MYTHBUSTING
CONFIDENTIALITY
IN PUBLIC CONTRACTING

Public contracts are a trillion-dollar global marketplace run on public money to deliver goods, works and services to citizens. Yet, information on what happens with that money is scarce and disconnected and access to it is restricted.
Transparency and openness around this spending can help improve the competitiveness, integrity and efficiency of the contracting process.
Concern about confidentiality of information in the contracts obscures vital details from the public, challenges better decision-making and monitoring of the procurement process and public spending.
We've talked to over 70 experts from more than 20 countries and found surprisingly little evidence that supports keeping contracting information secret.
This handy guide and report will help you with arguments and evidence to help reveal all the details on government dealings. And argument against a lazy default where contracting information is routinely classified as confidential.
It covers:
1
Our 5 principles to make information public
2
The facts about the 10 most common myths that keep information confidential in public contracting
3
What information to publish when
We hope that these evidence-based arguments will help you counter government and corporate inertia and vested interests.
Good luck!
Read the full report:
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1

Our 5 principles to make information public

1/
Disclose with minimal redaction
2/
Only redact legitimate sensitive information
3/
Provide justification for redactions
4/
State when sensitive information is disclosed
5/
Disclosure over time
2

The facts about the 10 most common myths that keep information confidential in public contracting

BUSTED
You don’t need an explicit reference to procurement information in FOI acts to proactively disclose it; you don’t even need an FOI act.
• Disclosure of contracting information can be based on other legislation than FOI
• Most FOI acts require public authorities to proactively disclose information, which may include contracting information
• Contracting authorities may decide to disclose contracting information even if legislation (FOI or other) lacks detailed requirements for proactive disclosure
• Legislation pertaining to public information disclosure often also applies to private companies contracted by the government
MYTH #1
Proactive disclosure of contracting information is not possible without a Freedom of Information (FOI) act
BUSTED
Confidentiality clauses do not prohibit the disclosure of contracting documents.
• Confidentiality clauses can only protect information that is legitimately sensitive
• It’s unlikely that all elements of a contracting document are legitimately sensitive
• Governments must disclose contracting information if required by legislation such as FOI or stock market disclosure requirements, even if the contract contains a confidentiality clause aimed at ‘protecting’ the information
• Confidentiality clauses can be overridden where parties agree to disclosure
MYTH #2
Confidentiality clauses prohibit the disclosure of contracting documents
BUSTED
Contracting documents containing commercially sensitive information can be disclosed.
• If information is legitimately sensitive, a clear case should be made as to how and why disclosure would cause harm; any redactions should be minimal
• Most commercially sensitive information is not legitimately sensitive forever
• Commercial information cannot be legitimately sensitive if it’s already known to competitors
• In some jurisdictions, even commercially sensitive information may be disclosed based on a public interest test
• The ‘commercially sensitive information’ argument is over-used. Some countries publish their contracts by default without apparent harm
MYTH #3
There is commercially sensitive information in contracting documents, so they can’t be disclosed
BUSTED
Defense contracting documents can be published without compromising national security.
• The national security argument is often applied to information that cannot legitimately be expected to undermine national security
• Only information that, if disclosed, would be likely to harm national security may be exempt from publication
• Non-sensitive parts of the contracting documents should be disclosed; redactions should be minimal and explained
• Classified defense contracting information cannot be withheld forever
• In some jurisdictions, even potentially harmful national security information may be disclosed based on a public interest test
MYTH #4
There is national security information in contracting documents, so they can’t be disclosed
BUSTED
Contracting documents that contain personal data can be disclosed.
• Disclosing some personal data is important for transparency in the procurement process and to prevent fraud
• Certain personal data can be disclosed without endangering people’s privacy and safety
• Anonymizing or aggregating certain personal data to make it non-identifiable can minimize harm
• Non-sensitive information can be disclosed unredacted; redactions should be minimal
• Privacy should operate in an inverse relationship to power
• It should be clear what personal data is collected, and how it is used, shared and secured
MYTH #5
There is personal data in contracting documents, so they can’t be disclosed
BUSTED
Disclosing contracting information does not encourage nor sustain collusion.
• Companies know who their competitors are; they do not depend on publicly disclosed contracting information for that knowledge
• The winning bidder’s name, which is usually disclosed anyway, is enough for cartel members to begin to check whether a cartel agreement was honored
• Disclosed contracting information has been used to detect collusion and to bust cartels
• Research shows that disclosing contracting information decreases cartel duration
• A supplier’s best strategy to win a contract is to tender at their best price, regardless of the estimated contract value
MYTH #6
Disclosing contracting information encourages and sustains collusion
BUSTED
Disclosing contracting information does not decrease competition.
• Default publication of contracting information and contracts in some countries, or its widespread availability via FOIs in others, has not deterred companies from bidding for government contracts
• Evidence shows disclosing contracting information leads to an increase in the average number of bidders per tender and/or a reduction in single bid contracts
• Publishing contracting information leads to a decrease in bid prices, not an increase
MYTH #7
Disclosing contracting information decreases competition
BUSTED
Reactive disclosure is more expensive than systematic, proactive disclosure.
• With the right infrastructure, managing records and disclosing information can be an automated, low-cost process
• Disclosing contracting information leads to substantial public savings and other benefits
• Government spending on resources to engage with the public is an investment, not a pure cost
• Bidders can factor the costs of redacting and uploading information into their bids
Disclosing contracting information does not lead to more appeals.
• The frequency of appeals does not depend on the disclosure level of contracting information
• E-procurement systems can make appealing and resolving award decisions easier and faster
MYTH #8
Disclosing contracting information costs too much money and leads to costly appeals and renegotiations
BUSTED
Disclosing contracting information can expose and reduce corruption.
• There is strong empirical and academic evidence that the chances of exposing and lowering corruption are highest when contracting information on all stages of the procurement process is disclosed
MYTH #9
Disclosing contracting information does not expose or lower corruption
BUSTED
There is abundant evidence of public engagement with contracting information; it increases as data improves.
• Plenty of stakeholders, including the public, media, civil society, companies and other parts of government already regularly access contracting information
• Education on government projects and easily accessible data increase stakeholder involvement and data use in public contracting as well as contribute to public trust
Government can easily mitigate the risk of misunderstandings by explaining information and its context better; potential criticism is no reason to keep information confidential.
• Contracting information should not be kept confidential simply because it could be misunderstood or lead to embarrassment and criticism
• To reduce misunderstandings and add context, governments should explain the information, and educate civil society, the media and citizens
MYTH #10
No one actually reads contracting information; if they do, they either misunderstand it or use it to embarrass officials
3

