Freedom of Information Act
CCC objected to releasing the line item prices and hourly labor rates as trade secrets. The Air Force rejected the CCC objections, so CCC sought injunctive relief.
The Court affirmed its earlier decisions and held that “constituent or line-item pricing information in a government contract falls within exemption 4 of the FOIA if its disclosure would impair the government’s ability to obtain necessary information in the future or cause substantial harm to the competitive positions from whom the information was obtained.” The Court rejected the Air Force attempt to establish a “per se” rule of disclosure of pricing data and concluded that earlier decisions had not established such a rule because the contractor had not established how “A rival
[could] reverse engineer competitively sensitive information.”
CCC argued that disclosure of the line-item prices would permit a competitor to undercut its prices for option work, thereby causing it competitive harm. The Air Force responded that it was likely to exercise the option to avoid high administrative costs. The Court pointed out that the Air Force ignores its obligation to evaluate the exercise of the option and only exercise the option if doing so “is the most advantageous method of fulfilling the government’s needs.”8
The Court also stated that the Federal Acquisition Regulation (“FAR”) requires “the debriefing shall not reveal any information …exempt from release under the Freedom of Information Act including… trade secrets.”9
The moral of the story here is to be alert for any effort by the government to release line-item pricing and unit labor costs, and object vigorously to any proposed release. Be sure you will suffer competitive harm in some way if the prices are released. The total contract price may be released. Do not rely on the government to protect your confidential information and possibly assume they will do so. Vigorous intervention on your part is required.
Tom Petruska, Owner
Contracts Unlimited, Incorporated
