In Your Request, You Specifically Asked for the Following Information to Be Provided

Enquiries to: Wendy Twigge
Your Ref:
Our Ref: WT/FOI/99460
Date: 25th May 2010 /
Mr Lee Parry
By Email to:

Dear Mr Parry

Re: FOI 99460

Thank you for your request for Information which has been actioned under the Freedom of Information Act 2000.

In your request, you specifically asked for the following information to be provided:-

1. A copy of the contract relating to the agreement.

2. An overview of all monies paid to BT/the joint venture relating

to this contract for each year that the contract has been in

operation.

3. The actual term of the contract (originally advertised as ten

years in the national press), including any extensions, as detailed

in the initial invitation to tender advert.

4. The exit management plan relating to the end of the contract.

5. The total number of staff transferred by TUPE from LCC the joint

venture.

In response to your request, I am able to provide the following information:-

1. The Service Provision Agreement dated 13 July 2001

The Joint Venture Shareholding Agreement dated 13 July 2001

Some of the information contained in these documents has been redacted. Accordingly, the Council must advise which Freedom of Information Act 2000 (FOI) exemption under which it considers the information can be withheld.

Although a detailed analysis of the reasons for redacting the withheld clauses has been carried out, disclosure of that in itself would serve to reveal the information sought to be withheld. Accordingly the reasons for withholding some of the information in the contracts will be framed in general terms. However, should you chose to take this matter further with the Information Commissioner’s Office, the detailed analysis of each clause will be provided to the ICO.

In this instance the redacted clauses have been withheld on the basis of the FOI Section 43 exemption. Section 43 exempts the provision of information where to do so would or would likely to prejudice the commercial interests of any person (including the Council).

The redacted clauses comprise specially negotiated terms unique to this contract. The terms are based on the Council’s specific requirements and as a reflection of BT’s expertise (eg technical methodology) in this area. Prejudice in terms of commercial disadvantage to both BT and the Council would or would likely to be caused in the following ways.

Some of the terms redacted terms arise through negotiation as trade-offs of an advantageous clause (to each respective party) on a quid pro quo basis. So these would not necessarily amount to terms that a competitor would be aware of or necessarily grant. In other words they are special terms.

Although specially negotiated on these contracts, some of these terms do not necessarily appertain to a contract of this nature, but could be implemented, as special terms, in other commercial contracts that the Council may wish to negotiate.

The Council would be placed at a disadvantage in its ability to negotiate in other contracts were it to disclose what it was prepared to concede, or what terms it was prepared to accept.

The exemption also applies to prejudice to another person, which we take to include another legal personality, such as BT plc.

Commercial prejudice to BT could manifest in two ways.

BT is an active and successful company in the ICT and BPO market. BT would be disadvantaged in disclosing what special terms it has been prepared to accede or grant to the Council. Disclosure of these other terms would place BT at a commercial disadvantage in that other organisations BT negotiates contracts with, would expect similarly favourable terms. Examples include the extent of liability, pricing, extent of service level provision etc etc.

Equally, other competitors would have the unfair advantage of having some insight into technical methodology, service level provision, etc reflective of BT’s expertise, when tendering on competing contracts. This is also true of course of pricing information. Other competitors would gain a commercial advantage and would be able to outbid/ undercut BT, thereby prejudicing BT’s commercial interests.

Whist this may work to some degree to the Council’s advantage, Section 43 extends the commercial prejudice to BT. BT has indicated that this indeed would put it at a commercial disadvantage with disclosure the withheld information.

I have considered the information against the context that some of the terms, such as pricing information, may not be relevant, given the age and length of the contract. Whilst this may be true when the contract is due to expire in 2017, the financial and numerical information (eg interest rates) are still live and current at the time that I write.

In applying the s43 exemption, I am obliged to consider whether it is more in the public interest to disclose the contents of the withheld information, or whether it is more in their interest to uphold the exemption.

I do not consider it to be in the public’s interests, in terms of expense to the public purse, for the Council to be placed in a commercially disadvantageous position. As indicated, as is the case in commercial negotiation, terms tend to be based upon bilateral compromise. Should a would-be competitor be alive to what level of terms the Council is prepared to accept then in the long term, the Council’s commercial interests, and therefore the public purse, would be placed at a disadvantage when negotiating contracts with other competitors.