What information to publish when

Do you know what to publish and when? We've examined together 34 of the most common data in public contracting.

Play our game to see what information can be sensitive and what should be open.
Sensitive or not?

  • Numerical figures concerning negotiated terms

    Not sensitiveSensitive

    sensitive!

    These may include escalation rates, underperformance rates, insurance and indemnification amounts, etc. The key is that the rates need to have been negotiated. Disclosing such rates can give away sensitive information about the risk both the government authority and the contractor are willing to take, and it can prejudice future negotiations of both parties.

    False!
    Correct

  • DETAILS OF FINANCIAL MODELS

    Not sensitiveSensitive

    sensitive!

    This is mainly relevant to large infrastructure projects and PPPs. Such financial models are required for the purpose of evaluation and due diligence, and typically include sophisticated pricing breakdowns, giving insight into the way in which revenue is generated and how the project is financed. The actual model (or parts of it), including formulas and inputs, is typically considered commercially sensitive.

    False!
    True

  • OUTCOMES OF FINANCIAL MODELS

    Not sensitiveSensitive

    Not sensitive!

    The results or outcomes of financial models should be disclosed so that the public knows how much the government is paying and how much it will receive in relation to a project.

    False!
    True

  • OUTCOMES OF NON-NEGOTIATED INDEMNIFICATION AMOUNTS

    Not sensitiveSensitive

    Not sensitive!

    In some projects indemnification amounts are standardized terms based on the size of the project. Typically, pre-qualification or evaluation criteria include a pass/fail at required minimum levels of indemnification amounts.

    False!
    True

  • INDEMNIFICATION CONTRACT CLAUSES

    Not sensitiveSensitive

    Not sensitive!

    Indemnification clauses in the contract are not commercially sensitive.

    False!
    True

  • RECORDS OF NEGOTIATIONS

    Not sensitiveSensitive

    sensitive!

    Records of contract negotiations between the contracting authority and the contractor are typically commercially sensitive

    False!
    True

  • RECORDS OF NEGOTIATIONS WITH THIRD PARTIES

    Not sensitiveSensitive

    sensitive!

    Records of negotiations between the contractor and third parties (such as subcontractors) are typically commercially sensitive.

    False!
    True

  • NON-NEGOTIATED INSURANCE TYPES AND THRESHOLDS

    Not sensitiveSensitive

    Not sensitive!

    In some projects required insurance amounts are standardized terms based on the size of the project. Typically, pre-qualification or evaluation criteria include a pass/fail at required types and minimum levels of insurance.

