Trade secrets and other confidential information pose delicate problems in public procurement procedures geared towards undistorted competition, equal treatment, non-discrimination and transparency.
The European Community (European Union) Procurement Directive 2004/18/EC acknowledges the confidentiality of tenders, initially and possibly later.
Confidentiality, trade secrets, transparency, secrecy, disclosure and data security are some of the subjects briefly evoked in this blog post on obligations of contracting authorities.
Under Title II Rules on public contracts, Chapter I General provisions, Article 6 of the Procurement Directive 2004/18/EC places on the contracting authority an obligation to respect the confidentiality of information from economic operators:
Without prejudice to the provisions of this Directive, in particular those concerning the obligations relating to the advertising of awarded contracts and to the information to candidates and tenderers set out in Articles 35(4) and 41, and in accordance with the national law to which the contracting authority is subject, the contracting authority shall not disclose information forwarded to it by economic operators which they have designated as confidential; such information includes, in particular, technical or trade secrets and the confidential aspects of tenders.
Transparency and secrecy
One of the principal aims of the Procurement Directive 2004/18/EC (or Classic Directive) is to ensure open, transparent and non-discriminatory award procedures, including reporting requirements and remedies. More generally, there is a body of law pertaining to freedom of information concerning public bodies.
On the other hand, tenders before they are opened and trade secrets beyond that oblige contracting authorities to respect the confidentiality of information communicated by tenderers.
Article 6 of the Procurement Directive tenderers have to designate information they regard as confidential. This does not mean a ‘carte blanche’ to withhold any information, since this would infringe upon the transparency of the award and the remedies available to unsuccessful competitors.
After indicating these conflicting interests and the respect for confidentiality, the Procurement Directive refers the detailed solutions to be sought in accordance with the national law to which the contracting authority is subject.
While the relevant national law has to be studied in each case, the problems encountered have many similarities across jurisdictions.
One example of a discussion of transparency versus secrecy is presented in Appendix III of the Irish guide Notifying Tenderers and Disclosure of Information, where the Information Commissioner’s views are summarised:
Summary of the Information Commissioner views regarding disclosure of records
relating to a tender competition given at conclusion of a ruling under Section 34(2)m of
the Freedom of Information Act 1997 in Case 98188.
· First, public bodies are obliged to treat all tenders as confidential at least until the time that the contract is awarded.
· Second, tender prices may be trade secrets during the currency of a tender competition, but only in exceptional circumstances, would historic prices remain trade secrets, As a general proposition, however, I accept that tender documents which “would reveal detailed information about a company's current pricing strategy” or about otherwise unavailable product information could fall within the scope of Section 27(I)(a) of the FOI Act even following the conclusion of a tender competition.
· Third, tender prices generally qualify as commercially sensitive information for the purposes of Sections 27(I)(b) and (c) of the FOI Act, Depending on the circumstances, product information can also be considered commercially sensitive under Section 27(I)(b).
· Fourth, when a contract is awarded, successful tender information loses confidentiality with respect to price and the type and quantity of the goods supplied. The public interest also favours the release of such information, but exceptions may arise (see Telecom Eireann and Mr. Mark Henry, Case Number 98114, to be published (13 Jan 2000).
· Fifth, other successful tender information which is commercially sensitive (for example, details of the internal organisation of a tenderer's business, analysis of the requirements of the public body, or detailed explanations as to how the tenderer proposed to meet these requirements) may remain confidential. Disclosure in the public interest ordinarily would not be required, unless it were necessary to explain the nature of goods or services purchased by the public body.
· Sixth, unsuccessful tender information which is commercially sensitive generally remains confidential after the award of a contract, and the public interest lies in protecting that information from disclosure.
I must stress, however, that no tender-related records are subject to either release or exemption as a class. Therefore each record must be examined on its own merits in light of the relevant circumstances.
Notifying Tenderers and Disclosure of Information is available at the Irish Government’s eTenders Public Procurement web site:
OECD: Integrity in public procurement
The OECD Council has adopted a Recommendation on enhancing integrity in public procurement
[C(2008)105], which evokes some of the challenges related to public procurement. It serves as a reminder of why openness is the norm and secrecy has to be interpreted restrictively.
The October 2008 OECD Recommendation is available at:
The third subparagraph of Article 29(3) of the Procurement Directive 2004/18/EC on the competitive dialogue reminds contracting authorities of the obligation to confidentiality in the context of a procedure where particularly complex contracts are discussed:
Article 29(3) third subparagraph
Contracting authorities may not reveal to the other participants solutions proposed or other confidential information communicated by a candidate participating in the dialogue without his/her agreement.
UK OGC/HMT guidance
The competitive dialogue is more prone to confidentiality problems than other award procedures. Again we look at an example of national guidance on problems common in nature.
Competitive Dialogue in 2008 – OGC/HMT joint guidance on using the procedure contains a section Equal Treatment and Commercially Confidential Information with advice to bidders and contracting authorities to agree on which parts of the solutions should be treated as confidential (page 19):
One obligation of contracting authorities is secure handling of confidential information (as seen in various provisions of the Procurement Directive). For a discussion of these topics in public (ICT) procurement, you can read the UK OGC Procurement Policy Note: Data Handling Review (Information Note 13/08 – 26 November 2008), especially Annex 2 Information Assurance in Procurement. The Information Note is available here:
As always, I would appreciate your comments with views or experiences.