Whilst I recognise that the concession of negotiated terms may in itself be a source of public interest, I have balanced this with the public interest in needing to ensure that the Council’s bargaining position remains intact on future contracts. The retention of the ability to negotiate future terms that are commercially favourable to the Council is, in my view of greater public interest, in terms of achieving savings on public expenditure.

I have also considered the position where terms are more commercially advantageous to the Council, and therefore arguably more in the public interest to disclose, as future competitors would have a benchmark to measure up to. The Council would then be able to deliver better value. However a contractor would be unwilling to grant those favourable terms in the first place were it aware that those terms would be placed in public domain. For the pubic expenditure reasons outlined, I consider that it would be contrary to the public interest to stifle the ability for the Council to secure commercially favourable terms.

I am aware of the argument that such contractors would not refrain from competing, given the value of the contract, and therefore commercially favourable terms, by virtue of competition, would be achieved.

However, most contractors with Council would be aware of their disclosure obligations under FOI at the outset. Accordingly nowadays contractors bid on the basis that the tendering process incorporates an ability to identify and reserve commercially sensitive information from being disclosed. In this instance BT has sought to preserve that by the inclusion of a confidentiality clause. Further they have provided me with a detailed list of information that it would like to withhold. Whether it is commercially prejudicial is of course a matter of fact and context. Having considered BT’s list in this instance I agree that it would be prejudicial to their commercial interests.

Quite apart from the risk of an action for breach of confidence, I believe that it would be difficult to establish whether contractors would be unwilling to engage in commercially favourable terms in future following disclosure: as this relies upon the proposition that a contractor would NOT do something. However on a wider point, I do not believe the FOI regime is designed to place companies at a disadvantage by forcing them to disclose commercially prejudicial information they have sought to safeguard by the inclusion of eg. a reserved list or a confidentiality clause.

In other words the provision of disclosure is built into the tendering process already, and it is on that basis that they compete. To do otherwise would enable a tactical advantage to be gained by individual companies.

Whilst, for the reasons outlined above, this might work to the greater public interest in the context of a tender for a public sector contract, Section 43 applies to commercial prejudice not just to the council but to the contracting company. I do not believe that it is in the greater public interest to the wider economy, to stifle the ability for individual companies to continue trading by forcing them to disclose commercially sensitive information. Indeed it is this very information that forms part of their stock-in trade. This is all the more so when there is an expectation that those parts would be withheld, as built into the tendering process as described above.

Further, I believe that it is in the greater public interest to enable companies to compete on an equal footing based upon assessment of merit, quality of service, and delivery of value, rather than any tactical advantage gained. It is also in the greater public interest to ensure that the assessment of public service contracts retain an integrity of process.

Accordingly for the reasons outlined above, on balance, I do not consider the public interest in receiving the information outweighs the public interest reasons for applying the exemption.

The Council also considers that Section 41 applies by virtue of the confidentiality clause contained in the contract. However I am of the view that it is the withheld information that exposes the Council to the greatest risk of a successful action for breach of confidence rather than the contracts as a whole.

I am satisfied that: those specific parts came from BT, as opposed to mutually agreed terms; arose under confidential circumstances; and are intrinsically confidential in nature. Further the Council has been made aware of a very real risk of an action for breach of confidence being taken. It is not, therefore merely hypothetical. Accordingly I consider that Section 41 applies to the withheld information.

I have also considered whether the public interest in those specific clauses is so strong as to override any duty of confidence arising from the confidentiality clauses. Whilst I recognise that there is a legitimate public interest, I do not conclude that the public interest in knowing the details of those specific clauses is so overwhelmingly strong as to override the duty of confidence owed. The terms are not so controversial, adverse or extreme as to arouse a high degree of public interest, when balanced with the detriment to the Council in terms of having to defend an action for breach of confidence.

With reference to the contract extension, this document has been subject to redaction. Specifically,information which has bee redacted is the dates for termination for convenience at sections 39.1 and 39.2. This information has been redacted as the information is considered to be of commercial interest and as such is exempt from disclosure by virtue of Section 43 of the Freedom of Information Act 2000. Section 43 is a qualified or conditional exemption and as such requires the consideration of the public interest test.

