foi freedom of information act written on a page

The terms of an RFP included the bidder’s consent to disclosure of all of its standing offer unit prices or rates. The owner then received a Freedom of Information request for relevant information related to the successful bidder. That bidder refused its consent to disclosure under third party exceptions in Freedom of Information legislation, notwithstanding the clear consent clause in the RFP. What were the owner’s obligations?

Test your understanding of the convergence of Freedom of Information legislation and contract law with a recent decision of the Federal Court of Appeal that considered these questions.

RFP and Consent to Disclosure

In 2009, PWGSC issued an RFP for the provision of research assistance to the Royal Military College of Canada. The RFP required that bidders include detailed personnel rates for approximately 100 categories of personnel, with annual adjustments over the five year contract period.

The RFP’s General Conditions included the following:

“The Offeror agrees to the disclosure of its standing offer unit prices or rates by Canada, and further agrees that it will have no right to claim against Canada, the Identified User, their employees, agents or servants, or any of them, in relation to such disclosure.”

Calian was awarded the contract for a five year period, commencing in January, 2010.

Freedom of Information Request

In 2013, after receiving a request for all contracts, correspondence etc. related to the successful bidder, PWGSC notified Calian and asked it to make representations as to why the information should not be disclosed. The federal Access to Information Act mandated this process due to the exceptions to disclosure related to third party information. The relevant excerpts of the Access to Information Act are:

20 (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains…

(b) financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party…

(c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party; or

(d) information the disclosure of which could reasonably be expected to interfere with contractual or other negotiations of a third party…

(5) The head of a government institution may disclose any record that contains information described in subsection (1) with the consent of the third party to whom the information relates.

Similar provisions are found in most provincial Freedom of Information legislation across the country.

Calian argued that disclosure would cause it a significant risk of harm as “it had to rely on its extensive and proprietary skills in managing personnel services to develop competitive pricing”, and would cause it “substantial and important material financial loss”. Calian introduced evidence in support – that Calian developed its rates through confidential negotiations with suppliers and its specialized expertise in overhead and profit. If other Calian customers knew of the rates, they would seek to pay less, and Calian’s specialized consultants would demand higher rates of remuneration.

Also, Calian had been the successful bidder in previous RFPs for the same services, and expected that another bidding cycle would again be launched; competing bidders would have a competitive advantage over Calian with this information.

PWGSC rejected Calian’s arguments, stating that “as the disclosure of information clause has already been incorporated in the Standing Offer, the unit prices and rates cannot be considered to be confidential third party information that would prejudice your competitive position and we must therefore release them.”

Calian then sought judicial review of PWGSC’s decision to release the personnel rates.

What do you think? Does the consent to disclosure clause in the RFP effectively bar Calian from invoking the third party exceptions under federal legislation?

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Answer

The Federal Court of Appeal concluded, in Attorney General of Canada and Calian Ltd and Information Commissioner of Canada, 2017 FCA 135, that the disputed information would be exempt, as Calian met its onus of proving that disclosure would prejudice Calian’s competitive position, and would interfere with Calian’s contractual negotiations (sections 20(1)(c) and (d)).

The effect of the consent to disclosure clause was that Calian had agreed to disclose this information that was otherwise exempt under the legislation. However, the Court ruled that section 20(5) of the Act gave PWGSC the discretion to withhold the information, despite Calian’s consent.

As PWGSC failed to turn its mind to its discretion under section 20(5), and consider whether there were circumstances that militated against disclosure despite prior consent, its process was flawed. The Court therefore referred the matter back to PWGSC for reconsideration.

To note as well – the Court rejected Calian’s position that its subjective interpretation, and the parties’ previous treatment of the consent to disclosure clause, were relevant.

What Does This Decision Add to Procurement Law?

When considering a Freedom of Information request related to a procurement, owners must consider the nature of third party information sought, and the position of third parties regarding the effect of disclosure of that information. The inclusion of consent to disclosure in procurement documents does not mean automatic disclosure.

The owner must consider the third party’s position and may refuse to release the information in certain circumstances. Facts will be crucial, as they were in Calian’s circumstances.

As the Court stated:

“By making such a provision discretionary in nature, Parliament unequivocally considered that there would be circumstances where notwithstanding consent to disclosure, the head of the government institution may still decide to not disclose the requested information”.

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Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.