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Guidance on Confidentiality in Procurement - FMG 3

Published July 2007

The purpose of this guidance is to assist Financial Management and Accountability Act 1997 [External Site] (referred to as agencies in this guidance) to identify and manage confidential information whilst ensuring an accountable and transparent procurement process.  This guidance is also designed to assist agencies to make appropriate use of confidentiality provisions in contracts and agency agreements (both referred collectively to as contracts in this guidance) and to correctly report on the use of confidentiality provisions in contracts.

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Table of Contents

Index

  1. Purpose
  2. Overview
  3. What is Confidential Information?
  4. Managing Confidential Information in a Procurement
  5. Confidentiality Clauses in Contracts
  6. Disclosure and Reporting

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1. Purpose

1.1 The purpose of this guidance is to assist Financial Management and Accountability Act 1997 (FMA Act) agencies (referred to as agencies in this guidance) to identify and manage confidential information whilst ensuring an accountable and transparent procurement process. This guidance is also designed to assist agencies to make appropriate use of confidentiality provisions in contracts and agency agreements (both referred collectively to as contracts in this guidance) and to correctly report on the use of confidentiality provisions in contracts.

1.2 This guidance does not apply to Commonwealth Authorities and Companies Act 1997 bodies.

1.3 In particular, this guidance assists agencies to:

FOOTNOTE:

  1. Information contained in a contract, or information obtained or generated in performing the contract.

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2. Overview

Index

Identifying and Managing Confidential Information

2.1 The principle of accountability and transparency as set out in the Commonwealth Procurement Guidelines (CPGs) suggests that contracting information should not be confidential unless there is a sound reason, informed by legal principle, for maintaining the confidentiality of the information.

2.2 Where the parties to a contract agree that information is confidential, the contract will include confidentiality clauses setting out how the parties will deal with that information. Agencies should not agree to confidentiality clauses in contracts unless the agency has made an assessment and determined, in accordance with this guidance, that the information to be covered by the clauses is confidential.

2.3 Agencies should carefully assess the need for confidentiality in procurement and in contracts. Agencies should balance the need to keep information transparent to meet reporting and disclosure requirements with the need to protect the confidentiality of information that might damage the Australian Government's interests or the commercial interests of suppliers.

2.4 A range of information may be determined to be confidential during a procurement process including:

2.5 This guidance deals with the following aspects of managing confidential information where it arises in a procurement process:

2.6 Determining whether information is appropriately protected as confidential is sometimes difficult so agencies should consider seeking expert legal advice. This guidance is not intended to constitute legal advice.

2.7 If during the course of a procurement, information is determined to be confidential the agency must ensure that:

Disclosure

2.8 As a party to a contract, the Australian Government cannot provide an absolute guarantee of confidentiality. The Australian Government is subject to a number of obligations whereby it is required to disclose information, regardless of any contractual obligations to maintain confidentiality. Disclosure obligations include:

What this Guidance does not Cover

2.9 This guidance does not cover:

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3. What is Confidential Information?

Index

3.1 For the purpose of this guidance confidential information is information that is either:

3.2 Confidential information may be:

3.3 Section 4 sets out how confidential information should be managed throughout the procurement process.

Legislative Requirements

3.4 Legislative requirements include statutory secrecy provisions, the Privacy Act 1988 [External Site] (Privacy Act) and any other legislation that can have the effect of requiring that particular information remains confidential.

3.5 There are several statutory provisions, known as secrecy provisions that restrict the disclosure of certain types of information held by the Australian Government. Often the breach of a secrecy provision is also a criminal offence. Information within the scope of a secrecy provision would be regarded as confidential information.

3.6 The Privacy Act establishes a framework for dealing with personal information held by the Australian Government and certain private entities. The Privacy Act contains specific provisions dealing with the protection of personal information by "Commonwealth Service Providers" (CSPs). These provisions require CSPs to behave as if they are an agency when dealing with personal information. The Privacy Act also requires agencies to include certain clauses in contracts with CSPs to ensure these requirements are met.

Determining that Information is Confidential

3.7 Where there is no legislative requirement to maintain confidentiality, an agency may decide that certain information is to be treated as confidential. This applies to information held either by the Australian Government or by a potential supplier.

3.8 Agencies' assessments of whether information is confidential should be made on a case-by-case basis. The decision about whether information is to be protected as confidential must be made for each procurement and not be influenced by decisions on confidentiality in other procurements.

3.9 The need for confidentiality must be balanced against public accountability requirements. It may be appropriate for an agency to determine that information is confidential in the following circumstances:

Public interest

3.10 Information may be determined to be confidential where its disclosure would be contrary to the public interest. The Department of Prime Minister and Cabinet's publication Government Guidelines for Official Witnesses before Parliamentary Committees and Related Matters [External Site] provides guidance on how to determine whether information should be treated as confidential on the grounds of public interest.

3.11 Public interest covers a wide variety of issues including national security, defence and Cabinet decisions and/or deliberations.

Intellectual property

3.12 Legislation provides formal protection of intellectual property rights including patents, trade marks, designs, copyright, circuit layout rights and plant breeder's rights.

3.13 For intellectual property that belongs to the Australian Government, the agency must consider whether this information should be treated as confidential in a particular procurement or contract. In the case of a request by a supplier to treat intellectual property as confidential, the agency should consider if the information is confidential in accordance with the Confidentiality Test below.

Other commercial confidentiality

3.14 Potential suppliers may seek protection of other commercial information. The CPGs require agencies to consider on a case-by-case basis any request from a potential supplier for material to be treated as confidential. Agencies may decide that a potential supplier's information is confidential if it meets the Confidentiality Test below. The Confidentiality Test can also be used to assess whether information held by an agency should be kept confidential due to its commercial sensitivity.

The Confidentiality Test

3.15 The Confidentiality Test consists of the following four criteria, based on legal principle, which must all be met in order to determine that a potential supplier's commercial information is confidential.