    Correct
    False!

  • DETAILED COSTING/ PRICING STRUCTURE

    Not sensitiveSensitive

    sensitive!

    This does not refer to the market price (which is typically public knowledge and therefore not commercially sensitive), but it refers to a breakdown of what it costs for the contractor to make a product or supply a service. It includes profit margins, detailed line-item pricing, and overhead rates.

    False!
    True

  • PROFIT MARGINS

    Not sensitiveSensitive

    sensitive!

    Profit margins is one of the elements of a cost breakdown of the product or service. Where a service or product price is made up of a combination of different elements, then the individual elements are typically commercially sensitive information

    False!
    True

  • OVERHEAD RATES

    Not sensitiveSensitive

    sensitive!

    Overhead rates are one element of a cost breakdown of the product or service. Where a service or product price is made up of a combination of different elements, then the individual elements are typically commercially sensitive information.

    False!
    True

  • PRICING IN THE SUPPLY CHAIN

    Not sensitiveSensitive

    sensitive!

    Information on how much a contractor pays to obtain the goods or services they sell, or how they decide what price(s) to bid is typically considered commercially sensitive information.

    False!
    True

  • INFORMATION ABOUT ONGOING LITIGATION THAT IS NOT IN THE PUBLIC DOMAIN

    Not sensitiveSensitive

    sensitive!

    Pre-qualification or evaluation criteria may require the bidder to indicate whether they are currently involved in court cases or litigation in relation to nonperformance or other contract-related issues. The bidder is required to provide details about the circumstances of such cases. Information concerning ongoing litigation not in the public domain is confidential and sensitive. Disclosing such details may prejudice ongoing investigations.

    False!
    True

  • PLANNED MERGERS AND/OR ACQUISITIONS THAT ARE NOT YET IN THE PUBLIC DOMAIN

    Not sensitiveSensitive

    sensitive!

    Bidders are sometimes required to indicate whether there are plans for mergers and acquisitions that might affect them, or a planned merger or acquisition might be an essential part of the solution the bidder is proposing for delivery of the project. In any case, plans for mergers and acquisitions that are not in the public domain are commercially sensitive information.

    False!
    True

  • Trade secrets

    Not sensitiveSensitive

    sensitive!

    Trade secrets are commercially sensitive information.

    False!
    True

  • BUSINESS AND INVESTMENT PLANS

    Not sensitiveSensitive

    sensitive!

    These plans typically detail how the contractor expects to generate a financial return from the project. Such details can be considered commercially sensitive information.

    False!
    True

  • Unit prices

    Not sensitiveSensitive

    Not sensitive!

    Where a contract is made up of a combination of different goods or services, the price of each of the goods or services is typically not considered commercially sensitive.

    True
    False!

  • TOTAL PRICE/COST OF CONTRACT

    Not sensitiveSensitive

    Not sensitive!

    The total price/cost of a contract is not commercially sensitive.

    True
    False!

  • METHODOLOGY AND APPROACH

    Not sensitiveSensitive

    Not sensitive!

    These may include a detailed description of product or service innovation or a detailed description as to how the company will meet tender requirements. In complex IT or infrastructure projects, for example, contracting authorities need to know in detail how the contractor is proposing to efficiently and cost-effectively deliver the project. This may include information about how certain software is used, how the company is going to apply lessons learned from past and similar projects, etc. Typically, some, but not all, of this information is commercially sensitive. For example, some information about the method or approach of delivery can be commercially sensitive information as it may compromise the contractor’s future tender negotiations, but not all of this information typically is. Some information about past projects is typically commercially sensitive information (depending on the project details), but not all.

    True
    False!

  • SUBCONTRACTING ARRANGEMENTS AND SUBCONTRACTOR NAMES

    Not sensitiveSensitive

    Not sensitive!

    Contractors are typically required to indicate which companies they are going to be subcontracting in order to deliver the project. This is important for the contracting authority to know, in particular where significant contract value rests with subcontractors. Contracting authorities may clarify subcontracting arrangements and supply chain management capabilities of the contractor to ensure the project will be delivered on time and within budget. Only in exceptional circumstances are subcontracting arrangements considered commercially sensitive information. Note that recent supply chain disclosure initiatives and legislation aimed at tackling modern slavery (in California, France and the UK, for example) have made subcontracting arrangements publicly available information. Some companies in the garment sector (including Nike, Timberland, and Puma) have voluntarily disclosed their supply chain, without any commercial harm, while previously these companies argued that their supply chain was commercially sensitive information. In Australia, under the Commonwealth Procurement Rules 2014, contractors are required to disclose the names of subcontractors.

