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Mr X and The Department of Education and Skills (FOI Act 2014)

Case Number: 170016

Whether the Department was justified in refusing access to certain records relating to the purchase of land and construction project for certain new school buildings on the basis that the records contained commercially sensitive information within the meaning of section 36(1)(b) of the FOI Act

Conducted in accordance with section 22(2) of the FOI Act by Elizabeth Dolan, Senior Investigator, who is authorised by the Information Commissioner to conduct this review

Background

In a request dated 14 September 2016, the applicant sought access to records relating to the purchase of land and construction project for certain new school buildings from 1 January 2008 to the date of the request. In a decision dated 25 November 2016, the Department granted the request in part but also refused it in part on various grounds. On 21 December 2016, following the applicant's request for internal review, the Department affirmed its original decision. On 9 January 2017, the applicant applied to this Office for a review of the Department's decision.

I have now completed my review in accordance with section 22(2) of the FOI Act. In carrying out my review, I have had regard to the submissions made by the applicant, the Department, and the third party companies affected by this review. I have also examined the contents of the records concerned. I have decided to conclude this review by way of a formal, binding decision.

Scope of the Review

This case initially involved a large volume of records. However, during the course of the review, the applicant helpfully identified the particular records of interest to him using the schedules of records provided by the Department. Subsequently, in response to queries made by this Office, the Department reconsidered its decision and agreed to release many of the records concerned. The Department maintains that the remaining records sought contain commercially sensitive information and are exempt under section 36(1)(b) of the FOI Act. This review is concerned solely with the question of whether the Department was justified in refusing access to the following records remaining at issue:

Section 1, Appendix C, Part 1: records 1 to 38, (except record 13, which was granted);
Section 1, Appendix C, Part 2: records 18, 19, 49, 73, 77, 83, 85, 89, 93.

Analysis and Findings

Section 22(12)(b) of the FOI Act provides that a decision to refuse to grant access to a record "shall be presumed not to have been justified unless the head concerned shows to the satisfaction of the Commissioner that the decision was justified." It should also be noted that a review by this Office under section 22 of the FOI Act is de novo in that it is based on the circumstances and the law as they apply on the date of the decision.

Reconsideration by the Department

During the course of the review in this case, the Department reconsidered its position and withdrew its objection to the release of the records relevant to the applicant's request with the exception of those it regarded as affecting the commercial interests of the third party companies which formed the Design Team for the school building project. It concluded following contacts with this Office that the records were no longer exempt or should be released in the public interest or administratively. (Certain records were created by the Chief State Solicitor's Office and therefore were outside of the remit of the Act by virtue of section 42(f).) However, in order to protect the interests of the affected third party companies, the Department maintained its claim for exemption under section 36(1)(b) in relation to the records remaining at issue, which include tender, contract, and fee information.

Objections by the affected companies

The five companies concerned were therefore notified of the review by this Office and given an opportunity to make submissions. In response, one company, which will be referred to as Company X, stated that it did not have any objection to the release of the records at issue. Another company made no response at all. The other three companies objected to the release of the records on the basis that they contained commercially sensitive information that could be prejudicial to their interests if released. These companies will be referred to as Company A, Company B, and Company C, respectively.

Company A made only very general assertions but the other two companies, Company B and Company C, referred specifically to their fee arrangements. Company B stated that it has developed a "bespoke" fee structure which it uses successfully on an ongoing basis and that its disclosure would prejudice its competitive position, considerably undermine its ability to obtain suitable commissions in future, and result in a material financial loss to itself. Company C suggested that its fee arrangements with the Department were made at a discount in the "depths of the recession" and could now prejudice its competitive position in relation to private sector clients. The director of the Company C also suggested that he regards the fee information as "reasonably private" because of his relations in the area, and he argued that the release of the information would serve no useful public interest, particularly as his company was not involved in the decision-making process with respect to the school building project.

Section 36(1)(b)

Section 36(1)(b) of the FOI Act provides that a request shall be refused if the record concerned contains "financial, commercial, scientific or technical or other information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of that person in the conduct of his or her profession or business or otherwise in his or her occupation". Section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than by refusing the request (section 36(3) refers)

The essence of the test in section 36(1)(b) is not the nature of the information, but the nature of the harm which might be occasioned by its release. I note that the standard of proof is relatively low under section 36(1)(b) in that the mere possibility of prejudice to the competitive position of the person concerned is sufficient. However, in the High Court case of Westwood Club v The Information Commissioner [2014] IEHC 375, Cross J. held that it is not sufficient for a party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive. A party opposing release should explain why disclosure of the particular records could prejudice its competitive position.

In this case, the records remaining at issue in this case date from October 2014 to February 2016 and consist of tender documents relating to Companies A, C and X, a standard conditions of engagement form relating to Company B, documents concerning "uplifts" or adjustments to the agreed fees relating to Companies A, B, C and X, and documents recording the consequent amendments to the fees received by the companies concerned (as well as the fees of the fifth company which neither sought an uplift nor responded to the invitation to make submissions in this case). Invoices regarding the payment of the fees are also included. It seems that the five companies formed a consortium or project team under the lead of Company A, with the records at issue referring to the fee proposals, uplifts of the fees, or other adjustments to the fee proposals that were sought and/or obtained by the companies in the consortium and the consortium as a whole. I note that hourly rates (or daily rates from which hourly rates could be deduced) are included in the tender documents (C.1 records 23, 25, 28, 34, 36), in a letter dated 19 November 2014 seeking an uplift of the overall fees sought by the consortium for the project (C.2 record 94), and also in some but not all of the individual uplift requests (C.1 records 10, 22, 24, 31, 32). (The amount of the uplift request itself from November 2014 and the reduced amount ultimately granted were disclosed by the Department, inadvertently or otherwise, upon the release of C.2 record 79; the decision to release this record was made in response to the applicant's original request.)

