Whether Kilkenny County Council was justified in refusing to release further information to the applicant relating to records associated with the Kilkenny Central Access Scheme (KCAS) bridge on the basis of section 36 of the FOI Act

18/09/2018

Background

By way of background it is noted that the construction of the Kilkenny Central Access Scheme (KCAS) bridge followed a competitive tender process undertaken by the Council in early 2014. According to the Council, of the eight contractors that submitted tenders following a shortlisting process, two submitted variant tenders in accordance with the terms of the tender process and the successful tender was determined as being the variant tender submitted by a named third party (the main contractor). The Council described a variant tender as one where a contractor under the public works contract has an option to submit an alternative design for all or any element of the works for approval/rejection by the employer on the basis that there is a saving to both parties.

The KCAS bridge was formally opened in May 2017. On 18 May 2017, the applicant sought copies of all structural reports on the bridge, to include geotechnical and geological reports and load testing reports, and all correspondence relating to those reports.

On 22 June the Council refused the request under section 36 of the FOI Act which serves to protect commercially sensitive information. The applicant sought an internal review of that decision on 26 June following which the internal reviewer varied the original decision. While she affirmed the original decision to refuse to grant access to records associated with the alternative design proposed by the contractor, she granted access to five records containing information on geotechnical matters which had been made available to tenderers for the project. On 21 July the applicant sought a review by this Office of the Council's decision.

During the course of the review, the Council indicated that it had refused access to 25 records it had identified as falling within the scope of the applicant's request. It argued that all records were exempt as they contained commercially sensitive information. As part of the review by this Office, Ms Connery, Investigator, wrote to the main contractor and three sub-contractors to invite submissions on the release of records she deemed to affect their interests.

Having regard to the submissions of the various parties, I have decided to bring this review to a close by way of a formal binding decision. In conducting this review I have had regard to the correspondence between the applicant and the Council, and to the correspondence between this Office and the various parties. I have also had regard to the contents of the records at issue. In referring to the record at issue, I have adopted the numbering system used by the Council in the schedule of records it provided to this Office with its submission of 26 October 2017.

Scope of Review

This review is solely concerned with whether the Council was justified in refusing to grant access to 25 records relating to the KCAS bridge under section 36(1) of the FOI Act.

Preliminary Matters

Before considering the exemption claimed, I wish to make the following points. Firstly, the applicant received only a very limited schedule of records in the internal review decision. The refused records were not listed nor was the applicant given any detail as to the number of records to which access had been refused. The Central Policy Unit of the Department of Public Expenditure and Reform (see www.foi.gov.ie) has published a Code of Practice on FOI for public bodies. The Code states that a schedule should be attached providing details of those records being released in full, of those to which partial access is being given and of those being refused and setting out the reasons why access is not been granted in full or in part and referencing relevant sections of the Act where refusals are made. I expect that the Council is aware of the Code and I would urge it to remind its decision makers of the need to comply with the guidance therein.

Secondly, it is important to note under section 22(12)(b) of the FOI Act, a decision to refuse to grant a request shall be presumed not to have been justified unless the head of the body shows to the satisfaction of the Commissioner that the decision was justified. This means that in this case, the onus is on the Council to satisfy this Office that its decision to refuse to grant access to the records at issue was justified.

Analysis and Findings

In its submissions to this Office, the Council stated that it initially relied upon section 36(1)(b) to refuse access to the records at issue but that following receipt of a letter of 21 August 2017 from the main contractor, a copy of which was made available to this Office for the purposes of the review, it considered that section 36(1)(c) was also of relevance.

Section 36(1)(b) provides for the refusal of a request if the record sought 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)(c) provides for the refusal of a request if the record sought contains information whose disclosure could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates.

Section 36(2) provides that records to which section 36(1) applies may be released in certain circumstances, including where the party to which the information relates consents to the release of the details concerned (section 36(2)(a) refers). In addition 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).
I note that the records at issue are primarily technical in nature and comprise plans, drawings, reports and other documents prepared in relation to the overall KCAS project. It is important to note that the main contractor engaged a number of sub-contractors on the project and a large number of the records comprise drawings and reports prepared by these sub-contractors. 

