Summary and implications
Under its Transparency Agenda, the Government aims to publish government tender and contractual information. The idea is to allow the public to see more clearly where money is being spent and on what.
The latest version of the MOD’s Commercial Policy Statement, published in March 2011 (the CPS), explains how MOD tender and contract documentation should meet the Transparency Agenda. In short, all MOD tender and contract documents over £10,000, not subject to an exemption, must be published online.
This briefing sets out the main points of the CPS and the exemptions to disclosure. It covers important considerations for contractors, wanting to avoid disclosure of sensitive information. Key points are to:
- Become familiar with the CPS, the exemptions and the “Transparency Narrative Conditions” inserted into all new MOD tenders and contracts;
- Consider the sensitive information you may want to try to exclude from publication. Specifically, how best to use the MOD's “Tenderer's Commercially Sensitive Information Form”, how to explain the sensitivity and the harm that might result from disclosure;
- Monitor data published by the MOD under the Transparency Agenda to be aware of what is being revealed and what is not. The release of information by competitors could be seen as an opportunity.
This initiative will sit uneasily with contractors in the defence sector who need to understand where the line is drawn between publicly disclosable information and commercially sensitive information that they have a legitimate right to protect. In the face of a gathering momentum towards publication of information, contractors have to get to grips with the legal basis on which information can be withheld from disclosure.
Transparency and exemptions
The MOD's standard “transparency narrative conditions”, provide that information shall be removed from publication if:
- It would otherwise be exempt from disclosure under the Freedom of Information Act (the FOI Act); or
- The contractor and the MOD agree the information is commercially sensitive.
Transparency Narrative Conditions
The MOD has published a set of standard “transparency narrative conditions” in the CPS. These conditions will, in future, be included in both tender and contract documents and remove any protection contractors previously had under DEFCON 531 from disclosure of contract details and payments.
The FOI Act provides a general statutory right of access to information held by public authorities. This right of access is subject to exemptions. The MOD are using the exemptions set out in the FOI Act as the basis for deciding what to disclose under the Transparency Agenda.
- Contracts for “Warlike Stores”
Arms, munitions etc are excluded from disclosure absolutely.
- The FOI Act exemptions
- National Security: this qualified exemption applies to information that poses a real threat to the interests of national security.
- Defence: this qualified exemption applies where disclosure prejudices the defence of the UK or of any colony, or the capability, effectiveness or security of any relevant forces.
- Commercial interest: this qualified exemption applies to information which constitutes a “trade secret” or where disclosure would or would be likely to prejudice the commercial interests of any person.
“Qualified exemptions” under the FOI Act mean that even if the MoD is satisfied that the relevant exemption applies, it can only be applied if the public interest in applying the exemption outweighs the public interest in disclosure.
How to protect commercially sensitive information
Contractors will need to consider carefully the categories of information that they genuinely consider to be commercially sensitive for identification in tenders and contracts. This is likely to cover pricing structures, price rates, and technical solutions, etc. This information must be identified in the Tenderer’s Commercially Sensitive Information Form together with a description of the sensitivity and the potential harm resulting from disclosure. Citing the relevant exemptions under the FOI Act will also be important. If the MOD disagrees with the contractor’s view of what should be disclosed and what redacted, the MOD will give at least two working days’ notice before publication. The contractor should be given an opportunity to make further representations.
Disclosure of pricing information
Disclosure of pricing information is often a sensitive issue for contractors. However, unless sufficient detail on pricing is disclosed, mere publication of overall pricing on contracts may have to be disclosed unless the contractor can argue that disclosure is likely to prejudice its commercial interests.
In its guidance on the Transparency Agenda (February 2011) HM Treasury gives the example of “expenditure on current military operations (including payments to contractors)” as a type of transaction that may be redacted from publication. This would only be the case, however, if the national security exemption under the FOI Act applied.
Monitoring the opportunity
Contractors may also want to consider monitoring the data actually published by the MOD under the Transparency Agenda to be aware of what is being published generally but also in case any errors are made in respect of the publication. Interestingly current guidance does not require public bodies to correct errors.
Finally, although contractors will have to adjust to a new climate of increased disclosure under the Transparency Agenda, the release of information by competitors arguably presents just as much of an opportunity. The data published by the MOD could well become a useful source of information that can be used to gain a competitive advantage and so to this extent the Transparency Agenda, as with the FOI Act, is a two way street.