Javelin Park – Tim's Blog

Notes on a Tribunal (well, almost). Or, “how to increase your contract costs by 30% by negotiating in secret.”

[Summary: I promise at some point this blog will carry content other than about incinerators and contracts. But, for the moment one more exciting instalment in the ongoing saga, in which we learn the contracting documents GCC have been fighting to hide show a 30% increase in Javelin Park costs.]

What’s just happened

Gloucestershire County Council (GCC) decided earlier this week to drop their appeal against an ICO ruling that they should release in full a 2015 ‘Value for Money’ analysis carried out just before they signed a revised contact with Urbaser Balfour Beatty (UBB) for building the Javelin Park Incinerator (which we’ve been referring to locally as the Ernst and Young report).

Throughout the process GCC have claimed that ‘commercial’ risk to both the Council and UBB prevents them from disclosing the documents. By dropping the appeal just a month before it was due to go to a Tribunal hearing, they avoid having to prove any of these claims in front of a panel and judge.

In addition, GCC appear to have delayed providing this information in order to commission Ernst and Young to produce another report, this time calculating an assumption-laden average gate fee, in order to continue to make the case for the project. This is at odds with the requirements of the Environmental Information Regulations to prompt disclosure – as presumably GCC must have known the commercial interest were no longer active prior to commissioning this new report, but instead chose to delay disclosure and spend taxpayers money on an ‘explanatory note’.

Where are we now

There’s a lot of history to this story, so to recap quickly.

Gloucestershire County Council have been seeking to build an Energy from Waste Incinerator for over a decade. In 2013 they signed a Public Private Partnership contract with UBB for the project. The contract was signed before planning permission was in place for the construction site. Planning was refused, leading to a two-year delay. This triggered a renegotiation of the contract in 2015, signed in January 2016. The plant is now under construction and close to being operational in 2019. Throughout the process GCC have claimed the project provides savings of up to £150m (later quietly reduced to £100m without explanation) over it’s 25 year life span.

Campaigners have long sought to see the contract, and in early 2016, the Information Rights Tribunal ruled that the majority of details, including gate fees (i.e. the price paid to burn waste) should be disclosed. I then requested a 2015 analysis relating to the re-negotiation, and was only given a highly redacted copy, not showing gate fees. I requested a review, and eventually appealed to the Information Commissioners Office (ICO) against authority refusal to release the information. The ICO ruled that the documents should be disclosed un-redacted. GCC appealed this decision in the summer, and since then have been preparing for a tribunal case claiming that disclosure would be against the contractors and the authorities commercial interest. They have now released the documents, although notably only claiming the contractor no longer has a commercial interest in them being confidential, leaving lingering questions about whether the authority had any legitimate commercial interest in non-disclosure all along.

What do we learn from the new documents

First below is the redacted document from GCC (click for full size). Then there is the equivalent table from the un-redacted and new report by Ernst and Young (which usefully does include the final rather than forecast figures for the renegotiated deal: i.e. the actual new contract numbers assuming there has been no further renegotiation since).

(Note that in the Table 2, the first ‘Variance’ column is between the originally signed contract, and the forecast revisions in 2015, and the second Variance column (in yellow) is between the forecast revisions, and the finally signed updated deal. So to get total variation from 2013 to 2016, you need to add these two columns together.)

So: what can we learn from the new data and documents:

(1) Firstly, the headline price per-tonne has increased by £42.97/tonne – a staggering 29.3% rise for a three year project delay (cumulative CPI inflation over the same period was 5.13%). The total per-tonne cost for the first 108,000 tonnes is now £189.33/tonne: far above anything any other authority in the country appears to be paying.
(2) This drives an increase in the nominal tonnage payments over the contract life of £446m to £601.5m. Whilst some of that might be offset by energy income/benefits, given these were also part of the case in 2013, this looks like a massive increase in costs – again just for a three year delay. (Given predicted waste volume rises in all the forecasts the contract is based on, a three year delay also involves starting the project when waste volumes are higher than in 2013 – so some change would be anticipated in this figure even if there was no gate fee increases. But the gate fee increases look like the major component turning Javelin Park from a £450m to a £600m project).
(3) Other tonnage payments have also increased – although the most notable change between the forecast, and signed renegotiation is that ‘Third Party Gate Fees’ have been kept down – suggesting that the financial modelling for the plant relies on attracting as much additional waste as possible at a low cost, with all the fixed costs of the project subsidised by the taxpayer.
(4) The Cabinet were told in November 2015 (E&Y VfM report; §3.1) that the capital costs of the project in UBB’s original Revised Project Plan “included a significantly inflated price of £177m.” but that “The council has had some success in negotiating this EPC price down and it now stands at £167m” and “the Council expects to see further improvements in this price”, yet by the signature of the new deal, the capital expenditure costs were also up 30% £178.9m – £2m higher than UBB’s opening gambit!
(5) The Value for Money calculations (E&Y VfM report, and restated in Table 3, new E&Y report) only carry out comparisons to ‘Termination (Landfill alternative)’ of which at least £60m is the cancellation cost signed up to in 2013. For this reason, the newly released Annex 1 of the report to Cabinet in 2015 (§6) explicitly acknowledges that the most that should be claimed in savings when this is taken out is £93m – and this is only when Council reserves are put into the project. It’s not clear why Cabinet Members continued to use a figure higher than this in public after this report.
(6) The first important thing from that last point are that at no point in 2015, did the Cabinet carry out a Value for Money assessment comparing the costs of continuing with the 30% more expensive contract, vs. cancelling and re-tendering. Instead, they pressed ahead with a closed-door renegotiation without competitive pressures – which goes a long way to explaining why the contractor could get such a big boost in costs.
(7) The second thing to note is that the claim of anything close to £100m savings is only secured by the cash injection into the project from reserves. Those are reserves that are then locked up and not available for other use. Without cash injections from reserves, the savings are much lower.

