Transparency in outsourced contracts

Does the outsourcing of public functions mean they are less transparent? Anna Sweeney summarises the latest developments in the recent controversy.

The transparency agenda has been high on the Coalition Government's list of priorities since it came to power four years ago. However, in those four years there has been significant outsourcing of public functions, not all without controversy. Recently, concerns have been voiced that it is difficult to find out what has been going on in these outsourced contracts – until it is too late.

Public functions that are carried on in-house are subject to the Freedom of Information Act (FOIA), so in theory (unless an exemption applies), anyone can find out information about how those functions are carried out. When those functions are outsourced to a private company, the position is less clear. The FOIA applies to information held by a public authority or "by another person on behalf of the authority" (section 3 (2) (b). But it is not always easy to tell when a contractor is holding information on behalf of a public authority (which would be subject to the FOIA) or on its own behalf (which would not be).

A recent ICO blog gives an example of a local authority contracting out the management of a leisure centre to a private company, and whether information about the number of people using the gym was the company's information, or the authority's. If the former, then there would be no way that a member of the public could compare usage of the gym before and after the contracting-out.

The Information Commissioner's Office (ICO) is concerned that "if significant information about the operation and delivery of public services is no longer covered [by the FOIA], then we are witnessing a gradual reduction of the scope of FOIA", with the risk of corresponding reductions in transparency, efficiency and public trust.

There are two obvious ways that the Government could address this. The first is to designate private contractors who provide public services under a contract with a public authority, as public authorities under section 5 FOIA. However, this seems to have been discounted as being too complicated.

The second way, and the one the Government is proceeding with, is to publish a revised code of practice to make sure that freedom of information clauses are put into all public sector outsourcing contracts. The aim is to have this in place by the end of 2014. The ICO have been asking for examples of contract terms relevant to FOIA, both good and bad, and of how public authorities are working successfully with private sector providers.

The new clauses will need to carefully define who 'holds' information for the purposes of FOIA and also be more consistent, promoting real partnership working rather than the often overly-cautious approach adopted to date.

Until the new clauses are published, we advise that freedom of information and transparency clauses in contracts with the private sector are carefully drafted to make clear what information is being held by the contractor on the authority's behalf, and must therefore be disclosed in response to an FOIA request, and place the onus on the contractor to work with the authority to be as transparent as possible.

Anna Sweeney is an associate and professional support lawyer at Walker Morris. She regularly contributes articles and updates to reach... ®, the free Walker Morris knowledge database and alerter service.