Contractors win courthouse fight to protect their information

Score one for contractors looking to stop agencies from releasing what they feel is proprietary information.

A federal appeals court ruled that the Defense Contract Management Agency was wrong when it released technical and quality control procedures of Sikorsky Aircraft and the Pratt and Whitney unit of United Technologies Corp. The information in question was part of two Freedom of Information Act requests. The Sikorsky information was part of a request filed by a New Haven, Conn., television station, and the request involving Pratt and Whitney was filed by the Hartford Courant in Connecticut.

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The U.S. Court of Appeals for the District of Columbia reversed two decisions made in 2008 by the U.S. District Court for the District of Columbia that supported DCMA's contention that the information was not proprietary and therefore not exempt under FOIA. The law's exemptions cover trade secrets and commercial or financial information obtained from a person and privileged or confidential information.

In defending their actions, DCMA officials said they had removed all of the sensitive, proprietary information and concluded that disclosure of the remaining information wouldn’t cause the contractors substantial competitive harm. DCMA officials told the court that mere embarrassment or hurting a company’s reputation does not trigger FOIA exemptions, according to the court document.

However, the appeals court strongly disagreed. “But where, as here, a contractor pinpoints by letter and affidavit technical information it believes that its competitors can use in their own operations, the agency must explain why substantial competitive harm is not likely to result if the information is disclosed,” the judges wrote.

“We find DCMA’s response insufficient,” they added. “We believe that DCMA failed to provide a reasoned basis for its conclusion to the contrary.”

Furthermore, “an agency’s unelaborated contrary conclusion does not suffice” as an argument against a company that showed it could be hurt if the information was released, the judges wrote. "A naked conclusion, however, is not enough."

The appellate court’s ruling might aid industry as the government demands more information and attempts to be more interactive with the public, experts say.

The decision strengthens a contractor’s ability to claim that government officials should protect its information despite FOIA requests, the Coalition for Government Procurement said in its weekly Friday Flash newsletter.

The court’s decision also traces a road map for successfully challenging a potential FOIA disclosure, according to the newsletter. The coalition tells contractors to mark “proprietary” on each page that contains prices, discounts or other sensitive information when submitting document to agencies.

The industry group also told companies to pay close attention whenever an agency sends a package of information it might release in response to a FOIA request.