The mystery of the ‘Real Average Gate Fee’

In the new Ernst and Young report that accompanies the response to my EIR/FOI request, a lot is made of a figure called the ‘Real Average Gate Fee’ (RAGF), which is calculated at £112.47/tonne.

Now – a few things about this number:

(1) I googled “Real Average Gate Fee” to see if this was based on an established industry wide methodology. As it turns out – the only place this phrase occurs on the whole of the Internet is in Ernst and Young’s report.

It turns out no-one apart from GCC know what a Real Average Gate Fee is either

(2) As I understand, this number is based on making best case assumptions about the income to the authority from electricity sales, and third-party income – and assuming the maximum contract tonnages set out in authority forecasts. If those assumptions are not met (e.g. we hit 60% recycling by 2020 and 70% by 2029/30; or waste volumes do not continue to rise as fast as forecast), then, because of the structure of the contract (all front-loaded costs on the first 108,000 tonnes; savings on waste volumes above this), the RAGF would very quickly rise. In other words, the RAGF is only valid if you accept high waste assumptions. In any other scenario it gets much higher.

(3) The report compares this to the range of real gate fees that WRAP found in their 2016 survey. Note that WRAP have a pretty robust methodology in their survey, and they state:

“Not all waste management services are costed or charged on a simple gate fee basis (£/tonne). In some cases a tonnage-related payment is just one element of a wider unitary charge paid by an authority” and that “every effort is made to eliminate such responses from the sample”

so the comparison of a constructed ‘Real Average Gate Fee’ from a unitary charge/PPP structure to a real gate fee is questionable at best.

(4) However, even more questionable is picking the 2016 data to compare the RAGF too. We now have 2017 data available from WRAP, and the E&Y report notes that this figure is based on the ‘Net Present Value based date of June 2015‘, so both 2015 and 2017 would seem more reasonable years to compare too.

Pro-tip: When looking to manipulate figures, always pick your comparison year to make your numbers look the best you can…

A quick look at WRAP’s EfW Overview dashboard for post-2000 plants gives us a clue as to why this year was chosen. 2016 is an outlier when it comes to maximum values in WRAPs survey. In 2015, the highest anyone responding to the survey was paying per tonne was £131/tonne, and in 2017 it was £116/tonne.

Even if we allow the not-really-comparable RAGF of £112/tonne – that put it right at the top of the range. Even a small reducting in income from energy, or reductions in waste, would push this into being the most expensive deal in the country.

If you compare the actual gate fee of £190/tonne for the first 108.000 tonnes, it is clear this is massively above what anyone else surveyed is paying.

What we still need to explore

The Ernst and Young Report VfM report notes that the overall lifetime project costs could have been substantially reduced with ‘Prudential Borrowing’ (i.e. relying on low interest loans the authority can achieve, rather than private banks). Annexe 1 to the 2015 Cabinet Report reveals this option was ignored, because it would have required discussion as part of the Council’s budget process in February 2016 and it states “the banks have advised that they need to achieve financial close by the end of the year [2015]”.

However, financial close was not achieved until January 2016 (it seems the banks didn’t mind so much after all?). It’s not yet clear to me what information Councillors outside cabinet had at the time on this decision – and what it tells us about the pursuit of a PFI option, when it appears other, much cheaper public funded options for the project were available.

There is also a question of the missing OJEU (Official Journal of the European Union) notice. It seems that, whilst in most cases, any contract variation of over 10% in value after the Public Contract Regulations 2015 came into force should normally have involved re-tendering, an exception may have been permissable for this project because of ‘unforseen circumstances’ (although whether the planning refusal is something a dilligent authority could not have forseen is open to major question). Notwithstanding that – LGA guidance states that in a case of major contract modification “a special type of notice must be published in OJEU” a “‘Notice of modification of a contract during its term’.”

I’ve not been able to find any evidence that such a notice was issued, and Cllr Rachel Smith has also asked for copies of all OJEU notices related to the project a number of times, and a contract modification notice has never been amongst them.

Where next?