Criterion 1: The information to be protected must be specifically identified.

3.16 Agencies are to consider what specific information, if any, is legitimately protected from disclosure. A request for inclusion of a provision in a contract that states that all information is confidential does not pass this test. Individual items of information, for example pricing, must be separately considered.

Criterion 2: The information must be commercially ‘sensitive'. This means that the information should not generally be known or ascertainable.

3.17 The specific information must be commercially ‘sensitive' and it must not already be in the public domain. A request by a potential supplier to maintain the confidentiality of commercial information would need to show that there is an objective basis for the request and demonstrate that the information is sensitive.

Criterion 3: Disclosure would cause unreasonable detriment to the owner of the information or another party.

3.18 A potential supplier seeking to maintain confidentiality would normally need to identify a real risk of damage to commercial interests flowing from disclosure which would cause unreasonable detriment. For example, disclosure of Internet price lists would not harm the owner, but disclosure of pricing information that reveals a potential supplier's profit margins may be detrimental.

Criterion 4: The information was provided under an understanding that it would remain confidential.

3.19 This criterion requires consideration of the circumstances in which the information was provided and a determination of whether there was a mutual, express or implied understanding that confidentiality would be maintained. The terms included in tender request documentation and in draft contracts will impact on this. For example, a request for tender and draft contract which included specific confidentiality provisions would support an assertion by a potential supplier that the agency has agreed to accept information on the understanding that it would remain confidential.

When is a Claim to Confidentiality Legitimate?

3.20 Legitimate claims to confidentiality may include where disclosure of the information would damage the commercial interests of the potential supplier. Each claim to confidentiality must be examined on a case-by-case basis. Agencies need to be satisfied that a request from a potential supplier for confidentiality meets the four criteria of the Confidentiality Test.

3.21 Appendix A provides examples of how to apply the Confidentiality Test. Categories of information that may meet the requirements of the Confidentiality Test include:

3.32 Examples of the types of commercial information that would not generally be considered to be confidential include:

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4. Managing Confidential Information in Procurement

Index

4.1 Confidentiality should be considered and managed throughout the procurement process. This includes planning the procurement to preparing request documents, through evaluating submissions, to awarding and managing the contract.

4.2 Throughout the procurement process, agencies should ensure that they protect the Australian Government's confidentiality interests where appropriate and consistent with this guidance.

4.3 Agencies should be aware that suppliers from the private sector may seek to protect their information as confidential. Where this occurs, agencies need to make an assessment of the information and determine whether the information should be protected as confidential.

Procurement Planning

4.4 When planning a procurement, agencies should consider the nature of the procurement and whether it is likely to raise confidentiality issues for the Australian Government. Such issues can arise in a number of ways including where:

4.5 The Australian Government's confidentiality can be managed in a number of ways including:

4.6 Agencies should also consider whether the nature of the procurement may raise confidentiality issues for potential suppliers. Such issues can arise in a number of ways including where:

4.7 Where a procurement may give rise to specific claims for confidentiality by potential suppliers, the planning of the procurement should take account of this by:

4.8 Even if a procurement process does not involve the submission of tenders, agencies should ensure that before potential suppliers provide information, they are made aware of the Australian Government's reporting and disclosure obligations and the agency's position in relation to dealing with commercially sensitive information. This could be done using a draft contract or through other forms of communication with potential suppliers.

Approaching the Market

4.9 Request documentation, including any draft contract, should reflect the agency's requirements for confidentiality and position on commercially sensitive information as assessed during the procurement planning process.

4.10 Where the planning of the procurement indicates that the confidentiality interests of the Australian Government need to be protected agencies should put appropriate measures in place. These could include:

4.11 Where the planning of the procurement indicates that supplier confidentiality issues should not arise, or that the agency would not be prepared to provide protection for commercially sensitive information after the award of the contract, the agency should:

4.12 Where the planning of the procurement indicates that supplier confidentiality issues may arise, agencies can:

4.13 Agencies must inform potential suppliers that agencies may be required to disclose information, regardless of any contractual requirements to maintain confidentiality, to parliamentary committees, the Auditor-General, the public under the provisions of the FOI Act (unless exempted) and, if required, the courts. Request documentation and any draft contract should have clauses specifying that agencies are required to disclose information in these circumstances.

4.14 Agencies should take care to ensure that when dealing with potential suppliers they do not make representations about maintaining the confidentiality of suppliers' commercial information that are inconsistent with the request documentation or the draft contract.

4.15 Model clauses for agencies to use are available at Appendix B. These clauses are not mandatory.

Handling and Evaluating Submissions

4.16 For probity, agencies must ensure all submissions are treated as confidential for the duration of the procurement process. Similarly, all unsuccessful submissions should be kept confidential after the award of the contract.

4.17 Accountability and transparency requirements mean that the successful submission and the resulting contract generally would not be confidential.

4.18 When evaluating submissions, it is open to the agency to assess the potential supplier's ability to meet the confidentiality obligations of the Australian Government, in accordance with stated evaluation criteria.

4.19 It is also open to the agency to evaluate submissions having regard to potential suppliers' claims for confidentiality where this is consistent with the stated evaluation criteria. The extent to which potential suppliers seek protection of particular information, such as intellectual property, may impact on the overall cost and risk of the proposal, for example transition and maintenance costs.

Awarding a Contract

4.20 Under the CPGs a contract is not required to be awarded to a supplier that the agency has determined is not fully capable of undertaking the contract. If confidentiality requirements in the draft contract are not able to be met by a potential supplier then they cannot be considered to be fully capable of undertaking the contract.

4.21 Following the evaluation process, agencies need to assess any supplier claims to confidentiality in accordance with Section 3 of this guidance and determine whether the information should be treated as confidential.

