29th January 2021
Yesterday this blog set out in detail what could be worked out form public domain sources about the politically controversial AstraZeneca contract for the provision of vaccines to the European Union.
That post was an exercise in detective work, aided greatly by the publication of a redacted version of a contract with another supplier, the terms of which fitted neatly with the details disclosed by the European commissioner and the CEO of AstraZeneca in their public bickering.
In the comments below that post, some commenters were able to glean even more from public sources, including from further examination of the published redacted contract (and many of the commenters at this blog are awesome and experts in their fields).
It was an interesting and indeed fascinating exercise.
It was something which should not have been needed.
For the actual contract should have been in the public domain to begin with.
There is no good reason why public contracts are not in the public domain.
(By ‘public contracts’ I mean contracts for the supply of goods, services and works – including for major projects – to public authorities.)
There are (supposed) reasons – the cant phrase ‘commercially sensitive’ is often the excuse – but no good reasons.
But there are two good reasons why public contracts should be in the public domain.
First, the goods, services and works supplied under public contracts are paid for with public money.
And public authorities tend to be reliable payers.
Fortunes can and often are made from lucrative public contracts.
It is not unusual for a valuable public contract to be the security for all sorts of further commercial transactions, so dependable is a public contract as a high-value revenue stream.
A good part of the wealth of the City of London, and of those currently enjoying lockdown life in expensive suburbs, is based not on the hard cut-and-thrust of private sector life but on the soft cushions of public sector contracts.
(And this dependency culture contrasts with the complaints of backbench government supporters about the supposed dependency-culture of free school meals.)
The price of this access to public money should be the burden of transparency.
A private sector company should not have the benefit of these lucrative and low-risk public contracts, and also have the contract shielded from public scrutiny.
Second, turning from revenue to performance, there is a public interest in publication of how any public contract addresses issues of risk allocation and sanctions for breach.
This is not about prices – as the European commission showed in publication of the redacted vaccine supply contract, it is perfectly possible to publish the substance of how a contract manages risk without publishing (real or imagined) ‘commercially sensitive’ material.
How does the contract deal with foreseeable risks?
How does the contract allocate the burden of risks between the parties?
What happens if a provider is unable to provide the agreed goods, services or works?
This is the meat of any substantial contract – not just the list of what is bought and for what price.
If that is all a contract is then there would be no need for any contract to be more than a page long.
The bulk of a contract, other than for the most simple of transactions, deals with what happens when things do not turn out as agreed – and what can happen next.
And in any public contract what happens next in the event of any non-performance is as much a matter in which the public interest is engaged as in the performance.
But when a contract is – in its entirety – hidden from public view, the public have no knowledge of how that contract allocates risk – or indeed whether the contract allocates risk at all.
This in turn means there will be contracts where the risk of non-performance is loaded entirely on the public authority.
And with such contracts the supplier will not only have the benefit of a lucrative revenue stream but also the benefit of it being legally risk-free.
A public supply contract for cakes, and for the service of eating them.
Publication of such contracts would not, at a stroke, mean that problems of non-performance or overcharging will go away.
Public procurement has many problems, and non-transparency is only one.
But the ‘commercially sensitive’ cloak of invisibility serves no one other than the public officials and suppliers who are shielded from any meaningful scrutiny.
A public official can sign a bad deal (and then sign amendment after amendment to that deal), and no one will find out because it is all ‘commercially sensitive’.
A supplier can get away with either bad contracts or terms not being enforced against them, again because it would be commercially sensitive’ for the terms of the contract to be published.
Some of those in public procurement will view the above as harsh – and will protest: how could you be so offensive and so doubtful.
But such displays of (non-commercial) sensitivity are not a good reason for non-disclosure of public contracts.
If all is well, then nothing will be lost with publication of public contracts – and publication will provided public confidence that good contracts are being entered into at fair prices and with effective and enforceable allocations of risk.
And if all is not well, then…well.
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