Freedom of information provides frustration and opportunities for bidders for public contracts
Release Date: 26 May 2010
The Freedom of Information Act 2000 was famously used for pushing the BBC to disclose information about its stars’ and senior managers’ pay. Closer to home, the law can also give the public and more importantly your competitors access to information about your pricing and related matters so is of critical importance in tender and public contracts situations.
One of the less welcome side effects of the Freedom of Information Act 2000 (FOIA) is that it gives the public access, not just to public sector information, but also to a considerable amount of private information.
The risk particularly affects organisations that work with public authorities and as such the housing and care sectors are often affected. When the provider enters into a contract with a commissioning authority most, if not all, of the service information will be subject to freedom of information. We find that providers have a good awareness of this. The contract often includes a freedom of information clause, and during service set-up the public authority will often ask for regular reporting on certain topics explicitly so that it can publish the information as part of its ‘publishing scheme’.
What is less well known is that information supplied to a public authority becomes subject to freedom of information much earlier than the contract stage. It starts when you submit a bid in response to tender, and your bid document, if requested, is liable to be disclosed.
Tendering parties started to use the FOIA in this way very soon after the new law came into force. It is not a new risk; we are however seeing a significant upsurge in the number of disclosures of bid documents, particularly by local authorities, in these sectors. Unsurprisingly it is the unsuccessful bidders who are making freedom of information requests, and the successful bids are the ones that get disclosed.
The implications for successful bidders are significant. The cost of preparing bid submissions can be high. Perhaps more importantly, bids often lay bare how providers achieve their price: standards mix – knowledge that is hard to acquire but easy to duplicate. Bids are often based on precedent documents that encapsulate accrued commercial knowledge and describe or reflect systems and practices that are embedded within the provider organisation. When your bid is made public, it could require major organisational change for you to retain or recover a competitive edge when the contract, or similar ones, come up for renewal.
It is easy to see how this might help to raise standards amongst providers, and that this would be in the public interest. It also grossly distorts competition and our experience suggests that public authorities tend to be more bullish about disclosing housing and care providers’ bids than they are, for example, with disclosing bids made by professional service firms.
Happily there is much that providers can do to protect their valuable know how in the public tendering process. Watertight protection of your know how requires experience and an understanding of laws on confidentiality, data protection, intellectual property and public tendering. Much can be achieved through staff awareness training and simple internal procedures, which we can provide. When you manage freedom of information risk proactively you only need experts for highly specialised top-up advice going forwards.
It is much harder to achieve a good outcome if you deal with such issues reactively. Public authorities do not always consult with providers before making a disclosure, so you might not have an opportunity to react at the appropriate time. Public authorities do always push in favour of disclosure, particularly in the housing and care sectors, and in some cases there is scope to challenge them and limit the disclosure. It is also possible that by making a disclosure a public authority will incur liability, or that you can prevent disclosure by obtaining an injunction, although such cases are rare. In any case, however, you start on the back foot if you have not previously taken steps to ensure that the public authority respects your know how, and you may need expert involvement at every step.
A parallel trend that we are seeing is that our provider clients are asking for our help in themselves making freedom of information requests on the back of unsuccessful bids. There are some subtleties for requesters to consider, to ensure that requests are effective. Timing can be important, and the request might need to be carefully scoped.
Freedom of information is here to stay and there is no sign of legislation to ease the impact, so a process of routinely protecting know how in bids and making requests following unsuccessful bids is an important way of staying competitive.
If you want to know more please contact David Hall at david.hall@anthonycollins.com or by telephone on 0121 212 7469.
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