I have considered the public interest in respect of the information contained in section 39.1 and 39.2 and believe that the release of this information is likely to prejudice the commercial interests of any person. (A person may be an individual, a company, the public authority itself or any other legal entity) as follows;

The information contained within these section, if released, would cause harm and/or be advantageous to rivals as the information relates to information used for the purpose of trade.

In considering the public interest test it has also been necessary to consider the test of prejudice, and this has required me to decide whether the information would if released be likely to harm, someone’s commercial interests.

I have considered the following factors in the test of prejudice, does the information relate to or could it impact upon a commercial activity. The information contained within the sections does have a link to the relationship with commercial activity, if it were to be released, the information could have repercussions in the management of the contract and/or the extension and the ability to minimise disruption to the provision of service delivery and the reduce the ability to work together to meet a common purpose in the provision of cost effective services.

The commercial activity conducted under this contract is done so in a highly competitive environment. The level of competition within the areas which the contract cover, would mean that if the information were to be released this would have a significant effect on the commercial interests any or all the organisations involved in the contract and will harm someone’s commercial interest.

Therefore the public interest in maintaining the exemption is considered greater than the public interest in disclosing the information at this time.

Information in Schedule 10 has also been redacted for the reasons specified already.

Information contained within Schedule 14 has been redacted. This information relates to financial information and specific costs, discounts charges and the like.

This information has been redacted as the information is considered to be of commercial interest and as such is exempt from disclosure by virtue of Section 43 of the Freedom of Information Act 2000. Section 43 is a qualified or conditional exemption and as such requires the consideration of the public interest test.

I have considered the public interest in respect of the information contained in Schedule 14 and believe that the release of this information is likely to prejudice the commercial interests of any person. (A person may be an individual, a company, the public authority itself or any other legal entity) as follows;

The information contained within these section, if released, would cause harm and/or be advantageous to rivals as the information relates to information used for the purpose of trade.

Therefore the public interest in maintaining the exemption is considered greater than the public interest in disclosing the information at this time.

Schedule 15 has been redacted, asset numbers of individual units have been removed. The asset number is used when validating the user and their details when/if any IT problems occur. As this is part of our validation of a user, we are unable to provide you with the specific base unit asset numbers as this is considered to be commercially sensitive and is therefore exempt from disclosure by virtue of Section 43 of the Freedom of Information Act 2000. Section 43 is a qualified or conditional exemption and as such requires the consideration of the public interest test.

I have considered the public interest in respect of the information contained in Schedule 15 and believe that the release of the asset numbers is likely to prejudice the commercial interests of any person. (A person may be an individual, a company, the public authority itself or any other legal entity) and on this occasion would be Liverpool City Council and/or Liverpool Direct limited as the release would effect their ability to validate actual calls and users requests for assistance either remotely or physically.

The information contained within these section, if released, would cause harm as the information relates to specific checks made to ensure work flows are carried out appropriately, security checks are made and only assets which are configured appropriately and which forms part of the services provided by Liverpool Direct Limited and therefore this information isused for the purpose of trade.

I have considered the following factors in the test of prejudice, does the information relate to or could it impact upon a commercial activity. The information contained within the sections does have a link to the relationship with commercial activity, if it were to be released, the information could have repercussions in the management of the contract as the information is used as a direct check to ensure services are only offered and carried out on the physical assets used by Liverpool City Council and which are covered by the contract with Liverpool Direct Limited for the purpose of cost effective services.

Therefore the public interest in maintaining the exemption is considered greater than the public interest in disclosing the information at this time.

Schedule 21 has been redacted, as the information relates to termination payments.

This information relates to financial information and specific costs, discounts charges and the like.

I have considered the public interest in respect of the information contained in Schedule 21 and believe that the release of this information is likely to prejudice the commercial interests of any person. (A person may be an individual, a company, the public authority itself or any other legal entity) as follows;

The information contained within these section, if released, would cause harm and/or be advantageous to rivals as the information relates to information used for the purpose of trade.