cLegal Opinion: GMP-0137

Index: 7.340, 7.523

Subject: FOIA Appeal: Offerors\' Proposals

January 14, 1993

Mr. Brian Van Holm, CPM

Management Solutions

8601 Dunwoody Place, Suite 714

Atlanta, Georgia 30350

Dear Mr. Van Holm:

This is in further response to your Freedom of Information

Act (\"FOIA\") appeal dated June 8, 1992 and our letter to you

dated August 5, 1992. You appeal the May 29, 1992 denial of your

FOIA request by Joseph B. Lynch, Manager, Buffalo Office, which

withheld the five successful proposals for real estate asset

management contracts under Exemption 4, 5 U.S.C. Section

552(b)(4), and 15 copies of the Technical Evaluation Panel\'s

(\"TEP\'s\") scoring documents for Management Solutions and 3 copies

of each of the TEP\'s scoring documents for the five successful

offerors\' proposals, under Exemption 5, 5 U.S.C. Section

552(b)(5).

My August 5, 1992 letter to you affirmed the denial of the

withheld documents under Exemption 5. With respect to the denial

of the five proposals submitted by the successful bidders under

Exemption 4, I advised that I was requesting the New York

Regional Office to notify the bidders and afford them the

opportunity to present their opinions on the confidential nature

of their proposals. After receipt of their submissions, I

advised that the Department would render a determination upon

your appeal for the five successful proposals.

Three of the five successful offerors have objected to the

release of the confidential and financial information contained

in their proposals. Based upon their objections and our review

of the information, I have determined to affirm, in part, and

reverse, in part, the initial denial of the five successful

proposals by the Buffalo Office.

The documentation submitted by Re/Max Advantage Real Estate

and Cayuga Real Estate will be supplied to you in its entirety,

as both of these companies informed HUD that they had no

objections to the release of the requested information. For the

reasons explained below, I have decided to withhold Part I and

the cost and pricing data found in Part II of the three remaining

proposals, as this information is confidential or financial

information properly withheld pursuant to Exemption 4.

Exemption 4 exempts from mandatory disclosure \"trade secrets

and commercial or financial information obtained from a person

and privileged or confidential.\" The courts have interpreted

Exemption 4 as protecting confidential commercial or financial

information the disclosure of which is likely to: (1) impair the

Government\'s ability to obtain necessary information in the

future; or (2) cause substantial harm to the competitive position

of the entity from whom the information was received. National

Parks and Conservation Association v. Morton, 498 F.2d 765, 770

(D.C. Cir. 1974). \"In order to show the likelihood of

substantial competitive harm it is not necessary to show actual

competitive harm; actual competition and the likelihood of

substantial injury is all that is necessary.\" Professional

Review Organization of Florida, Inc., v. U.S. Dept. of Health and

Human Services, 607 F. Supp. 423, 426 (D.D.C. 1985); citing, Gulf

and Western Industries, Inc. v. U.S., 615 F.2d 527, 530 (D.C.

Cir. 1979).

The information contained in the successful offerors\'

proposals, which we are withholding under Exemption 4, includes

financial statements, expenses, assets and liabilities, taxpayer

identification numbers, profit and loss statements, tax returns,

and the business practices, procedures, techniques and strategies

to be used to carry out the contract. This is confidential

financial and commercial information, the release of which could

permit competitors to gain \"valuable insight into the operational

strengths and weaknesses of the supplier of the information\" and

could cause substantial harm to the companies\' competitive

positions in future projects. National Parks and Conservation

Association v. Kleppe, 547 F.2d 673, 684 (D.C. Cir. 1976).

The Courts have recognized the competitive harm to a

submitter by the release of the above described information.

See, Braintree Electric Light Department v. Department of Energy,

494 F. Supp. 287, 290 (D.D.C. 1980) withholding financial

information including selling price, inventory balance, profit

margins, purchasing activity and cost of goods sold; Timken

Company v. U.S. Customs Service, et al., 491 F. Supp. 557, 559

(D.D.C. 1980) protecting financial and commercial information on

pricing and marketing.

In addition to the foregoing material, certain of the

offerors\' proposals contain information regarding the prior and

current experience and qualifications of its employees. I have

determined that this type of information which is identifiable to

individuals and/or groups of employees is not releasable pursuant

to Exemptions 4. This information, if released, could be used by

competitors to identify employees, determine technical,

administrative or marketing skills experience of competitors, and

locate employees for employee raiding purposes. See, Burroughs

Corp. v. Brown, 501 F. Supp. 375, 381 (E.D. Va 1980).

Since the withheld documents contain confidential commercial

and financial information, discretionary release is further

prohibited by the Trade Secrets Act. The Trade Secrets Act makes

it a criminal offense for an officer or employee of the

government to disclose to \"any extent not authorized by law any

information . . . \[which\] concerns or relates to trade secrets,

processes, operations, style of work, or apparatus, or to the

identity, confidential statistical data, amount or source of

income, profits, losses, or expenditures or any person, firm,

partnership corporation or association . . . .\" 18 U.S.C.

Section 1905. Accordingly, HUD is prohibited from releasing the

financial or commercial confidential information of the type

contained in the bid proposals, unless authorized to do so by

law.

You have the right to judicial review of this determination

under 5 U.S.C. Section 552(a)(4). Judicial review of my action

on this appeal is available to you in the United States District

Court for the judicial district in which you reside or have your

principal place of business, or in the District of Columbia, or

in the judicial district where the records you seek are located.

I am directing the Buffalo Office to release the information

from the five proposals as determined by this decision. Should

you have any further questions concerning the release of this

information by the Buffalo Office, you may contact

James Brylinski, Chief Counsel, at (716) 846-5783.

Very sincerely yours,

George L. Weidenfeller

Principal Deputy General Counsel

cc: Yvette Magruder

James Brylinski, Area Counsel, Buffalo Office, 2.2G

John P. Dellera, Regional Counsel, 2G