This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its May 2018 decision in Michael Seon (MRS Consulting) v. Regina Roman Catholic School Division No. 81, the Court of Queen’s Bench of Saskatchewan upheld the Regina Roman Catholic School Division No. 81 board of education’s refusal to disclose bid evaluation records under a public access request due to concerns over confidential bidder information. The case dealt with a tendering process for the award of a contract for the provision of computer hardware. One of the losing bidders brought a public access request for the evaluation records, which included the calculation of bidder unit prices and proposed delivery times. The School Division refused to disclose this information. The losing bidder brought a legal challenge to compel the disclosure of its competitor’s information under The Local Authority Freedom of Information and Protection of Privacy Act (LAFOIPPA) that applies to local authorities in Saskatchewan.
The Court concluded that the information in question was protected from disclosure under the relevant provisions of that statute:
The respondent argues that s. 18(1)(b) and (c) of the LAFOIPPA prohibit the applicant from accessing the Record. These provisions respecting the disclosure of third party information provide:
18(1) Subject to Part V and this section, a head shall refuse to give access to a record that contains:
…
(b) financial, commercial, scientific, technical or labour relations information that is supplied in confidence, implicitly or explicitly, to the local authority by a third party;
(c) information, the disclosure of which could reasonably be expected to:
(i) result in financial loss or gain to;
(ii) prejudice the competitive position of; or
(iii) interfere with the contractual or other negotiations of;
a third party; …
In order for s. 18(1)(b) to apply, the information in the Record must be:
(i) financial, commercial, scientific, technical or labour relations information;
(ii) supplied to the local authority by a third party; and
(iii) supplied in confidence, implicitly or explicitly.
I find that all three of the criteria of s. 18(1)(b) are met so as to prohibit the Record from being disclosed to the applicant.
First, unit pricing and unit delivery dates contained in vendors’ bids clearly constitute commercial information. In Canadian Bank Note Limited v Saskatchewan Government Insurance, 2016 SKQB 362, at para 36, [CBN], this Court held that unit prices in a tendering process are commercial information.
Second, the commercial information in question was disclosed by the third party vendors to the respondent, a local authority, as part of the tendering process. The point score given to each vendor was created using the unit pricing and delivery information. As a result, the point scores also constitute information disclosed by third parties to a local authority.
The third and key question is whether the unit pricing and delivery information supplied by third party vendors to the respondent was supplied in confidence, either implicitly or explicitly. The Tender, considered as a whole, suggests that information supplied by the vendors would be supplied and kept in confidence.
The Court also concluded that the disclosure of the commercial information could prejudice the future competitive position of the other bidders, noting that the losing bidder that filed the access request admitted that it wanted this information to assist in its future business planning:
The respondent’s evidence respecting risk of harm is simple. The respondent says that the differentiating features between the successful vendors and the unsuccessful vendors for the Tender were unit prices and delivery dates. Unit price made up 75% of the successful vendors’ point scores. Thus this scoring recognizes the competitive advantage vendors derive from their unit prices and their ability to deliver in the time required, determining what vendor is chosen for the Tender. It follows that releasing the only information that differentiates the third party vendors deprives them of their competitive advantage.
There is also evidence that one vendor, Powerhouse, refused to consent to release its unit price and delivery information because it considered that information to be a trade secret, having been developed through a proprietary formula, the disclosure of which would threaten its competitive advantage. Powerhouse noted that its pricing provided a “large portion” of its “competitive advantages to other resellers and competitors in the Canadian Marketplace.”
While the respondent did not provide any concrete examples of potential prejudice, in Calian, the Federal Court of Appeal found that it is not necessary to provide specific evidence about competitors or the ability of these competitors to compete for comparable future contracts in order to establish probable economic harm (at paras. 45 and 46). The likelihood of harm can often be inferred from rather basic facts about the competitive context. The disclosure of unit price information, in particular, is associated with some obvious potential harms. In Merck, at para 219, the Supreme Court stated that “disclosure of information, not already public, that is shown to give competitors … a competitive advantage in future transactions may, in principle, meet the requirements of s. 20(1)(c) [of the Access to Information Act]”. The court also stated that the evidence must convince the reviewing court that there is a direct link between the disclosure and the apprehended harm and that the harm could reasonably be expected to follow from the disclosure.
The fact that the Record contains specific unit pricing and delivery information from vendors who are competitors supports an obvious conclusion that disclosing such information can reasonably be expected to prejudice the competitive position of the vendors in future tenders for similar goods and services. Such disclosure gives a vendor knowledge of its competitor’s formula to bid – in this case, specific unit prices and delivery times. Access to that information can be used to undercut the competitive bidding of the third party in future transactions. Indeed, the applicant represented in chambers that, if disclosed, he intended to use the information contained in the Record as a form of “intelligence gathering” for his future business purposes.
Given that the Record contains sensitive and competitive commercial information, the evidence presented gives rise to a reasonable expectation of prejudice to the third party vendors’ competitive positions, which could result in future financial loss or gain as a result of the disclosure. There is a close interrelationship between any prejudice to the competitive position of a third party and a resultant financial loss to that third party or gain to its competitor (see CBN at para 50).
The Court therefore rejected the losing bidder’s attempt to obtain the disclosure of competing bidder information.
As this case illustrates, while public institutions are often subject to public access requests for their procurement records, they must balance their public disclosure duties against the duty to protect confidential bidder information. In appropriate instances, this results in withholding information from public access requests due to confidentiality considerations.
