Open Contracting: Exploring Open Government in Contracting and Procurement

  • March 16, 2018
  • Michael Rothe

The Ontario Bar Association’s Public Sector Lawyers Section in collaboration with the Privacy and Right to Access to Information Section hosted a panel discussion this winter on open contracting, which is a part of the open government initiative to increase transparency and accountability in the area of government contracting and procurement.  However, this openness must be balanced by the need of private businesses to protect competitive and sensitive information.

The panel was comprised of Frank DeVries, Senior Adjudicator and Manager of Adjudication with Ontario’s Office of the Information and Privacy Commissioner (IPC); Joanne Mitchell, counsel with the Regional Municipality of York; Elliot A. Smith, a Partner with Osler, Hoskin & Harcourt LLP; and John Wunderlich, President of John Wunderlich & Associates Inc.

The event began with a discussion of the general parameters of the open for government initiative, which is an “open by default” approach to information.  To illustrate the difference between “open by default” and the traditional “pull” approach to requests for information, the panel described open government as “a fire hose” of information compared to the “irrigation drip” of the traditional approach.

Of particular importance was the application of section 17 of the Freedom of Information and Protection of Privacy Act and section 10 of the Municipal Freedom of Information and Protection of Privacy Act.  Both Acts set out the same parameters by which third party information can be shared with the public. 

Comfortingly to business, sections 17 and 10 state that the government institution “shall refuse to disclose if the record reveals a trade secret or scientific, commercial, financial or labour relations information, supplied in confidence implicitly or explicitly” in certain circumstances where “the prospect of disclosure … gives rise to a reasonable expectation of harm”.  While this seems like a quick answer to the privacy concerns of any private business contracting with the government, according to Frank DeVries from the IPC, the  courts have generally ruled that “the provisions of a contract, in general, have been treated as mutually generated, rather than ‘supplied’, by the third party, even where the contract is precede by little or no negotiation or where the final agreement reflects information that originated from a single party.”  Moreover, while proposals, bids and RFPs, are treated differently and “have generally been found to be commercial information supplied to the institution in confidence”, the parties resisting disclosure must still “demonstrate a risk of harm that is well beyond the merely possible or speculative”.  The panel did not only address the legislative and common law context of the principles of open contracting, but also the public/private tensions therein. 

According to the IPC the benefits of open contracting are: improved public confidence and trust; increased accountability on spending; increased fairness and competition in contracting; and reduction in the number of access to information requests and appeals.  The IPC also recommends the routine publication of procurement records so that the parties know that information will be made public, allowing businesses to identify truly proprietary or personal information early in the process and put in a separate document.

From the private sector perspective, the scope of detail disclosed was questioned.  For example, does the public really need to see the pricing breakdown or is the bottom line sufficient, a practice followed by the TTC which utilises a public opening process.  Other downsides to open contracting include: a reluctance by some companies to bid; higher prices (discounts can be provided when business perceives value to having a contract with government, but may not want to share their discounted rates with private sector clients); less ingenuity in bids (exposure of a company’s “secret sauce” or their unique roadmap for the project may mean they lose that competitive advantage in future); and loss of information advantage. Finally, a low price is not always the best indicator of value for money.  Low bids are often followed by tail end costs and Project Change Reports (PCRs).  To avoid this a more complex or wholistic scoring matrix or evaluation process would be necessary, and even then, there may be concerns with trying to articulate complex reasons for the winning bid or with divulging the matrix or process which might result in future bid tailoring or gaming of the process itself.

The spirited debate of the pros and cons of open contracting were also later reflected in the many questions from the audience – both online and in the room.  Ultimately, everyone walked away with a better understanding of open contracting and with a handy guide on the subject, courtesy of the IPC.[1]

Michael is the President and CEO of the Canadian Finance & Leasing Association.  He previously held the position of Director of Legal Services with the Ontario Motor Vehicle Industry Council where he also held the position of Acting-Deputy Registrar.