General fee information
As Company C appears to concede, the fees are now at least somewhat historic given the economic recovery that the construction industry has experienced. Moreover, it is apparent from the records that the logistics involved in the school building project were of an unusual nature; therefore, the general fee arrangements made for such a project are unlikely to be regarded as particularly relevant to any future building projects. In the circumstances, with the exception of the hourly or daily rates discussed below, it is difficult for me to accept that the records contain commercially sensitive information within the meaning of section 36(1)(b) of the Act.

In any event, it is well settled that there is a very strong public interest in ensuring openness and accountability with respect to the expenditure of public funds. Therefore, even accepting that the records concerned contain commercially sensitive information, I find that the information concerned, apart from the hourly or daily rates discussed below, should be released in the public interest.

Hourly or daily fee rates
However, in Case 98188 (Mr. Mark Henry and the Office of Public Works), available at www.oic.ie, which involved tender-related records, this Office accepted that details of a company's internal business as well as its understanding of and approach to a particular project are generally regarded as commercially sensitive and may be entitled to confidential treatment even following the award of a contract. Thus, this Office generally accepts that disclosure of a company's hourly or daily rates could be harmful to its competitive position because of the insight it would give competitors into the company's business affairs (see, e.g., Case 160276 (Mr X and An Garda Síochána)).

In this case, in a letter dated 19 November 2014, Company A provided a breakdown of the uplift of fees requested on behalf of the consortium for the overall project. None of the companies involved has raised any specific concerns about the competitive position of the consortium itself, however, and I note that the breakdown did not refer to any particular aspects of the project such that the respective hourly or daily fee rates of any one company could be discerned. In the circumstances, I find no basis for concluding that the details provided in support of the November 2014 uplift request qualify for exemption under section 36(1)(b) of the Act.

In contrast, the tender documents at issue and certain records provided in support of individual uplift requests include hourly or daily fee rates that are in many instances further broken down by grade of the staff member involved. I accept that such details would provide meaningful insight into the business affairs of the companies concerned and could possibly be used by competitors in an effort to undercut the companies in future tenders for other building projects. Although the construction industry has experienced an economic recovery that would render general fee information, such as "bottom line" fee proposals, less meaningful in future tenders for different building projects, I accept that hourly or daily fee rates, especially where broken down further by grade, could be adjusted for inflation in a manner that could be helpful to competitors in relation to future fee proposals. Therefore, subject to subsection (2), I accept that section 36(1) applies.

Section 36(2) of the FOI Act sets out certain circumstances in which 36(1) does not apply. Section 36(2)(a) of provides that access shall be granted where the person to whom the record concerned relates has consented to access being granted to the requester. Accordingly, I find that the records relating solely to Company X are not exempt. I am satisfied, however, that section 36(2) otherwise does not apply.

In considering the public interest under section 36(3), I note once again that there is a strong public interest in openness and accountability with respect to the expenditure of public funds. However, this public interest is served to some degree by the records already released by the Department and the records that fall to be released in accordance with my findings above. On the other hand, the provisions of section 36 itself reflect the public interest in protecting commercially sensitive information. The purpose of the public interest test is to strike a balance between competing interests insofar as they are relevant. As noted in previous decisions, the Commissioner takes the view that the FOI Act was designed to increase openness and accountability in the way in which public bodies conduct their operations; generally speaking, it was not designed as a means to open up the operations of private enterprises to scrutiny. Accordingly, I find that, on balance, the public interest would be better served by refusing access to the hourly and daily fee rates included in the following tender documents and individual uplift requests: C.1 records 10, 22, 23, 28, 31, 34, and 36.

"Reasonably private" information?

For the sake of completeness in relation to the claims made by Company C, I note that section 37(1) of the Act applies to personal information. Personal information, in turn, is defined in section 2 of the FOI Act as information about an identifiable individual that (a) would, in the ordinary course of events, be known only to the individual or their family or friends or, (b) is held by a public body on the understanding that it would be treated by it as confidential. The definition also lists 14 categories of information that constitute personal information. In this case, the records at issue concern a school building project and the business affairs of the companies involved in the consortium. I do not accept that the fees paid to any of companies are of a private nature or otherwise qualify as personal information about any individual involved in the consortium.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby vary the decision of the Department in this case. I affirm its decision to refuse access to the hourly and daily fee rates included in the following tender documents and individual uplift requests: C.1 records 10, 22, 23, 28, 31, 34, and 36. I otherwise annul its decision to refuse access to the records at issue and direct that the records be released subject to the redaction of the hourly and daily fee rates found to be exempt.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated by the applicant not later than eight weeks after notice of the decision was given, and by any other party not later than four weeks after notice of the decision was given.

 

Elizabeth Dolan
Senior Investigator