Home >  Publications > Selected cases — Access to Official Information > Investigations Completed November 1998 - March 1999 > Case no. A.11/99

Parliamentary Commissioner for Administration

Investigations Completed November 1998 - March 1999

ACCESS TO OFFICIAL INFORMATION

5TH - SESSION 1998-99

Case No A.11/99

Refusal to release information about a grant award scheme

Dr C, who runs a research and development consultancy business, entered a competition for a grant award (the Smart scheme) run by the Department of Trade and Industry (DTI). After being told that his entry had been unsuccessful, he questioned the procedures used to assess his application and the reasons given for rejecting it. As a result of his enquiries, DTI gave him some more information about why his entry did not receive an award. He asked DTI for access to details of all the other projects against which his entry had been compared and to their file on his own entry. DTI refused the request saying that much of the information supplied by the other applicants was commercially confidential and could be withheld under Exemption 13 in Part II of the Code, and that their internal opinion, advice and recommendations about all the entries, including his, could be withheld under Exemption 2. The Ombudsman found that the exemptions which DTI had cited were relevant and, also, that all the information requested could be withheld under the part of Exemption 7(a) which covers the awarding of discretionary grants. However, he also concluded that all applicants were entitled to know the reasons why they were unsuccessful. DTI accepted the Ombudsman's suggestion that the additional information supplied to Dr C in response to his enquiries should be given to all applicants, and they agreed to revise their guidelines and procedures to ensure that future applicants to the scheme are given a fuller explanation. The Ombudsman partly upheld the complaint.

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7.1 Dr C complained that the Department of Trade and Industry (DTI) had refused him access to information to which he was entitled under the Code of Practice on Access to Government Information (the Code). My investigation began in September 1998 after I had received comments from the Permanent Secretary at DTI, following the Member's referral of the complaint to the Parliamentary Ombudsman. I have not put into this report every detail investigated by the Ombudsman's staff but I am satisfied that no matter of significance has been overlooked.

General background

7.2 The Government Offices for the Regions (GOs) were established in April 1994. They combine the former regional offices of what were the Departments of the Environment, Transport, Education and Employment, and also DTI. Buckinghamshire is covered by the Government Office for the South East (GOSE).

7.3 The Smart scheme, which was introduced by DTI in April 1997, is a national competition providing grants to individuals and to small and medium sized enterprises. The scheme contributes to DTI's objectives to stimulate innovation and encourage best practice throughout business, and to foster the creation and development of such enterprises. Individuals and independent small businesses with fewer than 50 employees may submit proposals for support for feasibility studies into innovative technology (Feasibility Stage Awards); independent businesses with fewer than 250 employees may compete for support for development projects up to pre-production prototype stage of new products and/or processes involving a significant technological advance (Development Stage Awards). Larger projects with strategic importance may be considered for Exceptional Awards. Competitions are run by each GO. More than one competition may be held each year.

7.4 All potential applicants are required to register their interest in the Smart scheme by completing a Registration of Interest (RoI) form. Each RoI should be assessed by the GO which covers the geographical area in which the bulk of the work on the project in question is expected to take place. Applicants successful at that stage are invited to apply for a grant award by completing a full application form (AF) and returning it within a given deadline to the appropriate GO. AFs are assessed against a marking framework to determine a short list of award winners. Specialist advice, obtained from one or more sources, is used to assist the assessment team when judging the overall suitability of the entries. A panel of judges then considers all the projects on the short list to determine which of them have best satisfied the competition criteria. Those criteria include: the level of innovation and novelty; viability; market potential; additionality (the potential to bring additional benefit to the United Kingdom or European Economic Area); and the capability of the company or individual to complete the project and achieve successful commercial exploitation of the results.