Hopefully a Christmas break! Whilst it was kind of GCC to drop these documents just before Christmas – I’m hoping to have at least a bit of time off.

However, far from proving the value for money or transparency of the project as Councillors claim: these documents show there are still major questions to be answered about how a secret renegotiation led to 30% increase in costs, and why no assessments took place to look at non-landfill alternatives and create at least some sort of competitive pressure at the time of renegotiation.

There are also major questions to be asked about the handing of the Information Tribunal appeal. But those can wait for a day or two at least.

Javelin Park Episode 5: Return of the ICO

[Summary: The Information Commissioner’s Office has upheld an appeal against continued redaction of key financial information about the Javelin Park Incinerator Public Private Partnership (PPP) project in Gloucestershire]

The Story So Far

I’ve written before about controversy over the contract for Javelin Park, a waste incinerator project worth at least £0.5bn and being constructed just outside Stroud as part of a 25-year Public Private Partnership deal. There’s a short history at the bottom of this article, which breaks off in 2015 when the Information Commissioners’ Office last ruled against Gloucestershire County Council (GCC) and told them to release an unredacted copy of the PPP contract. GCC appealed that decision, but were finally told by the Information Tribunal in 2017 to publish the contract: which they did. Sort of. Because in the papers released, we found out about a 2015 renegotiation that had taken place, meaning that we still don’t know how much local taxpayers are on the hook for, nor how the charging model affects potential recycling rates, or incentives to burn plastics.

In June last year, through FOI, I got a heavily redacted copy of a report considering the value for money of this renegotiated contract, but blacking out all the key figures. This week the Information Commissioner upheld my appeal against the redactions, ruling that GCC have 35 days to provide un-redacted information. They may still make their own appeal against this, but the ICO decision makes very clear that the reasoning from the 2017 Information Tribunal ruling holds firm when it comes to the public interest in knowing salient details of original and renegotiated contracts.

The Story Right Now

For the last two weeks, Gloucestershire resident Sid Saunders has been on hunger strike outside the county’s Shire Hall to call for the release of the full revised contract between Gloucestershire County Council and Urbaser Balfour Beatty. This is, to my knowledge, unprecedented. It demonstrates the strength of feeling over the project, and the crucial importance of transparency around contracts in securing public accountability.

GCC are already weeks overdue responding to the most recent FOI/EIR request for the latest contract text, and continue to stonewall requests for even basic details, repeating discredited soundbites about potential savings that rely on outdated assumptions about comparisons and high waste flows.

On Wednesday, Sid and other local activists staged a dignified silent protest at the meeting of GCC Cabinet, where public and councillor questions on an air quality agenda item had unconstitutionally been excluded.

Tomorrow we’ll be heading to Gloucester in support of Sid’s continued campaign for information, and for action to bring accountability to this mega-project.

It’s against this backdrop that I wanted to draw out some of the key elements of the ICO’s decision notice, and observations on GCC responses to FOI and EIR requests.

Unpacking the decision notice

The decision notice has not yet been published on the ICO website, but I’ve posted a copy here and will update the link once the ICO version is online.

The delays can’t stay

It is notable that every request for information relating to Javelin Park has been met with very delayed replies, exceeding the statutory limits set down in the Freedom of Information Act (FOIA), and the stricter Environmental Information Regulations (EIR).

The decision notice states that the “council failed to comply with the requirements of Regulation 5(2) and Regulation 14(2)” which set strict time limits on the provision of information, and the grounds for which an authority can take extra time to respond.

Yet, we’re seeing in the latest requests, that GCC suggest that they will need until the end of June (which falls, curiously, just days after the next full meeting of the County Council) to work out what they can release. I suspect consistent breaches of the regulations on timeliness are not likely to be looked on favourably by the ICO in any future appeals.

The information tribunal principles stand

The Commissioners decision notice draws heavily on the earlier Information Tribunal ruling that noted that, whilst there are commercial interests of the Authority, and UBB at play, there are significant public interests in transparency, and:

“In the end it is the electorate which must hold the Council as a whole to account and the electorate are more able to do that properly if relevant information is available to all”

The decision note makes clear that the reasoning applies to revisions to the contract:

Even with the disclosures ordered by the Tribunal from the contract the Commissioner considers that it is impossible for the public to be fully aware of the overall value for money of the project in the long term if it is unable to analyse the full figures regarding costs and price estimates which the council was working from at the time of the revised project plan.

going on to say:

The report therefore provides more current, relevant figures which the council used to evaluate and inform its decisions regarding the contract and it will presumably be used as a basis for its future negotiations over pricing and costs. Currently these figures are not publicly available, and therefore the public as a whole cannot create an overall picture as to whether the EfW development provides value for money under the revised agreement.

As the World Bank PPP Disclosure Framework makes clear, amendment and revisions to a contract are as important as the contract itself, and should be proactively published. Not laboriously dragged out of an authority through repeated trips to information tribunals.

