Recent Privacy Orders Compel Disclosure of Sensitive Contractual Details


A number of recent orders of the Office of the Information and Privacy Commissioner for British Columbia (the “Commissioner’s Office”) have required public bodies to disclose the details of commercial contracts with service providers.

In three orders released on August 16, 2010, the Vancouver Coastal Health Authority (the “Health Authority”) was ordered to disclose contracts regarding laundry and linen services, patient and retail food services, and cleaning services. The Health Authority tried to prevent this by invoking section 21(1) of the Freedom of Information and Protection of Privacy Act (“FIPPA”), which requires the withholding of information if the disclosure would harm the business interests of a third party. To qualify under this exemption, the information must be commercial and supplied in confidence, the disclosure of which would harm significantly the competitive position or interfere significantly with the negotiating position of the third party.

Earlier in the summer, the Ministry of Health (the “Ministry”) was ordered to disclose previously withheld provisions of a complex services agreement between the Ministry and a private service provider. The Ministry invoked sections 17(1)(d) and (e) of FIPPA, which allow information to be withheld if disclosure could reasonably be expected to harm the financial or economic interests of the Province.

In both sets of decisions, the Commissioner’s Office ordered the disclosure of the contractual details.

The Vancouver Coastal Health Authority Orders

The relevant parts of section 21(1) of FIPPA are as follows:

Disclosure harmful to business interests of a third party

21(1) The head of a public body must refuse to disclose to an applicant information

(a) that would reveal …
(ii) commercial, financial, labour relations, scientific or technical information of or about a third party,
(b) that is supplied, implicitly or explicitly, in confidence, and
(c) the disclosure of which could reasonably be expected to
(i) harm significantly the competitive position or interfere significantly with the negotiating position of the third party, …
(iii) result in undue financial loss or gain to any person or organization, … .

The Health Authority orders were based on requests for disclosure of the following contractual details:

  • In the Compass Canada contract for cleaning services: financial amounts and timelines;
  • In the Sodexo Canada contract for patient and retail food services: quality standards and targets; fees for food services; goods and services covered by certain rates; capital repayments; and customer sales base;
  • In the K-Bro contract for laundry and linen services: service delivery options, performance management provisions, and base pricing.

In each order, the issue was whether the contractual information was “supplied” or “negotiated”. If contractual information is “supplied” by a service provider, disclosure is not required, provided all other parts of the exemption test are met. However, if contractual information is negotiated, it is not “supplied”, and disclosure is required.

The difference between information that is supplied and information that is negotiated turns on whether the information is something that might change during a negotiation. If information is not susceptible to change as a result of a negotiation, the information has been “supplied” and its disclosure is not required (so long as the rest of the test is fulfilled). Thus, for example, if the price of a service is based on the contractor’s fixed costs and the contractor discloses its fixed prices to the public body, the fixed costs would be deemed to be “supplied” to the public body. Likewise, if a private company discloses its last quarter’s financial statements to a public entity on a confidential basis, that information has been supplied because past financial statements are not going to change as a result of the negotiations.

On the other hand, if the information is susceptible to change during negotiations, the information is considered to be negotiated and disclosure will likely be required, unless another exemption can be found. Whether the information actually changes during the course of a negotiation is irrelevant. For example, if the price of a service is not based on fixed costs, but on a pricing model negotiated by the parties, the information is deemed not to be “supplied” and disclosure is required.

Of course, disclosure in either case may not be desired by a contractor because information about negotiated prices and delivery metrics is just as sensitive as information about fixed costs and financial statements. Nevertheless, while confidentiality provisions may be put in place to prevent dissemination of negotiated provisions in the absence of a request for disclosure under FIPPA, such protections cannot prevent disclosure of negotiated provisions to the public.

In each order, the Commissioner’s office found that the information in question was not “supplied” to the Health Authority and ordered the disclosure of the information.

The Ministry of Health Orders

Pursuant to a services agreement, Maximus BC Health Incorporated was to deliver services related to the BC Medical Services Plan pursuant to an Alternative Services Delivery (“ASD”) arrangement. Requests for disclosure by the BC Government and Service Employees’ Union resulted in two separate orders of the Commissioner’s Office, both decided on the same basis.

At issue in the first order were the portions of the services agreement pertaining to benchmarking, gain sharing, uninterrupted services, and service levels, as well as an asset conveyance agreement. At issue in the second decision were periodic reports regarding performance of the service provider with respect to service level requirements and details of the financial penalties the Ministry assessed when the service provider did not meet the required levels.

The Ministry argued, on the basis of sections 17(1)(d) and (e) of FIPPA, that disclosure of the records should be exempted on the basis that disclosure could reasonably be expected to harm the negotiating position of the Province in future negotiations for ASD arrangements and thus harm the financial interests of the Province. In particular, the Ministry cited four types of potential financial harm:

  1. additional procurement costs due to extended negotiations in future ASD negotiations;
  2. damage to the Province’s negotiating position in relation to future contract negotiations
  3. the use of unusual provisions in future contract negotiations due to parties potentially taking the position that the Province acquiesced on a point before and should be able to do so again; and
  4. harm to the government’s ability to do ASDs in future.

Regarding the first three potential harms, the Commissioner’s Office dismissed these concerns on the following grounds:

  • The fact that information disclosed and deals struck will become public is inherent in dealings with government. In any event, the provisions the Ministry sought to withhold were not qualitatively different from other, previously disclosed, provisions of the Maximus services agreement;
  • The Ministry did not offer up any evidence of circumstances where, in fact, prior knowledge of contract details made future negotiations more difficult or resulted in the public body getting “a worse deal”. This supported the contention that sophisticated parties dealing with the government have extensive experience and knowledge regarding the terms of engagement. This also supported the conclusion that when dealing with such sophisticated parties, it is not reasonable to expect that knowledge of previously agreed upon terms will make the negotiations more difficult or complex;
  • In a contracting environment where there are a limited number of sophisticated proponents, it is likely that at least one potential contractor will have prior experience with the public body and therefore have knowledge of what has been previously agreed to. This minimizes the potential harm from disclosure of prior contracts and, as more contracts are entered into, the potential for harm continues to decrease; and
  • Each contract is negotiated in its own environment and has unique factors that influence the terms. While information about prior dealings may be relevant, the Commissioner’s Office was convinced that ASD contracts are not qualitatively different than other government contracts that are publicly disclosed. In fact, the unique nature of each ASD means that the value of each agreement as a precedent is limited, which makes it less likely that it could be used to harm the public body’s financial interest.

Regarding the fourth point, the Commissioner’s Office concluded:

  1. The service provider’s evidence did not support the Ministry’s concern that disclosure would prevent future bids on government jobs. Instead, there is a good deal of competition for government jobs.
  2. The Ministry’s argument that proponents would be more guarded with information disclosed to the Ministry or would price in a “risk premium” was “speculative”.

As a result, the Ministry was ordered to disclose all of the requested records.

Thus, public bodies in British Columbia and persons entering into contracts with these public bodies must keep in mind that only a limited scope of information can be kept confidential if a request for access is made. Potential disclosure of the information under FIPPA must be considered.