4.22 If the agency decides that this information should be kept confidential, appropriate confidentiality clauses should be included in the contract. Model clauses for the protection of specific information are available at Appendix B.

4.23 The reasons for agreeing to any specific confidentiality provisions should be documented by the agency. Documenting decisions about confidentiality is consistent with accountable and transparent procurement and will assist agencies to meet their reporting requirements on confidentiality consistent with FMG No.15 Guidance on Procurement Publishing Obligations.

4.24 If an agency decides that the claimed material does not meet the requirements for confidentiality, the potential supplier must be advised of this and offered the opportunity to withdraw or provide further information in support of the claim for confidentiality. If agreement cannot be reached and a contract cannot be awarded, the agency may need to approach the next preferred potential supplier.

Management of Contractual Information

4.25 Confidential information should be managed in accordance with any relevant legislation and confidentiality provisions in the contract. Irrespective of the terms of the contract, disclosure of supplier's confidential information may be necessary in some cases, for example to a parliamentary committee. Where a supplier's confidential information is required to be disclosed and this is inconsistent with the terms of the contract, written notice should be given to the supplier concerned prior to disclosing the information.

4.26 Depending on the terms of the contract, confidential information may remain confidential for the period of the contract, a period specified in the contract, or as governed by legislation. Confidentiality of information should only be maintained for the length of time that the information remains sensitive. Generally this won't be for an unlimited period.

4.27 It is open to agencies to negotiate with contractors to reassess the classification of confidential contractual information as non-confidential where the sensitivity of the information has diminished over time. If this situation arises, the agency should reassess the information based on this guidance.

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5. Confidentiality Clauses in Contracts

Index

5.1 There are two broad types of confidentiality clauses used in contracts;

General Confidentiality Clauses

5.2 General confidentiality clauses are included in many contracts. Such clauses either restate legislative obligations for confidentiality (such as under the Privacy Act or a secrecy provision) or set out a general understanding between the parties in relation to how they will deal with information when performing the contract.

5.3 In relation to the obligations arising under the Privacy Act, the Privacy Commissioner has issued guidelines to assist agencies to meet their obligations when engaging contractors. Agencies are required to include clauses in contracts covering the application of the Privacy Act to contractors and sub-contractors. Further information and standard clauses are available from the Office of the Privacy Commissioner website [External Site].

5.4 Contractual provisions are generally not required to maintain confidentiality obligations which arise from other legislation as these apply irrespective of what is included in a contract. However, agencies can include general provisions in the contract to remind suppliers of these legislative requirements.

5.5 General confidentiality provisions which do not identify any specific information as confidential, yet require confidentiality to be maintained, can appropriately be included in contracts. This type of contract provision deals with information which can only be identified in general terms and imposes a duty of confidentiality should such information be generated or obtained performing the contract.

Specific Confidentiality Clauses

5.6 Where an agency has determined that information is to be kept confidential, the mechanism for protecting this information is usually through a specific confidentiality clause. Specific clauses can protect the confidentiality of:

Clauses protecting information in the contract

5.7 Some contractual provisions protect specific information contained in the contract as confidential. Such clauses would only be necessary where the contract needs to specify the information that the agency has determined is confidential. Examples of where this could occur include where the contract specifies:

5.8 The existence of a confidentiality provision in a contract would not in itself be confidential.

Clauses protecting information obtained or generated in performing a contract

5.9 Contractual provisions can also be used to protect specific confidential information obtained or generated in performing the contract. These clauses can be used to protect commercial information that an agency has determined is confidential or for the protection of Australian Government material. Examples of where these clauses could be used include where:

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6. Disclosure and Reporting

Index

Disclosure

6.1 Where contracts have confidentiality provisions, those provisions generally specify to whom the information can be released and in what circumstances.

6.2 Irrespective of the terms of the contract, the Australian Government cannot provide an absolute guarantee of confidentiality. Agencies may be required to disclose confidential contract-related information to a parliamentary committee, the Auditor-General, to the public under a Freedom of Information request (if not exempted) or to a court. To ensure suppliers are fully aware of these obligations they should be set out in request documentation and in contracts which include confidentiality provisions.

6.3 Where confidential information is required to be disclosed, for example following a request from a parliamentary committee, an agency must provide reasonable notice in writing to the party from whom the information originated.

Australian National Audit Office access

6.4 Specific clauses should also be included in contracts to ensure the Australian National Audit Office (ANAO) has access to a contractor's premises to conduct audits and to obtain information. Model clauses addressing this issue are available at Appendix B. Confidentiality clauses in contracts should not override this disclosure obligation.

Reporting

6.5 The reporting requirements for procurement contracts are set out in FMG No. 15 Guidance on Procurement Publishing Obligations. One of these requirements is for agencies to report on AusTender the use of confidentiality provisions in contracts valued at $10 000 (GST inclusive) and above along with the reasons for the provisions within six weeks of entering into the contract. The reporting of confidentiality provisions on AusTender places this information in the public view, ensuring that the use of confidentiality provisions remains transparent2.

6.6 When reporting the use of confidentiality provisions in AusTender [External Site], agencies are required to identify:

6.7 AusTender includes an overarching statement indicating that most contracts reported contain general confidentiality provisions and the reasons these clauses are used. If a contract contains only general confidentiality provisions (such as where the provisions at B3 of Appendix B are used without a schedule listing specific information), the contract will be covered by the overarching statement and so would be reported as "no" for clauses protecting information contained in the contract (contract) and "no" for clauses protecting information obtained or generated in performing the contract (outputs).

6.8 Where a contract contains specific confidentiality provisions (such as where the provisions at B3 of Appendix B are used with a schedule listing specific information) the agency is required to indicate on AusTender whether the provision protects information in the contract (contract) and/or information obtained or generated in performing the contract (outputs). Table 1 below summarises the reporting of confidentiality on AusTender including the available reasons for confidentiality provisions.