Prices come from markets, not from secrets

A consistent theme in the GCCs case for keeping heavy redactions in the contract is that disclosure of information might affect the price they get for selling electricity generated at the plant. However, the decision notice puts the point succinctly:

Whilst she [the Commissioner] also accepts that if these figures are published third parties might take account of them during negotiations, the main issue will be the market value of electricity at the time that negotiations are taking place.

As I recall from first year economics lectures (or perhaps even GCSE business studies…): markets function better with more perfect information. The energy market is competitive, and there is no reason to think that selective secrecy will distort the market or secure the authority a better deal.

(It is worth noting that the same reasoning, hiding information to ‘get a better deal’ seems to be driving the non-disclosure of details of the £53m of land the authority plan to dispose of – again raising major questions about exactly whose interests are being served by a culture of secrecy?).

Not everything is open

The ICO decision notice is nuanced. It does find some areas where, with the commercial interest of the private party invoked, public interest is not strong enough to lead to disclosure. The Commissioner states:

These include issues such as interest and debt rates and operating costs of UBB which do not directly affect the overall value for money to the public, but which are commercially sensitive to UBB.

This makes some sense. As this decision notice relates to a consultants report on Value for Money, rather than the contract with the public authority, it is possible for there to be figures that do not warrant wider disclosure. However, following the precedent set by the Information Tribunal, the same reasoning would only apply to parts of a contract if they had been agreed in advance to be commercially confidential. As Judge Shanks found, only a limited part of the agreement between UBB and GCC was covered by such terms. Any redactions GCC now want to apply to a revised agreement should start only from consulting contract Schedule 23 on agreed commercial confidential information.

Where next?

GCC have either 28 days to appeal the decision notice, or 35 days to provide the requested information. The document in question is only a 29 page report, with a small number of redactions to remove, so it certainly should not take that long.

Last time GCC appealed to a Tribunal in the case of the 2013 Javelin Park Contract they spent upwards of £400,000 of taxpayers money on lawyers*, only to be told to release the majority of the text. Given the ICO Decision Notice makes clear it is relying on the reasoning of the Tribunal, a new appeal to the tribunal would seem unlikely to succeed.

However, we do now have to wait and see what GCC do, and whether we’ll get to know what the renegotiated contract prices were in 2015. Of course, this doesn’t tell us whether or not there has been further renegotiation, and for that we have to continue to push for proactive transparency and a clear open contracting policy at GCC that will make transparency the norm, rather than something committed local citizens have to fight for through self-sacrificing direct action.

*Based on public spending data payments from Residential Waste Project to Eversheds.

The ongoing secrecy saga of Javelin Park: Ernst and Young Value for Money Analysis

[Summary: the latest in Gloucestershire County Council’s Javelin Park secrecy saga (read up on recent episodes here, here and here)]

In the Information Tribunal ruling EA/2015/0254-6 (which led to the provision of a mostly unredacted copy of the 2013 UBB Javelin Park Incinerator Contract), paragraph 27 contains a reference to reports produced for Cabinet by Ernst and Young that provide the basis for the high estimated cancellation cost of the Javelin Park Incinerator.

I requested a copy of these documents from Gloucestershire County Council (GCC) in an FOI request, and following a long review process, have been provided with a heavily redacted copy of the Ernst and Young report has been provided under the Environment Information Regulations (EIRs).

What can we learn from the redacted copy?

The report provides updated Value for Money and Affordability analysis for the Javelin Park Incinerator contract. It was provided to the Council on 5th November 2015, ahead of the Cabinet approving a second ‘Financial Close’ of the Javelin Park Public Private Partnership project at their meeting of 11th November 2015.

This updates many of the figures given in the 2012 Annex 4 ‘Resource Implications’ that was provided in a fully unredacted form following the Information Tribunal ruling. It also provides a number of insights into the actions of the council to inject additional funding into the project.

Whilst the redactions mean there is litle new financial information here on which to update an understanding of the project Value for Money, I did take note of the following:

Due to the planning delays, a ‘Revised Project Planning’ (RPP) process was triggered. This allows for various costs and figures in the contract to be updated (See the 2013 contract §3.3). §5.5 of the report indicates that there are updated tonnage prices in force under the Revised Project Plan, with the prose suggesting these have increased. The prose also suggests that anticipated third-party waste revenues have decreased.
The report calculates the cost of a Force Majeure Planning Failure Termination. In November 2015 planning approval was fully in place, so this would have been on the basis of GCC excercising their right to turn down the Revised Project Plan (RPP) from UBB.
The report does not calculate the cost of a ‘Voluntary Authority Termination’ (the council choosing not to proceed with construction), but instead states that it “would anticipate a sum in excess of £100m”.
§4 of the Ernst and Young report states that: “any decision to terminate and pursue a landfill alternative would require a termination payment to UBB to meet costs already incurred. This cost, amounting to c£60m (as set out in Appendix A) has been added to the cost of the Landfill Alternative.” Appendix A is heavily redacted, so it is not possible to identify the basis for this figure, or why this figure of £60m is lower than the sum ‘anticipated in excess of £100m’. However, this could be the source of the £60m – £100m cancellation cost estimates cited by Cabinet members.
In the ‘Force Majeure Cancellation Costs’ calculations in Appendix 1, under sub-contractor breakage and redundancy costs, Ernst and Young note that no evidence is held on the actual costs expended by UBB to date, nor the sub-contract breakage costs that would actually be incurred.
As of November 2015, Eversheds had produced legal advice to the council on Procurement risks including risk of challenge (p. 3)
The affordability analysis (§1.2) “identifies that without the capital contribution [£17m] the Project is in breach of the Council’s affordability limit until 2024 but there after falls inside the affordability limit” and introducing the £17m capital contribution moves affordability to 2022.