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Background

7.5 Dr C runs a one-man research and development consultancy business. Before May 1997, he had twice applied unsuccessfully for a DTI grant. On 28 May 1997, he registered an interest in the Smart scheme by completing a RoI form which was forwarded, in error, to the Government Office for London on 29 May. That GO conducted an initial appraisal and on 23 June they invited Dr C to complete an AF and submit it to GOSE for their June 1997 competition. Dr C submitted an application for a feasibility stage award on 27 June. A case officer from GOSE visited Dr C on 30 July to discuss his application. On 21 August, GOSE wrote to Dr C saying that his project had not been selected for a Smart award.

7.6 Dr C telephoned the case officer on at least two occasions about the outcome of his application. He then wrote to GOSE on 2 September questioning the procedure which they used when assessing his application, including the part played by the visit of the case officer. He was concerned in particular about the low score his project received for innovation, and why the project was considered not to be part of the growth strategy of his company. On 15 September, he wrote to a Member of the House of Commons (the Member) enlisting her support and, on 19 September, the Member asked the Parliamentary Under-Secretary of State for Small Firms, Trade and Industry at DTI to comment on the matters raised in Dr C's letter.

7.7 On 2 October, GOSE replied to Dr C's letter of 2 September saying that his project had been carefully assessed against the marking frame and guidelines for the Smart scheme. In addition, it had to be considered in relation to the 24 other projects which were being judged at the same time. The projects which won support were the ones considered to be the strongest in terms of innovation and the prospects for exploitation. They had compared his project again, both to the winning projects and against the marking scheme but could find no grounds for changing their original decision. On 21 October, the Minister of State for Science, Energy and Industry (the Minister) replied to the Member's letter of 19 September giving a brief explanation as to why Dr C's project was unsuccessful. On 7 November, Dr C wrote directly to the Minister saying that DTI had not responded to his particular concern, which was about the Smart procedure rather than the result; he asked them again to consider his views about the way they had assessed the level of innovation in his project and its prospects for exploitation.

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7.8 On 19 November 1997, the Member wrote to the Minister asking for a more detailed explanation of GOSE's decision, in order to help Dr C when making future applications for Smart awards, and for details of the applications of the 14 winners in the competition run by GOSE. The Minister replied on 7 December giving a further explanation of the procedure for assessing Smart applications. He refused the Member's request to see copies of the other applications, saying that the information was commercially confidential and could not be copied to a third party without the consent of the applicants. Each GO prepared a list of Smart winners and when the list for GOSE became available a copy would be sent to her. On 30 December, Dr C wrote to the Member asking for the full DTI file on his Smart application, including all the correspondence from specialist advisers, the assessment report and details of how the marking frame was applied to his project. On 13 January 1998, the Minister replied to Dr C's letter of 7 November giving a further description of the assessment procedure. On 19 January, the Member wrote to the Minister asking for the full DTI file on Dr C's application, as requested in his letter of 30 December. The same day Dr C wrote to the Minister asking for details of the expert evidence which had been obtained and used to assess the level of innovation in his entry. The Minister sent interim replies to both letters on 3 March, apologising for the delay and mentioning that the requests for information were being considered formally under the Code. On 19 June, the Minister wrote to the Member apologising again for the delay and saying that the file in question contained a mixture of internal opinion, advice and recommendations. Disclosure of that information would prejudice the effective administration of a discretionary grant scheme such as Smart. The file also contained information about other applicants, and disclosure of that information would harm their competitive position. As a result, the information could be withheld under Exemption 2 and Exemption 13 in Part II of the Code. The Minister also wrote to Dr C on that date, apologising for the time it had taken to send a substantive reply and describing the assessment procedure again.

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DTI's comments on the complaint

