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Government Prevented from Disclosing Unit Pricing Information

The government's disclosure of a contractor's unit pricing in a Freedom of Information Act request was barred by the Trade Secrets Act, according to the District Court for the District of Columbia, because disclosure of the confidential information would cause the contractor substantial competitive harm. The contractor opposed the government's release of pricing information contained in two contracts for the procurement of jet engine spare parts. The contractor based its opposition on FOIA Exemption 4, which exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential" (5 USC 552(b)(4)). The government, however, informed the contractor it intended to release the information on grounds the contractor would not suffer substantial competitive harm. The contractor brought a "reverse" suit under the FOIA and the Administrative Procedure Act, and the parties filed cross-motions for summary judgment.

Substantial Harm

Under the FOIA, if the government compels submission of information, as was the case here, the court must determine whether disclosure would "cause substantial harm to the competitive position of the person from whom the information was obtained." Although the burden of proof was on the contractor to demonstrate how the release of the information would cause it harm, the contractor was not required to show precisely how disclosure would harm its competitive position. The court found the contractor provided extensive material explaining how it faced actual competition over contracts for jet engine spare parts and how its competitors could use the disputed information for competitive advantage. The court concluded the government's reasons for granting the FOIA request were contrary to prevailing case law and unsupported in the administrative record, which showed that disclosure of the unit pricing information would lead to substantial competitive harm to the contractor from its customers, who could demand lower pricing if the disclosure were made. According to the court, that showing was sufficient to deem the information "confidential" for purposes of FOIA Exemption 4 and the Trade Secrets Act. (General Electric Co. v. Dept. of the Air Force, DC DofC, 53 CCF ¶79,181)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

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