At the November 2015 Cabinet meeting the Cabinet claimed savings from the project of £153m, based on the difference between a Landfill base scenario of £522m and project cost of £399m (once a £13m financial contribution from the council had been made). This assumes a waste flow of 60% recycling. The savings substantially erode (a c. 60% decrease in Net Present Value) with lower waste flow from higher recycling rates.

What is still redacted?

The vast majority of financial sums are redacted from the document, with with the authority invoking ‘regulation 12(5)(e)’ of the Enviromental Information Regulations (EIRs).

There are also a number of redacted sentences, where the nature of the sentence and the goal of redaction is unclear.

Are these redactions justified?

It is notable that in the contract FOI request Information Tribunal Ruling, for similar information in Annexe 4, the Tribunal stated (§77):

“No particular case is made as to how the redacted information in Annex 4 comes within regulation 12(5)(e) but, even assuming it did, we are satisfied the Commissioner’s assessment on the public interest is correct.”

However, they do ground some of this reasoning in the length of time between the information and the present day, stating:

Given that by April 2015 the Contract had long since been signed and there was controversy surrounding it we consider that there was a strong public interest in disclosure of all this detail. The Council’s Checklist says that release would have harmed its negotiating position, presumably in relation to a new procurement. We have commented on that scenario in general terms. Any information about the Council’s general financial position reflected in Annex 4 ought we think to have been in the public domain in any event.

This same reasoning would appear to apply in 2017 to figures from 2015.

The redactions in this report also cover ‘key changes in UBB proposal compared to the position at financial close’, including updated tonnage costs.

The World Bank Framework for Public Private Partnership disclosure calls for publication of tariff information, and revisions to tariff information: suggesting international best practice is for this information to be in the public domain, not kept confidential.

Where next?

Campaigners and County Councillors from a number of parties continue to oppose the incinerator. A complaint has been lodged with the Competition and Markets Authority and local residents have filed formal complaints with the Council’s monitoring officer over the conduct of Cabinet members reporting figures, largely it would seem based on the Ernst and Young report. There will undoubtedly be further updates in local press.

Javelin Park: What’s in the Information Tribunal ruling?

[Summary: exploring on a local open contracting campaign victory and it’s implications for contract transparency]

On Friday, the Information Rights Tribunal ruled on the appeal by Gloucestershire County Council against an earlier ruling by the Information Commissioner that the contract for a large PFI (Public Private Partnership) project to build an waste incinerator at Javelin Park near Stroud should be substantially published.

Campaigners have been fighting for access to the contract since 2015, when their first Freedom of Information Request was refused. Although we discovered earlier this year that the contract text had been accidentally put into the public domain by the Council failing to properly apply all the redactions they have been arguing for to an earlier FOI response, the Information Tribunal ruling is important in that it:

Sets out clearly the Tribunal’s view on the sections of the contract and it’s schedules that should be in the public domain (almost all of it);
Sets out clear reasoning applicable to other UK contracts – supporting the idea that there is a strong public interest in the text of contracts, and that exceptions for commercial confidentiality should be minimal;
Provides support for the idea that contract text should be proactively published.

You can find a copy of the ruling here, but, as it runs to 67 pages I’ve pulled out a few of the key points below.

(A) The basics

In paragraph 6 – 21 the Tribunal helpfully describe the background of the case – which involves a 25-year Public Private Partnership contract involving the build and operation of a Waste Incinerator, with an estimated overall contract value of £500m, and annual capacity of up to 190,000 tonnes.

The original request for an unredacted copy of the contract was made under the Environmental Information Regulations (EIR) – and was fought by the council on the grounds of Intellectual Property Rights, and Commercial Confidentiality.

(B) The arguments

Below is a non-exhaustive summary of arguments explored in the tribunal report (from the perspective of a non-lawyer trying to sense-make):

(1) Environment Information Regulations vs FOI? The council argued that sections of the contract should be considered under FOI (slightly weaker access rights) instead of Environment Information Regulations. The Tribunal ruled that the contract, as a whole, fell under EIRs (Para 39 & 40) as it, as a whole, represents a measure with substantial environmental implications.

(2) Commercial confidentiality? The council argued that large sections of the contract, including pricing and volume information, were commercially sensitive and their disclosure could pose a risk to both the private contractor, and the council, in terms of impacts on any future tendering activity.

