Request for price of successful tender to supply medical product
In September 1988 the Ombudsman was asked to investigate a decision by an area health board not to make available certain information pursuant to section 9(2)(b)(ii) of the OIA. The complaint concerned the decision of the board not to disclose the price that had been successfully tendered to the board for the supply of a medical product. The circumstances were that one of the clauses of the board's conditions of tender had stated:
The name of the successful tenderer and the offer accepted may be advised to other tenderers unless such information has been nominated as confidential in the tender offer submitted.
The successful tenderer did nominate as such and the board, after considering a request, declined to release the successful price to the requester. It informed the requester that the information was to be withheld pursuant to the board's condition of tender and section 9(2)(b)(ii).
After consulting the board, the requester and the successful tenderer, the Ombudsman established that there were three commercial positions occupied by the latter which might be prejudiced by disclosure of the information at issue. These were:
the market position occupied by the company as a current supplier under the contract;
the market position the company occupied as a national supplier; and
the competitive advantage which the successful tenderer had gained in the first market (by virtue of the Board's conditions of tender) to win the Board contract.
The Ombudsman could not accept that any prejudice to the first two commercial positions was a distinct or significant possibility. In the first place, it was evident that price was the sole determinant on which the company won the contract and that disclosure of the information would not mean that the requester would automatically be able to offer a lower price at the next tender round. (Tenders were conducted at six monthly intervals.)
Secondly, the Ombudsman could find no evidence that would have allowed her to conclude that the contract holder's position in the national market place might be prejudiced.
In respect of the competitive advantage enjoyed by the contract holder, the Ombudsman accepted that prejudice was a distinct possibility. Both companies had informed her that knowledge of the previous successful tender price would be a significant factor in formulating a bid for the next tender round. Therefore, if the successful price was disclosed to the requester, the current holder of the contract would lose its competitive advantage.
The Ombudsman then had to consider whether, for the purposes of section 9(2)(b)(ii), such prejudice was unreasonable. The board argued that any prejudice would be unreasonable as it had given an undertaking to the successful tenderer to maintain confidentiality in respect of the tender price. Further arguments put forward in support of this contention were:
the market concerned was highly competitive;
both suppliers stated that knowledge of the current price was a significant factor in fixing a bid for the next tender round;
the board's policy was to accept the lowest price;
the contract was of considerable importance to the current holder;
if only the current holder knew the information it would have a significant competitive advantage in preparing bids for the next tender round; and
the advantage had been obtained through reliance on a condition of the tender contract which applied equally to both parties.
Although the Ombudsman accepted that disclosure of the information would allow the requester to redress the successful tenderer's competitive advantage, she was of the view that this advantage had only been created as a result of the board relying on its conditions of tender to withhold the current tender price. The condition of tender did not, in itself, provide any basis for withholding the information under the OIA and the Ombudsman could not identify any other grounds for withholding the information under the Act.
Moreover, the Ombudsman was not satisfied that the advantage held by the current holder was so significant that it would have been unreasonable to lose it. There was insufficient evidence to suggest that knowledge of a current tender price would significantly assist any tenderer to gain a contract at the next round.
Therefore, although the Ombudsman accepted that disclosure of the information at issue would prejudice the advantage held by the successful tenderer, she could not conclude that such prejudice would be unreasonable in the circumstances of this particular case.
Furthermore the Ombudsman was of the view that even if section 9(2)(b)(ii) had provided good reason for withholding, other considerations would have rendered it desirable, in the public interest, to make that information available (section 9(1) of the OIA).
The relevant public interest considerations were first that there is a public interest in purchasing procedures of public organisations being seen to be beyond reproach, and secondly, that there is a similar interest in the public having access to how public funds are spent. Section 4(a)(ii) of the OIA recognises these interests where it states that one of the purposes of the Act is to ‘increase progressively the availability of official information to the people of New Zealand in order to promote the accountability of ...officials’.
The Ombudsman wrote to the Board outlining her views as a preliminary opinion. The Board accepted that opinion. It also advised the Ombudsman that it had altered its conditions of tender so that a successful tenderer could no longer nominate confidentiality.
This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.