmed to exist by the public body and given to members of the public who ask for it. The FOI applies generally to most public bodies in the health sector (and also to some bodies such as GP contract holders in respect of those contracts).

A commonly applied exemption from releasing information requested is “trade secrets and other commercially sensitive information” under section 43 of FOI. A public authority may rely on the section 43 exemption where disclosure is likely to prejudice the commercial interests of any person (including the public authority itself). This right not to release information is “qualified” which means that it must be released where the balance of public interest is in favour of releasing the information. This exemption can often interplay with the section 41 exemption in relation to information given to the public authority in confidence (for example sensitive information may be provided by bidders in a procurement exemption and engage both sections). The section 41 exemption is “absolute”, which means that if this is engaged then the public interest test will not apply and a public body will not have to release the information. However, it is not possible to ‘contract out’ of the FOI regime by labelling material as confidential when it would normally not be exempt from disclosure.

There are a number of other exemptions which apply to different information and different bodies. The main points to be aware of when contracting with the public sector is that you should carefully consider what information is, in fact, commercially sensitive confidential and seek to ensure that this is appropriately recorded as such (for example expressly marked as confidential under any contracts). Blanket confidentiality clauses covering everything, including the very existence of a contract not just its commercial terms, are unlikely to survive the public interest except in very sensitive matters. Being sensitive to the needs of the public sector, and expressly providing for the release of information under the freedom of information regime can save time and requests for amendments. Asking to be informed of FOI requests is prudent, but it must always be remembered that the duty to release or not sits with the public body, and disclosure can be ordered by the Information Commissioner or Tribunal, who will be looking to further the public interest in demonstrating transparency, accountability and value for money in any contract involving the use of public funds. Understanding this and focussing on protecting the core sensitive information, such as the level of profit/surplus on a contract, or truly unique know-how, is likely to be the most effective strategy.

It is important to bear in mind that the Information Commissioner regards the limited commercial prejudice resulting from transparency regarding, for example, the value of a contract or the performance criteria as a necessary cost to be paid to gain access to public funds and the advantages that it brings. A public body will be assisted by submissions that accept the need for transparency and a realistic attitude to what is truly sensitive and what is not; submissions seeking to withhold information that represents standard industry practice, or material duplicated in a company’s marketing material, are usually counterproductive.

If you have any questions regarding Freedom of Information, confidentiality and related issues, we would be pleased to help.

 

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