In paragraph 44 the tribunal provide a useful discussion of EIR Regulation 12(5)(e) and the difficulty of working out to what extent an adverse effect of disclosure on economic interests of parties need to be established to justify confidentiality. However, the arguments of the Tribunal hinge much more on Schedule 23 of the contract itself, which was headed “Commercial sensitive contractual provisions”, and which was cited in the contract (§84.1) as the list of items that should be kept confidential by the parties.

A large quantity of the redactions sought by the Council, and which they appears to have spent over £200,000 fighting for (based on transactions to their lawyers in the Spending over £500 data), are not contained in this schedule.

Whilst it therefore appears the contract did follow good practice of agreeing from the outset any sections that could be subject to confidentiality, the Council did not follow this in actually applying redactions.

(3) Public interests in disclosure? The Tribunal evaluated each of the redactions sought by the council, and tested (a) whether confidentiality could be reasonably expected under the contract clause and schedules referring to this; and (b) whether there was, in any case, a public interest in disclosure.

Paragraphs 57 – 59 discuss the basis of public interest are worth quoting at length:

“§57. …Concerns have been expressed about the EfW technology chosen by the Council, which those against it say may involve harmful emissions and toxic waste left over from the scrubbing process. Planning concerns have been expressed about the height, mass and design of the plant and the increase in heavy road traffic which will be caused along with consequential air pollution. Although we are not in any position to assess the merits of these concerns, they are clearly genuine and not frivolous.

§58. The Contract itself is a PFI contract involving the expenditure of a great deal of public money over many years;… We can, we think, take judicial note of the fact that the PFI model is itself controversial, with legitimate concerns expressed about bad value for money, opacity and the tendency to load expenditure on future generations. Further, it is said that the structure of the Contract, by requiring the Council to pay for a certain amount of waste to be incinerated (the so-called “take or pay” arrangement) may have tied the Council in to supply a quantity of waste which is not viable in future and may have negative environmental effect of discouraging recycling…

§59. Given those considerations, in our view there was a significant public interest in the disclosure of the entire contract, in the interests both of transparency and accountability, ie the enable the public to be informed as to exactly what the Council had agreed on their behalf and its long-term consequences and to hold it properly to account, in particular through Council elections.”

On the issue of whether sections of the contract can be selectively disclosed, the Tribunal state:

§59. “… We make clear that we are not suggesting that the exercise is an ‘all or nothing’ one all we are doing is recognising that the provisions which the Council seeks to withhold are part of a greater interlocking whole and must inevitably be seen in that context.”

They also draw attention to the Local Government Transparency Code 2014 and the presumption in there of proactive disclosure – something I cover in this post.

They further draw attention to the fact that, when the original request was made in March 2015:

“§61…”the controversy was particularly intense and there was a danger that the whole Contract would have to be terminated at a cost, according to the Council of up to £100 million. At that stage, in our view, the Council’s obligation to act transparency was particularly strong as was the public interest in the exact position in relation to the compensation payable in so far as the Contract contained relevant provisions.”

They also argue that what matters is not how much of the text of a contract is in the public domain (the council argued that 95% of the text was public from the 1000+ pages of documents), but the substantives of that text. The tribunal state:

“In our view, the fact that the public authority has disclosed some information in the past cannot be relevant to the issue of whether they should have disclosed more.”

On the majority of individual redactions evaluated, the Tribunal find the public interest overwhelmingly supports publication. Paragraphs 74 – 216 go through the contract redaction-by-redaction, schedule by schedule, providing the reasoning for each decision. Where redactions are upheld, this is down to their information being included in the schedule of confidential information, and the Tribunal finding no substantial public interest in disclosure (though in some cases they still express puzzlement as to why redaction might be required).

(4) Impact on future procurement? In paragraph 72 the Tribunal consider arguments from the Council and UBB that disclosure would prejudice future procurements, and prevent the Council getting the best deal. They state:

“§72… We cannot accept such a case. Any potential contractor seeking to do business throughout the EU must be well aware of the duties of public authorities in relation to environmental information. We do not accept that they would (or should) complain or change their behaviour in response to a disclosure of information by the Council or any other public authority which was required by the EIR (or indeed FOIA)…”

(5) Intellectual property protection? The council invoked a separate argument for Schedule 33 which covers the sale of electricity generated from the plant. The mechanism by which this is to happen is fairly opaque, and appears to involve as-yet untested deals for ‘power off-take’. The Tribunal note that they were not “…given a very clear explanation of how this was all going to work…” (§212), but that “…Mr Mawdsley [(the council officer responsible)] [hoped] to sell the contents of Schedule 33 to other local authorities.”

The council argued that the Schedule was their IP, “based on copyright , database rights and the law relating to trade secrets.”.