7.9 In his reply of 23 September, the Permanent Secretary told me that the file relating to Dr C's application contained internal opinion, advice and recommendations on Smart projects, the disclosure of which would prejudice the frankness and candour of internal discussion. The file also contained some information about other applicants' entries which was commercially confidential and which, if released, might harm their competitive position. The information on the file was therefore withheld under Exemption 2 and Exemption 13 as DTI took the view that the harm which would arise from releasing the information in question outweighed any public interest in disclosing it. The Permanent Secretary added that disclosure of the file would be likely to prejudice the operation of the Smart scheme itself so Exemption 7(a) was also relevant; mindful, however, of the Ombudsman's comments in earlier cases, that departments should restrict the number of Code exemptions they rely upon, the Department's formal position was that the information request was covered by Exemption 2 and Exemption 13. Also relevant was that part of paragraph 4 of Part I of the Code which says: 'There is no commitment that pre-existing documents, as distinct from information, will be made available in response to requests'. In respect of Dr C's request to see the information which was used to assess the level of innovation in his entry, the Permanent Secretary said that DTI had provided him with information over the telephone and in writing; he referred, in particular, to the Minister's letter of 19 June (paragraph 7.8). Any other relevant information was covered by the restrictions he had already mentioned. As to the complaint about delay, the Permanent Secretary said DTI had apologised to Dr C and the Member, and he repeated that apology. The requests had raised some difficult issues, but his department also acknowledged that there had been an internal failure on their part which they were addressing.

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The Code of Practice on Access to Government Information

7.10 Paragraph 3 of Part I of the Code describes information the government says it will make available. I refer to that commitment later in this report; the relevant parts of the paragraph read as follows: 'Subject to the exemptions in Part II, the Code commits departments':

i) to publish the facts and analysis of the facts which the Government considers relevant and important in framing' decisions';

iii) to give reasons for administrative decisions to those affected'.

- internal opinion, advice, recommendation, consultation and deliberation'.

'a) Information whose disclosure could lead to improper gain or advantage or would prejudice':

- the awarding of discretionary grants.'

'Information including commercial confidences, trade secrets or intellectual property whose unwarranted disclosure would harm the competitive position of a third party.'

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Investigation

7.14 The Ombudsman's staff visited GOSE and obtained the file covering Dr C's application. This file contains a large amount of information which Dr C will have already seen, including the RoI and AF which he completed, letters he and the Member sent to DTI, and DTI's replies to those letters. Of the remaining documents on the file, the following papers relate directly to the assessment of Dr C's application: the financial assessment; expert advice obtained from elsewhere in DTI; the completed marking frame; a case officer's report on the visit to Dr C on 30 July 1997; an assessment report; notes on the meeting of the Smart judging panel held on 20 August; and a note summarising the panel's assessment of Dr C's application. Also on the file is internal advice relating to the letters from Dr C and the Member, as well as miscellaneous papers such as telephone notes and fax header pages. The first financial appraisal was carried out in May 1996, in respect of an earlier application from Dr C, by an accountant employed by GOSE on a contractual basis. As part of that contractual agreement, there is an undertaking that DTI will 'treat as confidential all unpublished information supplied by the Contractor under the Contract'. The accountant was asked to review his appraisal of Dr C's business when GOSE received Dr C's 1997 application. (I note that the accountant has informed DTI that he would not favour disclosure to Dr C of information from his appraisal.) The other expert advice which GOSE obtained came from within DTI. It comprised: a completed marking frame; advice as to the extent to which Dr C's application met each of the competition criteria; an overall recommendation in respect of the project; and information about the expert's knowledge of the subject area of Dr C's project. Since August 1998, experts who are asked to contribute to the assessment of a Smart application are informed that the information they provide 'could be revealed under the rules for Open Government on rare occasions'. However, this was not part of the guidance at the time of Dr C's application and the nature of such occasions is not defined.

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7.15 GOSE told the Ombudsman's staff that 16 projects considered by the Smart panel in the June 1997 competition received funding. The Ombudsman's staff examined one of the files that GOSE held on other applicants, which contained information about a successful applicant for a Smart award in that competition. The version of the guidance notes about the Smart award which was sent to those applying for the June 1997 awards contains a statement that information provided by applicants in response to questions 1 to 17 in the application form will be published if their entries are successful (although elsewhere on the AF, there is an 'In Confidence' privacy marking). The information is published by DTI in a directory of Smart winners in England, Wales, Scotland and Northern Ireland. GOSE told the Ombudsman's staff that the latest directory will be published in December 1998 and will include details of the 16 winners in the June 1997 competition. They would send a copy of the directory to the Member as soon as it has been printed. Copies are likely to be available in mid December.