This table explains your responsibilities in reporting on the Austender website in a variety of situations. The left column lists the various situations, the second column relates to information contained in the contract and the third column relates to information obtained or generated in performing the contract.

Table 1: Reporting different types of confidentiality provisions on AusTender
Situation Protecting information contained in the contract (AusTender "Contract") Protecting information obtained or generated in performing contract (AusTender "Outputs")
Where there are general confidentiality provisions only Report "No" Report "No"
Where there are specific provision/s protecting information in the contract and information obtained or generated in performing the contract Report "Yes" Report "Yes"
Where there are specific provision/s protecting information in the contract only Report "Yes" Report "No"
Where there are specific provision/s protecting information obtained or generated in performing the contract only Report "No" Report "Yes"
Reasons available where a contract is reported as "yes"
  • Costing/profit information
  • Intellectual Property
  • Privacy Act
  • Public Interest
  • Secrecy Provisions
  • Other
  • Artistic, literary, cultural secrets
  • Intellectual Property
  • Privacy Act
  • Public Interest
  • Secrecy Provisions
  • Other

Reasons for confidentiality provisions for AusTender reporting

6.9 When reporting on AusTender, the reasons for confidentiality are to be selected from the options set out below. Where more than one reason for confidentiality applies, each reason should be selected on AusTender.

Artistic, literary or cultural secrets

6.10 This reason is used where information is determined to be confidential because it reveals artistic, literary or cultural secrets. Examples include photo shoots, historical manuscripts or secret indigenous culture. This type of information is not generally set out in the contract itself and accordingly is not included in AusTender as a reason for a specific contract clause protecting information contained in the contract.

Costing/profit information

6.11 This reason is used where the confidential information would reveal the supplier's internal costing information or information about its profit margin. This type of information is generally set out in the contract itself and accordingly is not a reason for a specific contract clause protecting information obtained or generated in performing the contract.

Intellectual property

6.12 This reason can apply to confidential information either in the contract or generated or obtained in performing the contract. This reason is used where the agency has determined that specific intellectual property or trade secrets are to be kept confidential.

Privacy Act

6.13 Many contracts contain general confidentiality provisions for the protection of personal information. As stated above, where a contract contains only general confidentiality provisions, these do not have to be further indicated on AusTender. The standard privacy clauses available at www.privacy.gov.au would be regarded as general confidentiality provisions.

6.14 Accordingly, this reason would only be used where a contract contains a confidentiality provision to protect specific personal information contained in the contract or obtained or generated in performing the contract.

Public interest

6.15 This reason is to be used where an agency determines that information is confidential because its disclosure would be contrary to the public interest. The information protected for this reason could be information in the contract or obtained or generated in performing a contract. Public interest issues could include national security, defence and Cabinet decisions and/or deliberations.

Secrecy provisions

6.16 Secrecy provisions generally apply irrespective of a contractual clause to maintain the confidentiality of the information so this information can be protected through a general confidentiality clause that reminds the parties of their legislative obligations.

6.17 This reason would only apply where a confidentiality provision is used to protect specific information covered by a secrecy provision. The information protected for this reason could be information in the contract or obtained or generated from a contract.

Other

6.18 This reason would be used by an agency for any reason that is different to those set out above. If agencies choose to use this reason for reporting purposes, they should document an explanation of the specific reason and report this on AusTender consistent with FMG No.15 Guidance on Procurement Publishing Obligations. One example of the use of "other" as a reason is where a confidentiality clause is used to protect information because disclosure of the information would have a substantial adverse effect on the financial or property interests of the Australian Government.

FOOTNOTES:

  1. Where the existence of the contract itself is confidential, it may not be appropriate to report the contract. Guidance on dealing with these contracts is available in FMG No.15 Guidance on Procurement Publishing Obligations.
  2. Described in AusTender as Confidentiality (Contract).
  3. Described in AusTender as Confidentiality (Outputs).

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Appendix A: Examples Applying the Confidentiality Test

Index

This section provides examples of applying the Confidentiality Test described in Section 3 when determining whether commercial information is confidential.

All four criteria must be met in order to determine that commercial information is confidential. The four criteria agencies must apply in deciding whether a potential supplier's commercial information is confidential are:

Criterion 1: The information to be protected must be specifically identified.

Criterion 2: The information must be commercially sensitive. This means that the information should not generally be known or ascertainable.

Criterion 3: Disclosure would cause unreasonable detriment to the owner of the information or another party.

Criterion 4: The information was provided under an understanding that it would remain confidential.

Business/Delivery Methodology

A potential supplier has identified as confidential in its submission the specification of how it delivers its services. The potential supplier claims (and the agency agrees) that the methodology has been developed using its "smart" (original or innovative) solution and disclosure is likely to result in competitors adopting the methodology, diminishing its commercial value and adversely affecting the potential supplier's competitive position in the market. Only the potential supplier and a small number of its employees know the methodology. In the approach to the market, potential suppliers were invited to specify what, if any, information they sought to protect as confidential.

Assessment of the information against the confidentiality criteria follows:

Service Level Measures

Service based contracts often contain measures to reward good service delivery and to reduce payment for poor service delivery. The measures set the levels for a reward/reduction regime.

A potential supplier requests that service level measures be treated as confidential on the basis that disclosure would enable competitors to estimate its cost structure and therefore damage its commercial interests. The service level measures have been specifically developed for the proposed contract and are not known to anyone except the supplier and the agency. The agency has not made any representations, either in the tender documentation, or verbally, to the effect that the service level measures would be treated as confidential.

Analysis of the service level measures against the criteria for confidentiality indicates that they do not meet the tests:

Whilst the service level measures in this simplified example would not be confidential based on the above analysis, agencies should be conscious that the quantum of financial penalties or rewards raises similar issues to those applicable to pricing information. For example, contracts that provide for profit to be at risk or shared depending on performance may disclose the supplier's underlying cost structure.