The tribunal dismiss this, and in a damning paragraph note:

“§216. So far as the public interest is concerned, we agree with the Commissioner that, if relevant, it favours the disclosure of Schedule 33. The Council expressly accepts that there is a public interest in transparency about its plans to sell electricity for wider use; in our view it is a weighty public interest. On the other hand, we remain unclear as to how the Council’s or UBB’s negotiating position with third parties will be damaged. As to the wish to protect the confidentiality of legal and technical details that are novel in order to sell them on to other local authorities, even assuming that Mr Mawdsley is not being overoptimistic about the potential for the Council to make money in this way, we do not think that there is a particularly great public interest in the Council being able to commercially exploit a scheme which is apparently designed to avoid the normal regulatory regime.”

Overall

I’m not sure to what extend Tribunal decisions set precedents for others – but it seems to me there are strong arguments here that supports the positions that:

Where contracts are made that commit public money – the public have a right to know the detail of those contracts;
Contracts need to be treated as a whole, and redactions kept to a minimum;
Only redactions agreed in advance, and set out transparently in a clear schedule should be allowed;
A public party cannot claim intellectual property over a negotiated contract text;

Now that we have official access to the substantial majority of the Gloucestershire Incinerator contract, the challenge ahead is to work our what of the damage done by the Council Cabinet and contractors unaccountable actions over the last 18 months can be challenged, and undone. Access to documents is ultimately just one part of a wider open contracting journey.

(C) Other things of note

There are a few other elements of note I jotted down whilst reading through the judgement.

The claim made to council on 18th Feb 2015 that it could cost £60m – £100m to cancel the contract appears to be based on calculations from officers, and/or Ernst and Young which have not been published by the authority (perhaps another EIR or FOIA request will be needed here…). The Tribunal ruling refers in Paragraph 27 to a document from Ernst and Young presented to Cabinet in November 2015. However campaigners reading the unredacted contract cannot find the substantiation for the cancellation costs being so high before the facility is operational. It appears breakage before the plant is in operation could cost substantially less than the break-points once it is up and running – and possibly even lower than the £30m the Council has subsequently committed from reserves to cover shortfalls in the project.
Fighting disclosure has potentially cost the council much more than the hundreds of thousands spent on legal fees. Now that the contract model can be scrutinised, and alternatives explored, it may turn out that delays have led to potential cancellation of the contract
Mr Mawdsley, the council officer who has been pushing the Incinerator contract, comes in for criticism from the Tribunal. In paragraph 73 they note “Mr Peiro’s [UBB staff member] evidence was inevitably likely to be rather partisan, and, although he is an official and was giving evidence on behalf of a public authority, we are afraid we reached the view that Mr Mawdsley’s evidence on behalf of the Council was also rather partisan. We were surprised at the failure of each to attach any great importance to clause 84 and Schedule 23 or to the Transparency Code… We accept the submission of Mr West at para 78 of his final submissions that Mr Mawdsley’s evidence was ‘…so far-reaching as to be unconvincing, in particular in relation to matters such as Access Road Disruption Events”.

What next?

I’ve tried, at least in section A and B above to summarise rather than analyse. But, as I’m posting this on a personal blog, if I might here be forgiven a personal and partisan point…

If you are in Gloucestershire and concerned about this – the Tribunal made a good point: elections are a key mechanism to hold the Council to account – and all the Councillors who voted for the Incinerator on the basis of bad information, or secrets known only to Cabinet, are up for re-election on May 4th.

I only discovered this local case when my wife, Rachel, started getting involved in local Green Party conversations, and pointed out the work our Green County Councillor Sarah Lunnon was doing to push for open contracting, and to challenge the secrecy of the Incinerator contract. We were both astonished to see the County Council being so reckless with public resources and our local environment – and to see them so opposed to transparent and accountable politics.

It spurred me into reading as much as I could of the information that was available on the contract – but Rachel has taken it a step further – and is standing as Green Party candidate for Minchinhampton Division in the upcoming County Council elections.

There is ultimately the chance that we could change the balance of power in Gloucestershire – voting out the Tory administration that’s made these reckless decisions – and getting in a progressive coalition who can work to undo the damage. So – if you happen to be local to Minchinhampton, Thrupp or Chalford: please support Rachel. If you live elsewhere in Gloucestershire: make sure you get out and vote on May 4th, and use your vote for a progressive candidate who will commit to open contracting, and to stopping this one wasteful incinerator deal.

And if this is all too parochial… think about the contracts your local authority has signed you up to. Have you looked to see that they really work in the public interest?

[Note – typos in transcription from the original judgement are my own. I’m working from a printed copy, awaiting access to digital copy from the Tribunal website]

UK Open Contracting goes local in Gloucestershire?

[Summary: Explore arguments for Gloucestershire County Council to support Open Contracting on Weds 7th December]

This Wednesday, on the eve of the Open Government Partnership summit in Paris, where I expect we’ll be hearing updates from Open Contracting projects across the world, my local County Council in Gloucestershire will be voting on an Open Contracting motion.

If you’re not familiar with Open Contracting, it’s a simple idea, described by the Open Contracting Partnership here.

