Drawing the Line on Commercial Sensitivity: FOI Disclosure Risks in Public-Private Contracts

Freedom of Information requests often arrive after a contract has been signed, when commercial sensitivities are acute and operational relationships are live. The resulting tension is familiar: the public authority must comply with its transparency obligations, while the contractor expects confidential information to remain confidential. Resolving that tension requires more than a confidentiality clause.

The legal starting point

Public authorities in the UK are subject to the Freedom of Information Act 2000 and, for environmental information, the Environmental Information Regulations 2004. The FOIA regime starts from a presumption of disclosure. A public authority must confirm whether it holds requested information and, subject to exemptions, communicate it to the applicant.

There is no general exemption called commercial confidentiality. Instead, authorities must consider specific exemptions, most commonly section 43(2) of FOIA, which applies where disclosure would, or would be likely to, prejudice the commercial interests of any person. That exemption is qualified by the public interest test. Section 41, which protects information obtained in confidence, is an absolute exemption, but it applies only where the information has the necessary quality of confidence and was obtained in circumstances importing an obligation of confidence.

A private contractor is not generally a public authority for FOIA purposes, but information it supplies to a public authority may be held by that authority and therefore fall within scope. Contractual confidentiality provisions do not determine the FOI outcome. The authority retains its statutory discretion and cannot contract out of its obligations.

Why disputes arise

Requests commonly focus on pricing, unit rates, profit margins, tender methodology, subcontractor details, intellectual property, workforce information and performance failures. Each raises different considerations. Historic pricing may be less sensitive than current pricing that could affect a live negotiation. A generic assertion that disclosure would harm competitiveness is unlikely to be sufficient; the authority should be able to explain the specific prejudice and the likelihood of it occurring.

The public interest can point strongly towards disclosure where it supports accountability for public money, scrutiny of service quality or understanding of a significant public contract. It may point against disclosure where it would reveal genuinely sensitive commercial information, undermine a contractor's ability to compete fairly or prejudice a live procurement.

Drafting for disclosure resilience

Contracts can help, but they cannot replace a proper assessment at the time of a request.

• Use a confidentiality schedule. Identify categories of information said to be confidential and explain why. Avoid marking an entire contract as confidential.
• Be granular. Distinguish between the contract terms, pricing, methodology and performance data. A blanket label invites challenge and weakens credibility.
• State duration and review. Confidentiality should not last indefinitely by default. Consider when sensitivity is likely to reduce.
• Include a FOI clause. Require notification and consultation where a request may affect the contractor, while acknowledging that the authority remains the decision-maker.
• Flow obligations down. Subcontractors and consortium members should understand the transparency regime and the authority's obligations.
• Record evidence early. Contemporaneous records of market sensitivity, negotiating position and likely prejudice are more persuasive than later assertions.
• Separate the genuinely confidential from the merely embarrassing. Reputational concern is not the same as commercial prejudice.

A practical framework for authorities

When a request arrives, a disciplined process is essential.

1. Identify the information requested and confirm who holds it.
2. Consider each exemption and apply it to specific information rather than the document as a whole.
3. Assess prejudice and the likelihood of harm, taking account of current market conditions.
4. Apply the public interest test where the exemption is qualified.
5. Consult the contractor where appropriate, but make an independent decision.
6. Redact only what is necessary and explain the redactions clearly.
7. Record the reasoning, including the factors weighed for and against disclosure.
8. Review the position if circumstances change or if there is an internal review or regulatory complaint.

Conclusion

Commercial confidentiality and FOI are not opposites. A contract that identifies genuinely sensitive material, explains why it is sensitive and provides a workable consultation mechanism is more likely to withstand scrutiny than one that relies on a blanket label. Authorities should treat transparency as a design feature of public-private contracting, not as a threat to be managed after the event. LGSS Law advises public authorities and private sector clients on information law, contract drafting and disclosure risk. This article provides general information and does not constitute legal advice.