Pricing Information

Each request for confidentiality of pricing information should be considered on its merits.

Generally, the fact that disclosing pricing information would make life more difficult for the supplier is not sufficient reason. For example, a potential supplier may claim confidentiality on the basis that it does not want its competitors to know its prices. However, transparency of such information could, potentially, lead to increased competition and better value for money outcomes for the Government.

The examples below focus on assessing whether individual elements of a pricing methodology would be confidential. Agencies should note that although a specific element may be assessed as not meeting the confidentiality criteria, the complete methodology may nevertheless warrant protection if it meets the test for confidentiality, for example because it provides sufficient information to make a reasonable estimate of a supplier's profit margin.

Total price

In contract negotiations, a potential supplier of human resource services asks an agency to maintain the total price of a proposed contract as confidential on the basis that release of the information would enable its competitors to estimate future bids by the organisation. In previous discussions with the potential supplier, the agency indicated that the Australian Government is required to report the contract price on AusTender. The request for tender also highlighted this requirement.

Analysis of the request indicates that the claim does not meet the test for confidentiality:

Based on this analysis, it would generally not be appropriate for an agency to agree to a request to maintain confidentiality as not all of the criteria have been met.

Price of individual items or groups of items

While prices for individual items or groups of items of property or services would not generally be confidential, there may be some exceptions. Confidentiality would not be appropriate if the pricing information is generally known. However, if individual prices for items forming part of the contractual requirements would disclose underlying costs and profit on that item or other commercially sensitive information such as special discounts, (see below), a potential supplier may legitimately claim that the information is confidential.

A simple example of a case where a unit price would not be confidential is where a potential supplier has advertised the price that will be charged in a catalogue:

Based on this analysis, it would not be appropriate for an agency to agree to a request to maintain confidentiality as the criteria have not been met.

Discounts

A potential supplier may claim confidentiality of pricing information for reasons other than those discussed above. For example, it may be providing the agency with a considerable discount. The potential supplier may properly seek confidentiality of the discount information if it can establish that it would suffer unreasonable detriment if the level of discount offered were disclosed. For example, the potential supplier may be able to demonstrate that its financial interests would be prejudiced if its other customers were to know of and seek similar levels of discount as those available to the agency, or that disclosure of discount information would enable competitors to determine the actual cost of the property or services.

As discounts may or may not be confidential, depending on the circumstances, officials should consider requests to maintain confidentiality of such information on a case-by-case basis.

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Appendix B: Model Clauses

Index

B1. Model Clauses for Confidentiality Undertaking

1. Confidential Information

1.1 The Recipient acknowledges and agrees that:

  1. the Confidential Information is confidential and that any Confidential Information disclosed to the Recipient is disclosed to the Recipient only pursuant to the terms of this undertaking;
  2. it must not, other than with the prior written approval of the Commonwealth, use, disclose, divulge or deal with any Confidential Information, nor allow any act, matter or thing to be done or occur whereby any Confidential Information may be ascertained or used by, or disclosed or communicated to, any other person, except in accordance with the terms of this undertaking; and
  3. improper use or disclosure of Confidential Information would damage the Commonwealth.

2. Restrictions On Use

2.1 The Recipient agrees to use the Confidential Information only for:

  1. considering whether to prepare a Tender, and if the Recipient decides to do so, preparing the Tender; and
  2. negotiating a Contract.

2.2 The Recipient must:

  1. keep the Confidential Information, and all Documents containing, or referring to, any Confidential Information, under effective control of the Recipient;
  2. not use or reproduce any Document containing, or referring to, any Confidential Information, nor allow any other person to use or reproduce any such Document, except to the extent necessary to enable the Recipient to do the things specified in clause 2.1;
  3. take all reasonable steps to ensure that Confidential Information, and all Documents containing, or referring to, any Confidential Information, are protected at all times from any unauthorised use, disclosure or access and immediately notify the Commonwealth if the Recipient becomes aware of any unauthorised access to, or use or disclosure of, any Confidential Information;
  4. if required at any time by the Commonwealth to do so, deliver up to the Commonwealth, or destroy, all Confidential Information, including all Documents containing, or referring to, any Confidential Information, in the possession, custody or control of the Recipient; and
  5. if required by the Commonwealth:
    1. permit the Commonwealth reasonable access to the Recipient's premises and information management systems to ensure or check compliance with this undertaking; and
    2. provide to the Commonwealth a statutory declaration of an officer of the Recipient stating that clause 2.2(e) has been complied with.

3. Disclosure to Employees or Other Representatives

3.1 Subject to clause 3.2, the Recipient may disclose, or give access to, Confidential Information to any employee or any other person nominated by the Recipient as its representative, who needs to access the Confidential Information to enable the Recipient to do the things permitted by clause 2.1.

3.2 The Recipient must, prior to disclosing, or giving access to, Confidential Information to any representative pursuant to clause 3.1, ensure that:

  1. the representative agrees to comply with, and be bound by, the terms of this undertaking; and
  2. a copy of an undertaking signed by the representative has been provided to the Commonwealth.

4. Personal Information

4.1 The Recipient agrees, with respect to all Personal Information acquired by it during the Request for Tender Process, to abide by the provisions of the Privacy Act as if the Recipient were an "Agency" as defined by that Act.

Interpretation

In this undertaking, unless the contrary intention appears:

‘Confidential Information' means: [Note: agency to specify information to be kept confidential]

‘Contract' means any contract negotiated, and/or entered into, with the Commonwealth in connection with the Request for Tender Process.

‘Personal Information' has the same meaning as in the Privacy Act 1988.

B2. Model Clauses for Tender Documents

General statement on front of tender documents

The Commonwealth is subject to a number of specific requirements, which support internal and external scrutiny of its tendering and contracting processes.

This includes the requirement to publish details of agency agreements and Commonwealth contracts with an estimated liability of $10 000 or more and standing offers on AusTender.