    True
    False!

  • PAST COURT CASES IN THE PUBLIC DOMAIN

    Not sensitiveSensitive

    Not sensitive!

    Pre-qualification or evaluation criteria may require the bidder to indicate whether they have been in the past involved in court cases or litigation in relation to non-performance or other contract-related issues. The bidder is required to provide details about the circumstances and outcomes of such cases. Details of past court cases and litigation are public knowledge, and provide useful information to the government and the taxpayer. Therefore, past court cases that are in the public domain are not commercially sensitive information.

    True
    False!

  • ANY INFORMATION THAT IS IN THE PUBLIC DOMAIN

    Not sensitiveSensitive

    Not sensitive!

    Information in the public domain is never commercially sensitive information

    True
    False!

  • PERFORMANCE INFORMATION UNDER CURRENT CONTRACT

    Not sensitiveSensitive

    Not sensitive!

    Performance information is not commercially sensitive information.

    True
    False!

  • PAST PERFORMANCE INFORMATION

    Not sensitiveSensitive

    Not sensitive!

    Past performance information is not commercially sensitive information.

    True
    False!

  • WINNING BIDDER’S PROPOSAL

    Not sensitiveSensitive

    Not sensitive!

    Except for the commercially sensitive parts in proposals, the winning bidder’s proposal is not commercially sensitive information once the tender period has closed. Most contracts include the winning bidder’s proposal as an annex to the contract.

    True
    False!

  • UNSUCCESSFUL BIDDER’S PROPOSAL

    Not sensitiveSensitive

    Not sensitive!

    Except for the commercially sensitive parts in proposals, unsuccessful proposals are not commercially sensitive information once the tender period has closed.

    Correct
    False!

  • PERFORMANCE AND FINANCIAL GUARANTEES

    Not sensitiveSensitive

    Not sensitive!

    Performance and financial guarantees are not commercially sensitive information.

    Correct
    False!

  • KEY PERFORMANCE INDICATORS / PERFORMANCE METRICS

    Not sensitiveSensitive

    Not sensitive!

    Key performance indicators and performance metrics for measuring project performance are not commercially sensitive information.

    True
    False!

  • CLAUSES THAT DESCRIBE HOW INTELLECTUAL PROPERTY RIGHTS ARE TO BE DEALT WITH

    Not sensitiveSensitive

    Not sensitive!

    Clauses that describe how intellectual property rights are to be dealt with are not commercially sensitive information.

    True
    False!

  • PAYMENT ARRANGEMENTS

    Not sensitiveSensitive

    Not sensitive!

    Payment arrangements under the contract are not commercially sensitive information.

    True
    False!

  • LIQUIDATED DAMAGES

    Not sensitiveSensitive

    Not sensitive!

    Contracts generally include a provision for the contractor to pay liquidated damages to the contracting authority in the event that the contract is breached, for example when the contractor fails to complete the works by the date set out in the contract. Liquidated damages are not penalties, they are predetermined damages set when a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date. They are generally set as a fixed daily or weekly sum. Liquidated damages are not commercially sensitive information.

    True
    False!

  • INCENTIVE MECHANISMS

    Not sensitiveSensitive

    Not sensitive!

    This can include plans for managing underperformance, the structure of rewards for early delivery, etc. Incentive mechanisms are typically not commercially sensitive, except for any negotiated financial amounts they may contain.

    True
    False!

  • THE CONTRACT

    Not sensitiveSensitive

    Not sensitive!

    Except for information in the contract that is agreed between contractor and government authority to be commercially sensitive, the contract is not commercially sensitive information. The government authority and the bidder cannot agree to keep the whole contract confidential based on commercially sensitive grounds.

    True
    False!

  • RISK OF SIGNIFICANT HARM TO THE ENVIRONMENT OR TO THE HEALTH AND SAFETY OF PEOPLE

    Not sensitiveSensitive

    Not sensitive!

    The contracting agency should disclose any risk of significant harm to the environment or to the health and safety of people in relation to a project, as this information is in the public interest.

    True
    False!
Well done! you scored 6 out of 6
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3

What information can be published and when?

Do you know what types of information to publish and when? We've examined 34 of the most common types of data encountered in public contracting.

Play our game to see what information is considered sensitive and what can be published freely.
Let's play

Get in touch

The Open Contracting Partnership connects governments, civil society and business to open up and transform public contracting so that it is smarter, better and fairer.
www.open-contracting.org@opencontractinginfo@open-contracting.org