The motion, introduced by our local Green Party councillor Sarah Lunnon, calls on the Council to:

commit to the Open Contracting Global Principles and takes action to ensure that: – By the end of 2017 complete information for all contracting processes over £1m, including details of the tender, award and contract process, the full text of contracts and amendments, and performance information, are proactively published;* – By the end of 2018 complete information is available for all contracting processes, over £500, is proactively published”

It goes on to state that:

“The presumption should be that the text of all contracts is open by default. Redactions should only be permitted: (a) at the explicit written request of the parties to the contract; (b) subject to the public interest tests of the Freedom of Information act; (c) with the minimum possible redactions; and (d) with full justifications for any redaction given.”

Passing this motion would, as far as I’m aware, make Gloucestershire the first local authority in the UK to explicitly commit to the Open Contracting Global Principles. Although the Gloucestershire motion may be, at least in part, a response to the opaqueness of one particular contract, by being framed in terms of the Global Open Contracting Principles, if offers something of a win-win for local business (greater access to opportunities), citizens (greater understanding of how funds are spent) and the authority (better deals, and better scrutiny of spending).

If you’re a Gloucestershire resident, consider contacting your Councillor to ask them to support the motion.

If you’re not – perhaps there might be an opportunity to bring forward an open contracting initiative in your own area? As it turns out – all the national policy foundations are in place in the UK – it just needs commitment from local areas to put them into practice.

The framework exists for local open contracting in the UK

Below are a few of the resources I found to address common questions raised about Open Contracting, and disclosure of contracting documents, when I was researching a short letter to local councillors on the motion.

National procurement policy already establishes a presumption in favour of disclosure The UK’s Public Sector Procurement Policy incorporates a set of Transparency Principles that state that:

There should be a presumption in favour of disclosing information, with exemptions following the provisions of the Freedom of Information Act – for example, on national security or commercial confidentiality grounds. The presumption in favour of disclosure should apply to the vast majority of commercial information about government contracts, with commercial confidentiality being the exception rather than the rule.

The principles go on to note that exemptions may be available for pricing information, but that “This means the way the supplier has arrived at the price they are charging government in a contract, ****but should not usually be grounds for withholding the price itself.****” (emphasis added)

Commercial confidentiality concerns can be addressed through good planning

In 2014, the Centre for Global Development facilitated a multi-stakeholder working group on Publishing Government Contracts, including public and private sector representatives. This group concluded that:

While there are legitimate commercial, national-security, and privacy concerns, they involve a small minority of contracts and can be addressed using a principles-based redaction policy. (From issue brief. Full report here)

The findings of the CDG working group show that a principle of ‘open by default’ is viable and practice.

Data protection concerns rarely justify non-disclosure of contracts

The Local Government Transparency Code 2015 provides guidance on managing any data protection concerns that may arise from contract publication, stating that:

The Data Protection Act 1998 also does not automatically prohibit information being published naming the suppliers with whom the authority has contracts, including sole traders, because of the public interest in accountability and transparency in the spending of public money.

Section 20 of the code addresses commercial confidentiality, stating that:

The Government has not seen any evidence that publishing details about contracts entered into by local authorities would prejudice procurement exercises or the interests of commercial organisations, or breach commercial confidentiality unless specific confidentiality clauses are included in contracts. Local authorities should expect to publish details of contracts newly entered into – commercial confidentiality should not, in itself, be a reason for local authorities to not follow the provisions of this Code. Therefore, local authorities should consider inserting clauses in new contracts allowing for the disclosure of data in compliance with this Code.

Model transparency clauses can be used to manage disclosure of structured performance information

Initial advocacy for a Model Transparency Clause in the UK was led by Institute for Government, and the national transparency clause, now included in the Model Services Contract, was developed with input from the National Council for Voluntary Services, Open Data Institute, and major private sector contractors. The extensive work that has taken place to develop models of disclosure that balance commercial practicalities and government and public interests in having access to clear information on contract performance, provides a tried-and-tested template for local authorities to build upon.

Contracts Finder and the Open Contracting Data Standard provide ready-made tools to implement disclosure

Contracts Finder is the government’s national platform for publication of contracting opportunities and awards. Local authorities are mandated to submit above-threshold procurements through the platform, but, as far as I understand, can also submit data on all procurement opportunities via Contracts Finder if they choose.

This means there is little extra cost for a local authority to make structured information on all its procurement processes available.

Some planning may be required to manage contract document publication effectively, but the technical complexity involved should be no more than making space available on a local council website for the documents, and linking to these from submissions to Contracts Finder.

Contracts Finder has recently launched an Open Contracting Data Standard API, allowing access to structured information about contracting processes, and a discovery phase is currently underway to improve the platform: with the opportunity to feed in ideas about how local authorities might wish to get their data back, to be able to display it for contracting transparency locally.

Looking ahead

I hope I’ll be able to update this post with news of a successful motion on Thursday. In any case, I’ve been quite struck when working on the research above on the potential to really develop a local open contracting agenda in the UK.

Interested in getting involved too? Drop me a line and let’s explore (tim@timdavies.org.uk)