Tenderers should note that the Parliament and its committees have the power to require the disclosure of Commonwealth contracts and contract information to enable them to carry out their functions.

The Commonwealth will treat as confidential any information provided by tenderers prior to the award of a contract. Once a contract has been awarded, the Commonwealth will not keep confidential information provided by the successful tenderer. [Note: if the agency intends to consider requests for confidentiality add the following to this paragraph] unless the Commonwealth has agreed to maintain that information as confidential. In considering a request for confidentiality, the Commonwealth will consider whether disclosure would cause detriment to the contractor or other third party and the circumstances under which the information was disclosed.

The Commonwealth cannot provide an absolute guarantee of confidentiality because certain confidential information may be required to be disclosed by law or to the Parliament or the Auditor-General.

Model clause for tender documents

1 Confidentiality

1.1 The Commonwealth undertakes to keep confidential any Confidential Information provided to the Commonwealth by tenderers prior to the award of a contract and, in respect of unsuccessful tenderers, after contract award.

1.2 The obligation of confidentiality in clause 1.1 does not apply if the Confidential Information:

  1. is disclosed by the Commonwealth to its advisers or employees solely in order to consider the tender responses;
  2. is disclosed by the Commonwealth to the responsible Minister;
  3. is disclosed by the Commonwealth, in response to a request by a House or a Committee of the Parliament of the Commonwealth of Australia;
  4. is authorised or required by law to be disclosed; or
  5. is in the public domain otherwise than due to a breach of clause 1.1.

[Note: Agencies should use the following clause if they do not intend to consider requests to protect commercially sensitive information]

1.3 Tenderers should not submit confidential information in their tender. The Commonwealth will not consider requests for information provided by the successful tenderer to be kept confidential after the award of the contract.

[Note: Agencies should only use the following clauses if they are prepared to consider requests for confidentiality]

1.3 The Commonwealth will agree to keep confidential any specific information provided under, or in connection with, the Contract where it is appropriate to do so having regard to the matters covered by the Commonwealth's Guidance on Confidentiality in Procurement.

1.4 To enable the Commonwealth to consider whether it agrees to keep specific information confidential, tenderers must include in their tender any request that information is to be treated as confidential following the award of a contract to it, specifying the information and giving reasons why it is necessary to keep the information confidential.

1.5 The Commonwealth will consider any request made under clause 1.4 and will inform the tenderer whether or not the Commonwealth, in its sole discretion, agrees to the request and the terms under which it agrees.

1.6 The terms of any agreement will form part of the Contract to be awarded at the completion of the tender process.

B3. Model Clauses for Contracts

The following clause allows the parties to specify the particular information to be kept confidential in a schedule. If specific information is set out in the schedule, the clause would be regarded as a specific confidentiality clause for reporting purposes. If there is no specific information contained in the schedule, the clause would be regarded as a general confidentiality clause for reporting purposes.

1 Confidentiality

1.1 Confidential information not to be disclosed

1.1.1 Subject to clause 1.3.1, a Party must not, without the prior written consent of the other Party, disclose any Confidential Information of the other Party to a third party.

1.1.2 In giving written consent to the disclosure of Confidential Information, a Party may impose such conditions as it thinks fit, and the other Party agrees to comply with these conditions.

1.2 Written undertakings 5

1.2.1 A Party may at any time require the other Party to arrange for:

  1. its Advisers; or
  2. any other third party, other than a Commonwealth employee, to whom information may be disclosed pursuant to clause 1.3.1 (a) or (e);

    to give a written undertaking in the form of a deed relating to the use and non-disclosure of the first Party's Confidential Information.

1.2.2 If the other Party receives a request under clause 1.2.1, it must promptly arrange for all such undertakings to be given.

1.3 Exceptions to obligations

1.3.1 The obligations on the Parties under this clause 1 will not be taken to have been breached to the extent that Confidential Information:

  1. is disclosed by a Party to its Advisers or employees solely in order to comply with obligations, or to exercise rights, under this Contract;
  2. is disclosed to a Party's internal management personnel, solely to enable effective management or auditing of contract-related activities;
  3. is disclosed by the Commonwealth to the responsible Minister;
  4. is disclosed by the Commonwealth, in response to a request by a House or a Committee of the Parliament of the Commonwealth of Australia;
  5. is shared by the Commonwealth within the Commonwealth's organisation, or with another agency, where this serves the Commonwealth's legitimate interests;
  6. is authorised or required by law, including under this Contract, under a licence or otherwise, to be disclosed; or
  7. is in the public domain otherwise than due to a breach of this
    clause 1.

1.4 Obligation on disclosure

1.4.1 Where a Party discloses Confidential Information to another person:

  1. pursuant to clauses 1.3.1 (a), (b) or (e), the disclosing Party must:
    1. notify the receiving person that the information is Confidential Information; and
    2. not provide the information unless the receiving person agrees to keep the information confidential; or
  2. pursuant to clauses 1.3.1 (c) and (d), the disclosing party must notify the receiving party that the information is Confidential Information.

1.5 Additional confidential information

1.5.1 The Parties may agree in writing after the date of this Contract that certain additional information is to constitute Confidential Information for the purposes of this Contract.

1.5.2 Where the Parties agree in writing after the date of this Contract that certain additional information is to constitute Confidential Information for the purposes of this Contract, this documentation is incorporated into, and becomes part of this Contract, on the date by which both Parties have signed this documentation.

1.6 Period of confidentiality

1.6.1 The obligations under this clause 1 continue, notwithstanding the expiry or termination of this Contract:

  1. in relation to an item of information described in Schedule X6,
    for the period set out in that schedule in respect of that item; and
  2. in relation to any information which the Parties agree in writing after the date of this Contract is to constitute Confidential Information for the purposes of this Contract, for the period agreed by the Parties in writing in respect of that information.

