Disclosure of Government contracts in NSW

By Brendan Bateman.

Key Points:
There are cascading obligations of disclosure depending on the type of Government contract.

The political maelstrom surrounding certain private-public infrastructure projects in NSW such as the Cross City Tunnel and the Lane Cove Tunnel, and the extent of the Government’s obligation to disclose the terms of the contractual arrangements relating to those projects, has resulted in recent amendments to the Freedom of Information Act 1989 (NSW) (FOI Act) imposing statutory obligations for disclosure of Government contracts.

The Freedom of Information Amendment (Open Government - Disclosure of Contracts) Act 2006 was passed by the NSW Parliament on 22 November 2006. The Act inserts a new section (section 15A) into the FOI Act which requires an agency to provide disclosure of a Government contract in accordance with the requirements of that section within 60 days of that contract becoming effective.

What is a Government contract?

A "Government contract" for the purpose of section 15A is defined to mean essentially a contract between an agency and a private sector entity, under which either agrees to undertake a specific project, provide specific goods or services or transfer real property. It can also include a lease of real property but does not include a contract of employment.

Disclosure obligations

There are cascading obligations of disclosure depending on the type of Government contract. Three classes of Government contracts are prescribed:

• a class 1 contract is a Government contract the value of which is likely to be $150,000 or more.

This attracts the "minimum" levels of disclosure under the amendment, essentially requiring disclosure of the name of the contractor and any related entity with an interest in the contract, the date the contract becomes effective, the particulars of the project, the estimated amount to be paid to the contractor and any provisions by which this can be varied, provisions for the renegotiation of the contract, and a summary of the criteria used to assess tenders if the contract arose from a tender process.

• a class 2 contract is a class 1 contract but which:
• has not been the subject of a tender process; or
• has been the subject of a tender process and the terms have been "substantially" negotiated with the successful tenderer; or
• carries with it an obligation to maintain or operate infrastructure or assets for 10 years or more; or
• is privately financed; or
• involves the transfer of a significant asset of the agency to another party to the contract in exchange for the transfer of an asset to the agency.

In addition to the details to be disclosed for class 1 contracts, a class 2 contract requires disclosure of details relating to the transfer of any assets, the results of any cost-benefit analysis of the contract, a summary of the information used in the contractor's full base case financial model, how risk is to be apportioned between the parties during construction and operation, quantified in net present-value terms and specifying the assumptions involved, and particulars of guarantees or undertakings given.

• a class 3 contract is a class 2 contract the value of which is likely to be more than $5 million.

In addition to the disclosures required for a class 1 and class 2 contract, a copy of the class 3 contract must be published. If the agency does not publish or only publishes part of the contract, it must publish a statement setting out the reasons why the contract or certain provisions have not been published, when it is intended that the contract or provisions will be published, and a general description of the provisions that have not been published.

Disclosure obligations also exist where there is a material variation to the terms of a government contract, the provisions of which have already been disclosed under section 15A.

Publication

The information on Government contracts required to be published is to be published on an internet website (https://tenders.nsw.gov.au/nsw/) and in such other manner as the responsible Minister may approve.

The information is to be published on the website for the greater of 30 days or the date the contract is completed.

Exceptions

Excluded from the disclosure obligations is any information that:

• is "commercial in confidence" – this is defined to mean any provision of a contract that would disclose the contractor's financing arrangements, cost structure or profit margins, full base case financial model, intellectual property or which would otherwise place the contractor at a substantial commercial disadvantage;
• contains the details of any unsuccessful tenderer;
• could reasonably be expected to affect public safety or security;
• would otherwise be an exempt document under the FOI Act.

A corresponding amendment to the business affairs exemption of the FOI Act (Schedule 1, clause 7) is made to include "commercial in confidence" provisions of a Government contract.

Further, the definition of "agency" in the FOI Act is amended but only in so far as it relates to section 15A to exclude a State owned corporation (SOC) under the State Owned Corporations Act 1989 or a local authority (although the section provides that the regulations may extend all or part of the disclosure obligations in that section to a local authority). It follows that a Government contract entered into by a SOC is not subject to the new disclosure obligations.

The amendments to the FOI Act create the first statutory obligation in NSW on certain agencies to disclose the details of the contractual arrangements which they enter into with the private sector. Nevertheless, there is no specific provision dealing with non-compliance. Indeed, the amendments anticipate that, notwithstanding the specific details prescribed for disclosure, an agency may nevertheless not publish that information provided that the agency publishes its reasons for not doing so. Further, if any person disagrees with the way in which the agency has interpreted its obligations under section 15A, the agency is to obtain the opinion of the Chairperson of the State Contracts Control Board.

Disclosure regimes elsewhere

Similar requirements for the disclosure of Government contracts already exist in other jurisdictions:

• At the Federal level, agencies must publish on AusTender details of contracts of $10,000 or more and place on its home page lists of contracts of $100,000 or more in the previous 12 months. Exemptions are similar to those under the FOI Act (Cth).
• In Victoria, summaries of contracts exceeding $100,000 and the whole of contracts exceeding $10 million are published on the Contracts Publishing System. Exemptions are similar to those under the FOI Act (Vic).
• In South Australia, summaries of lower value contracts (eg. contracts between $500,000 and $4 million) and the whole of higher value contracts
  (eg. contracts of $4 million or more and contracts involving asset sale of $1 million or more) are published on the Tenders and Contracts website. The Chief Executive of a public authority may decide not to disclose contracts with genuinely confidential business information and trade secrets.
• In Queensland, there is no existing requirement to report on Government procurement, although there are recent recommendations for a new requirement to publish details of awarded contracts and standing offer arrangements $100,000 and over.
• Currently, trade secrets and information that has a commercial value is exempt from disclosure under the FOI Act (Qld).

For further information, please contact Brendan Bateman.