Assessment

7.16 Part of Dr C's request was to see all the information contained in DTI's files on the 16 applicants who were awarded grants. As these 16 applicants supplied information to DTI on the understanding that if they were successful some of it would be published, I have confined my assessment to the information in those files which is not, and was not intended to be, in the public domain. DTI take the view that some of this information is covered by Exemption 13 in Part II of the Code. The files in question include commercially confidential information, such as information relating to applicants' detailed submissions about their projects and background financial information. I accept that disclosure of that information might harm the competitive position of the companies who provided it and, therefore, I consider that it was correctly withheld by DTI.

7.17 There was information on the files of the other applicants which was not covered by Exemption 13. Some of that remaining information covers the views of those expert advisers asked by DTI to comment on various aspects of the other applications. It has been established (paragraph 7.14) that this advice is effectively internal advice. In my opinion such advice comes within the ambit of Exemption 2 in Part II of the Code and I accept that it may not remain frank and unequivocal if it were known that it might be released not only to the company itself (to which I return later) but to other competitors. Such a situation could cause the kind of harm envisaged by the exemption. My opinion is expressed only in the context of this case and it does not take account of the guidance now given to experts on the possible disclosure of their advice (see paragraph 7.14).

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7.18 Beyond Exemption 2 and Exemption 13, however, is that part of Exemption 7(a) which deals with the operation of discretionary grant schemes like Smart. It appears to me that the Smart scheme, in which applicants compete against each other for limited funds, and whose applications are assessed on their relative merits, would not operate effectively if applicants were able to gain access both to information provided by their rival competitors and to DTI's assessments of those applications. That is self-evidently applicable to any current scheme, but would that risk remain after the awards in any particular competition have been made? I believe so. Applying for a Smart award does not preclude an unsuccessful applicant from entering the competition again (as Dr C did himself) and as long as the Smart scheme continues to exist, therefore, the argument applies in favour of non-disclosure of information about both past and current applications, as it is clearly the case that an unfair advantage could be obtained if an individual applicant had the opportunity of access to the kind of information requested in this case. I therefore found that all the details about rival applicants and DTI's assessments of those applications may be withheld, in the interest of maintaining the integrity of the Smart scheme, under Exemption 7(a).

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7.19 I now consider Dr C's request to see all the information about his own application. Much of the information held on his file originated from him. The Code does not apply to the information he provided as it is information he already holds. However, the file does contain material which did not originate from Dr C. I repeat that the Code gives a right of access only to information, not to documents, and that it is the refusal to provide the information in Dr C's file I am considering here. The further material includes the technical advice which was provided as part of the assessment of Dr C's application. It involves the initial views of DTI's expert advisers (including their financial adviser); the assessment of their case officer, and the opinions and conclusions of the Smart judging panel. Exemptions 2 and 7(a) appear to me to be potentially relevant to this advice.

7.20 There is little doubt in my mind that the advice and opinion under consideration here is of the kind which Exemption 2 is designed to protect. Exemption 2, however, incorporates a harm test and, therefore, the issue of whether disclosure of this information harms the 'frankness and candour of internal discussion' as defined by the Code must be considered. In trying to form a view on this I am conscious that DTI have provided no specific evidence in relation to this exemption to support the view that harm would result from any disclosure. What harm might there be? I recognise that the Smart awards are competitive, and the winners receive significant financial support for their proposals. It is clearly right that any individual or organisation whose application for funding is unsuccessful should be told why. Dr C has been given some information, in very general terms, as to why he did not receive an award; but there may be a case for saying that he should have been given more at the time that he was notified that his application had been unsuccessful. While sympathising strongly with Dr C's desire to have more detailed information, it seems to me that to provide him with detailed information about the views of the advisers consulted and the views of the panel of judges would serve only to undermine the Smart scheme. It is essential that those providing advice of this kind should feel free to do so in as frank and uninhibited a way as possible. However, as noted in paragraph 7.14, the later Smart guidance (although not the guidance in existence at the time of Dr C's application) now recognises the possibility that this advice could, on occasion, be publicly revealed. This exemption may not therefore be appropriate in the future, although obviously each case must be considered on its merits.