1.7 No Reduction in Privacy Obligations

1.7.1 Nothing in this clause 1 derogates from any obligation which either Party may have either under the Privacy Act 1988 as amended from time to time, or under this Contract, in relation to the protection of Personal Information.

Interpretation

`Confidential Information´ means information that is by its nature confidential; and

  1. is described in Schedule X 7 of this Contract; or
  2. a Party knows or ought to know is confidential,

    but does not include:
  3. information which is or becomes public knowledge other than by breach of the Contract or any other confidentiality obligation.

B4. Model ANAO Access Clauses

1. Books and records

1.1 Contractor to keep books and records

The Contractor must:

  1. keep and must require its subcontractors to keep adequate books and records, in accordance with Australian accounting standard, in sufficient detail to enable the amounts payable by the Customer under this Contract to be determined; and
  2. retain and require its subcontractors to retain for a period of seven years after termination or expiration of this Contract all books and records relating to the Services.

1.2 Costs

The Contractor must bear its own costs of complying with this clause.

1.3 Survival

This clause applies for the Contract Period and for a period of seven years from the termination or expiry of this Contract.

2. Audit and access

2.1 Right to conduct audits

The Customer or a representative may conduct audits relevant to the performance of the Contractor's obligations under this Contract. Audits may be conducted of:

  1. the Contractor's operational practices and procedures as they relate to this Contract, including security procedures;
  2. the accuracy of the Contractor's invoices and reports in relation to the provision of the Services under this Contract;
  3. the Contractor's compliance with its confidentiality, privacy obligations and security obligations under this Contract;
  4. material (including books and records) in the possession of the Contractor relevant to the Services or Contract; and
  5. any other matters determined by the Customer to be relevant to the Services or Contract.

2.2 Access by the Customer

The Customer may, at reasonable times and on giving reasonable notice to the Contractor:

  1. access the premises of the Contractor to the extent relevant to the performance of this Contract;
  2. require the provision by the Contractor, its employees, agents or subcontractors, of records and information in a data format and storage medium accessible by the Customer by use of the Customer's existing computer hardware and software;
  3. inspect and copy documentation, books and records, however stored, in the custody or under control of the Contractor, its employees, agents or subcontractors; and
  4. require assistance in respect of any inquiry into or concerning the Services or this Contract. For these purposes an inquiry includes any administrative or statutory review, audit or inquiry (whether within or external to the Department), any request for information directed to the Customer, and any inquiry conducted by Parliament or any Parliamentary committee.

The Customer must provide access to the Contractor's computer hardware and software to the extent necessary for the customer to exercise its rights under this clause, and provide the customer with any reasonable assistance requested by the Customer to use that hardware and software.

2.3 Conduct of audit and access

The Customer must use reasonable endeavours to ensure that:

  1. audits performed pursuant to clause 2.1; and
  2. the exercise of the general rights granted by clause 2.2 by the Customer,

do not unreasonably delay or disrupt in any material respect the Contractor's performance of its obligations under the Contract.

2.4 Costs

  1. Except as set out in clause 2.4(b), each party must bear its own costs of any reviews and/or audits.
  2. If the Contractor is able to substantiate that it has incurred direct expenses in the Customer's exercise of the rights granted under clause 2.1 or clause 2.2 which, having regard to the value of this Contract, are substantial, the Customer and the Contractor will negotiate an appropriate reimbursement. Any reimbursement must not be greater than the direct expenses incurred and substantiated.

2.5 Auditor-General and Privacy Commissioner

The rights of the Customer under clause 2.2(a) to 2.2(c) apply equally to the Auditor-General or a delegate of the Auditor-General, or the Privacy Commissioner or a delegate of the Privacy Commissioner, for the purpose of performing the Auditor-General's or Privacy Commissioner's statutory functions or powers.

2.6 Contractor to comply with Auditor-General's requirements

The Contractor must do all things necessary to comply with the Auditor-General's or his or her delegate's or the Privacy Commissioner's or his or her delegate's requirements, notified under clause 2.3, provided such requirements are legally enforceable and within the power of the Auditor-General, the Privacy Commissioner, or his or her respective delegate.

2.7 No reduction in responsibility

The requirement for, and participation in, audits does not in any way reduce the Contractor's responsibility to perform its obligations in accordance with the Contract.

2.8 Subcontractor requirements

The Contractor must ensure that any subcontract entered into for the purpose of this Contract contains an equivalent clause granting the rights specified in this clause.

2.9 No restriction

Nothing in this Contract reduces, limits or restricts in any way any function, power, right or entitlement of the Auditor-General or a delegate of the Auditor-General or the Privacy Commissioner or a delegate of the Privacy Commissioner. The rights of the Customer under this Contract are in addition to any other power, right or entitlement of the Auditor-General or a delegate of the Auditor-General or the Privacy Commissioner or a delegate of the Privacy Commissioner.

2.10 Survival

This clause applies for the Contract Period and for a period of seven years from the termination or expiry of this Contract.

FOOTNOTES:

  1. This sub-clause is optional and is relevant when the Commonwealth is seeking to obtain the maximum protection for sensitive Confidential Information or when the Commonwealth intends to disclose Confidential Information to third party consultants.
  2. Agencies would need to develop a schedule detailing specific information or clauses that are confidential.
  3. If this model clause is being used as a general confidentiality clause because no specific information has bee identified as confidential, references to the schedule should be deleted.

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Appendix C: Reporting Examples

Index

Examples of Correct Reporting

Contract containing a general confidentiality clause – no protection of specific information.

Department of Q entered into a contract for the provision of internal audit services which contained a clause saying that the contractor could not, except in certain circumstances, disclose any confidential information without prior approval. There was no specific information listed as confidential and no requirement to maintain the confidentiality of any of the contract's provisions.