In its submissions to this Office, the Council argued that subsection (1)(b) applied to the records on the ground that they contain information on pricing methodologies, technical issues, design and risk mitigation. It stated that the "information contained in the specialist design [i.e. piling contract] was submitted as part of the variant tender" and it argued that release of this alternative design to third parties would be an advantage to competitors of the main contractor and a disadvantage to the main contractor in future contracts. The Council also referred to certain paragraphs of the letter of 21 August 2017 it received from the main contractor. In essence, those paragraphs contains assertions by the main contractor that the information in the records is confidential, commercially sensitive information.

The Council also argued that subsection (1)(c) applied as the release of the relevant documents would prejudice contractual or other negotiations between the main contractor and future public sector employers as it would inhibit the amount of information which the main contractor would be willing to provide to these public sector employers and therefore lead to less efficient contracts for public sector projects. This position was supported by the letter of 21 August 2017 from the main contractor.
Ms Connery invited the main contractor to make a submission on the release of all 25 records. Sub-contractor A was invited to make a submission in respect of records 13 to 22, 24, and 25. Sub-contractor B was invited to make a submission in respect of records 1 to 5, while sub-contractor C was invited to make a submission in respect of records 6, 7 and 23.

Sub-contractor A stated that there was no commercially sensitive information in records 13 to 22, 24, and 25. Sub-contractor B did not make a submission. Sub-contractor C stated that it had no objection to the release of records 6, 7 and 23 but asked that no commercially sensitive information be released. However it identified no such information in the records.

The main contractor stated that it had no objection to the release of 18 of the records (Records 5, 6, 8 to 11, 13 to 22, 24, and 25). As none of the third parties have expressed any concerns as to the release of those records, I find that the Council was not justified in refusing access to them under sections 36(1)(b) or 36(1)(c).

With regard to the remainder of the records (Records 1 to 4, 7, 12 and 23), the main contractor argued that the records contain information from which it would be possible to establish its understanding of, and approach to, the construction of the bridge and to the tendering for the KCAS and similar projects. It argued that its understanding and approach was based on the unique experience and understanding gleaned over the years and which led to the creation of an innovative design and work method utilised in the project.

The main contractor stated that when tendering for "Employer Design Contracts" such as the KCAS project, the furnishing of a variant design is risky as there is no onus on the employer to adopt the variant design. It stated that in approaching the KCAS project, it adopted an approach based on its business practices and understanding of the particular project and in conjunction with its specialists, created a variant design which included a different and innovative method for the construction of the bridge which resulted, among other things, in substantial savings to the Council. It argued that the release of records 1 to 4, 7, 12, and 23 would result in it incurring material loss in the commercial advantage enjoyed by virtue of its particular knowledge and approach.

Records 1 to 4 were created by the consultant engineers employed by Kilkenny County Council to design and supervise the construction (Sub-contractor B). However the main contractor stated that these records contain references to its variant design. Records 7 and 12 were created by one of the sub-contractors on the project (Sub-contractor C). With regard to these two records the main contractor stated that these reports were prepared following detailed consultation with them and incorporating elements of the variant design. In submissions to this Office the main contractor has stated that while release of the constituent elements of these reports may not of themselves give rise to a material financial loss, their release in concert against the background of the overall approach would undoubtedly disclose the type and form of innovation it adopted. 

There are, in essence, two separate harm tests contained in section 36(1)(b). The first is where disclosure of the record could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates. The second is where disclosure 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,
The standard of proof necessary to meet this second harm test (i.e. "could prejudice") is considerably lower than the standard required to meet the test of "could reasonably be expected to" in the first part of section 36(1)(b). Having regard to this standard and to the main contractor's submissions, I accept that section 36(1)(b) applies to records 1-4, 7, 12 and 23. 