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7.21 As far as the appraisal by the financial adviser is concerned, I have noted (see paragraph 7.14) that his advice is provided under a cloak of contractual confidentiality. In particular, as part of that contract, DTI have agreed to treat as confidential " all unpublished information supplied by the Contractor under the Contract'. I am satisfied that this contractual arrangement affords to the financial appraisal additional protection to that already provided by the application of Exemption 2.

7.22 In addition to Exemption 2, the information sought by Dr C is also covered by Exemption 7(a) in the way in which that exemption applies to discretionary grant schemes. The same arguments apply here to the information on Dr C's own file as they do to the information on the files of his competitors. It seems clear to me that providing Dr C with the information he seeks could prejudice the operation of the Smart award scheme in that it would give him information which is not available to his competitors. That would clearly work to his advantage. Smart award competitions are held on a regular basis: Dr C has himself applied on three occasions. I accept that the scheme could not work fairly if one applicant had access to information not made available to others. Although there might be some public interest in having the evaluative process behind the Smart awards brought into public view, I am satisfied that the wider public interest would be better served by maintaining the integrity of that process and by ensuring that no individual competitor is able to gain any personal advantage. It could be argued that the solution to the difficulty would be to make all the information, from the details of the individual applications through to the comments of the judging panel, equally available to all competitors. While this would undoubtedly meet the test of fairness, it seems to me that the logistics of such an exercise would be impractical and render the scheme virtually inoperable. On that basis, I am of the opinion that Exemption 7(a) can be applied to withhold this information as well as Exemption 2.

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7.23 I turn finally to DTI's handling of the information request. About the matter of delay, I welcome the Permanent Secretary's further apology for the time taken to review the information request and his undertaking that improvements will be made to GOSE's internal procedures for dealing with Ministerial correspondence. The other element is: did GOSE provide Dr C with a sufficient explanation as to why his application for a Smart award was unsuccessful? Certainly, it was only as a result of persistence on the part of both Dr C and the Member that more information about the assessment procedure was released than was contained in the rejection letter sent to him on 21 August. DTI said, after these exchanges of correspondence were exhausted, that they could provide no more information without releasing information covered by Code exemptions. This suggests that the rejection letter could have contained a more detailed explanation as to why Dr C's project did not receive an award. I suggested to the Permanent Secretary that the additional information contained in the Minister's letters to Dr C and the Member, which is of a general nature, is the sort of information which should be included automatically in the letters they send to all unsuccessful applicants. Also, should any unsuccessful applicant from a previous competition write to DTI requesting a fuller explanation as to why they did not receive a Smart award, I would expect DTI to provide them with the same level of information as that contained in the Minister's replies to Dr C and the Member. In his reply, the Permanent Secretary said the Department would review their guidelines and prepare a new standard rejection letter for the Smart scheme which would be used by all GOs to provide additional information to applicants. In addition, lessons learned from this case would be disseminated across the Department as they may also apply to other grant schemes.

Conclusion

7.24 I accept that DTI were entitled to withhold from Dr C, under Exemption 13, much of the information submitted to them by other Smart applicants; and I also accept that the internal advice and assessments of all Smart applicants is covered by Exemption 2. I found that Exemption 7(a) may also be relied upon to withhold all this information. However, the additional information which DTI released in response to further enquiries made by Dr C and the Member is the sort of information which should be made routinely available to all unsuccessful candidates; DTI have agreed to review their guidelines and procedures to ensure that this occurs to benefit future applicants to the Smart award scheme. As to their handling of Dr C's information request, they have apologised to him for the time taken to review his request under the Code. I see this as a suitable outcome to a partially justified complaint.

Total screening and investigation time = 19 weeks

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Last updated: 4 April 2005