The confidentiality clause in this contract would be regarded as a general confidentiality clause described within the overarching statement in AusTender that most contracts contain general confidentiality provisions. Accordingly, this contract would be reported as not containing provisions protecting information contained in the contract (on AusTender Contract = No) and not containing confidentiality provisions in relation to "information obtained or generated in performing the contract" (on AusTender Outputs = No). This clause was not considered sufficient to enable the contract to be listed as protecting "information obtained or generated in performing the contract" because the information to be protected was not specifically identified, but was only defined in general terms.

Contract protecting specific information in the contract with a general confidentiality clause.

Department of Z is preparing to report a contract which contains a clause (similar to that at B3 of Appendix B) which requires the parties to keep confidential the information listed in the schedule and other information that the parties ought to know is confidential.

Several clauses of the contract are listed in the schedule. These clauses contain details of the supplier's original business methodology and the price of certain individual items. There is no other information listed in the schedule.

This contract would be reported in AusTender as a contract containing clauses protecting specific information contained in the contract (on AusTender Contract = Yes) specifying "intellectual property" and "internal costing/profit information" as the reasons. The contract would be reported as not protecting specific information obtained or generated in performing the contract (on AusTender Outputs = No). The other general confidentiality obligations imposed by the clause would be covered by the overarching statement provided in AusTender.

Contract protecting specific information generated in performing the contract with a general confidentiality clause.

Department of J is preparing to report a consultancy contract which contains a clause (similar to that at B3 of Appendix B) which requires the parties to keep confidential the information listed in the schedule and other information that the parties ought to know is confidential.

The schedule lists the consultant's final report as information to be kept confidential. The report is expected to make recommendations on a number of sensitive issues and the agency has determined that releasing the report would disclose matters contrary to the public interest. There is no other information listed in the schedule.

This contract would be reported in AusTender as a contract not containing clauses protecting specific information contained in the contract (AusTender Contract = No). It would, however be reported as protecting "information obtained or generated in performing the contract" since it identifies specific information generated in performing the contract (AusTender Outputs = Yes). The reason would be reported as "public interest". The clause also imposes general confidentiality obligations as outlined in the overarching statement provided in AusTender.

Examples of Incorrect Reporting

General clause incorrectly reported as protecting "information obtained or generated in performing the contract".

Department K entered into a contract for research into the quality of its service delivery including a survey of clients. The contract contained the clauses required under the Privacy Act to ensure the service provider dealt with personal information as required by the Privacy Act. There was no specific information identified as subject to requirements of confidentiality.

This contract was incorrectly reported as protecting "information obtained or generated in performing the contract" with the reason reported as "Privacy Act".

This contract does not contain any specific confidentiality requirements and should have been reported as not containing provisions protecting information in the contract (on AusTender Contract = No) and not protecting "information obtained or generated in performing the contract" (on AusTender Outputs = No). The privacy clauses are regarded as general confidentiality obligations as outlined in the overarching statement provided in AusTender.

This contract would only be correctly reported as protecting "information obtained or generated in performing the contract" with the reason reported as "Privacy Act" if there were specific information identified in the contract as confidential – for example the contract could have specified that "individual survey responses" be kept confidential.

Contract protecting "information obtained or generated in performing the contract" incorrectly reported as containing provisions "protecting specific information in the contract".

Department X entered into a contract for the design and production of new software. The contract specified that the details of the software design when produced were to be kept confidential.

The contract was incorrectly reported as containing provisions "protecting specific information in the contract" with the reason reported as "intellectual property".

This contract should have been reported as not containing provisions protecting information in the contract (on AusTender Contract = No) but as protecting "information obtained or generated in performing the contract" (on AusTender Outputs = Yes). The reason was correctly reported.

This contract would only be properly reported as containing provisions protecting information in the contract if the confidentiality extended to information set out in the contract.

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Appendix D - Flowchart - Dealing with Confidentiality in Procurement

Appendix D Flowchart dealing with confidentiality in procurement

Appendix D - Flowchart (PDF Version) [PDF Document 31 KB]

Appendix D - Flowchart (RTF Version) [Word Document 1.1 MB]

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Appendix E: Definitions

Agency or agencies
an FMA Act agency or agencies. An FMA Act agency is an entity which is subject to the Financial Management and Accountability Act 1997 [External Site].

Confidential information
for the purposes of this guidance, confidential information is information that is:

Confidentiality
the limiting of access to specified information to authorised users for approved purposes – the confidentiality requirement is determined by reference to the likely consequences of unauthorised disclosure of official information.

Confidentiality clause/confidentiality provision
a clause in a contract, providing for a particular matter; stipulation; or proviso of confidentiality.

Contract
includes a Commonwealth contract or agency agreement. A Commonwealth contract is an agreement for the procurement of property and/or services under which the Commonwealth is obliged, or may become obliged, to make a payment of public money. An agency agreement for the procurement of property and services under which an FMA Act agency is obliged, or may become obliged, to make a payment of public money to another agency8.

General confidentiality clause
a clause in a contract that sets out how the parties will deal with confidential information without identifying specific information to be kept confidential.

Specific confidentiality clause
a clause in a contract that sets out how the parties will deal with confidential information that has been specifically identified.

GST inclusive
the value of a good or service, including the amount of Goods and Services Tax (if any) payable on that good or service.

Privacy Act
means the Privacy Act 1988 [External Site].

Secrecy provision
a statutory provision that prevents the disclosure of a particular type of Commonwealth information.

Submission
includes any formally submitted response from a potential supplier to an approach to the market. Submissions include tenders, expressions of interest and applications for inclusion on a multi-use list.

FOOTNOTE:

  1. Agency agreements will often take the form of a memorandum of understanding.

Copyright Notice

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This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. Requests and inquiries concerning reproduction and rights should be addressed to Commonwealth Copyright Administration, Attorney General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca [External Site]

Contact for information on this page: Procurement Agency Advice

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Last Modified: 10 February, 2010