The Public Interest

The public interest balancing test in section 36(3) expressly acknowledges the potential for harm arising from the release of a record. Therefore, the fact that release of the record might give rise to one or more of the harms identified in section 36(1) does not, of itself, provide a sufficient basis for concluding that the public interest would be better served by refusing the request. The public interest test involves a balancing exercise between the public interest served by granting the request and the public interest served by refusing it. The FOI body must consider or assess the competing interests that must be weighed in that balancing exercise and explain the basis on which it has decided where the balance of the public interest lies.

On the matter of public interest factors favouring release, it is important to note the long title to the Act which provides for a right of access "to the greatest extent possible consistent with the public interest". There is a strong public interest in the enhancement of openness, transparency and accountability in FOI bodies. These principles are recognised by section 11(3) of the Act which provides that an FOI body, in performing any function under the Act, shall have regard to -”
(a) the need to achieve greater openness in the activities of FOI bodies and to promote adherence by them to the principle of transparency in government and public affairs,
(b) the need to strengthen the accountability and improve the quality of decision-making of FOI bodies, and
(c) the need to inform scrutiny, discussion, comment and review by the public of the activities of FOI bodies and facilitate more effective participation by the public in consultations relating to the role, responsibilities and performance of FOI bodies.
The applicant argued that the release of the records at issue would provide further information around the geophysical and structural design of the KCAS project which would greater inform understanding around the financial outrun of the project.

In its submission to this Office the Council stated that it relied on section 36(1) to avoid competitively disadvantaging the main contractor on the project, as well as the sub-contractors that had been engaged. Secondly, the Council argued that it would not be in the public interest, and would undermine the integrity of the tender process, if commercially sensitive information in relation to companies tendering for work from public bodies were to be released. I also note the reference in the Council's submission to the fact that access to the relevant records had been refused partly on the basis that 'they contain information on pricing methodologies'. 

Having reviewing the records it does not appear to me that any of the scheduled documents contain any information on the pricing structures of either the main contractor or any sub-contractor. Therefore at the outset I would like to say that I do not consider this a reasonable expectation in the current case. 
This Office considers that there is a significant public interest in openness, transparency and accountability in public bodies, particularly where the use of public funds is concerned. The release of information relating to the expenditure of public funds by FOI bodies acts as a significant aid in ensuring the effective oversight of public expenditure and bringing transparency to the principle of ensuring value for money.  In this case the amount of expenditure involved on the KCAS bridge project is significant. Therefore, the public interest in release is particularly strong in this case.

However, I must weigh this against the effect that release of these records could have on the commercial interests of the third parties. In particular there is a legitimate public interest in commercial entities being able to conduct commercial transactions with public bodies without fear of suffering commercially as a result. In its submission the main contractor argued that release of the records at issue would substantially benefit any competitor contractor seeking to determine its particular working methods and therefore release of these records would not be in the public interest. The main contractor has also submitted that if the type of information contained in records 1-4, 7, 12 and 23 were to be released it would inevitably lead to private companies reserving the use of their innovative approaches to projects within the private sector only, for fear that such innovation would become public knowledge. It is also noteworthy that the use of the main contractor's innovative approach in this case resulted in savings to the Council.

Having carefully considered the matter, I do not believe that the disclosure of the records at issue would serve to allow for such a level of oversight of public expenditure that the public interest would be better served by release, to the detriment of the commercial position of the main contractor. I accept that the release of the records would be of benefit to competitors, given the level of detail involved, and such that release could unduly prejudice the commercial position of the main contractor. 
I find, therefore, that the public interest would, on balance, be better served by refusing access to record 1-4, 7, 12 and 23 and that the Council was justified in refusing access to these records under section 36(1)(b) of the FOI Act. Having found these records to be exempt under section 36(1)(b), I do not need to consider if they are also exempt under section 36(1)(c).

Decision

Having carried out a review under section 22(2) of the Freedom of Information Act 2014, I hereby vary Kilkenny County Council's decision as follows:
(i)    with regard to records 5-6, 8-11, 13-22, 24-25, I annul the decision of the Council and direct that these records be released;
(ii)   with regard to records 1-4, 7, 12 and 23, I affirm the decision of the Council to refuse access under section 36(1)(b).

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.

Stephen Rafferty
Senior Investigator