Opinion ID: 550
Heading Depth: 2
Heading Rank: 1

Heading: Sikorsky, Pratt & DCMA

Text: Sikorsky makes helicopters and Pratt makes aircraft engines. Both companies are wholly owned by United Technologies Corporation. Both have various foreign and domestic military and civilian customers and both sell their products to the United States. DCMA monitors defense contractors, including Sikorsky and Pratt, to ensure they satisfy their contractual obligations when providing services and supplies to the United States. It keeps a regular presence at Sikorsky's and Pratt's facilities. If it discovers a problem, it notifies the contractor and may issue a Corrective Action Request (CAR) or an audit report to the contractor to remedy the problem.
In March 2004 a New Haven, Connecticut television reporter submitted a FOIA request to the regional DCMA office (DCMA East) for, in pertinent part, all CARs DCMA had issued to Sikorsky over the past year regarding the Black Hawk helicopter. [4] The Director of DCMA East initially denied the request, concluding under Exemption 4 their release will significantly impair DCMA's ability to obtain the same quality of information from Sikorsky and from other Defense contractors in the future. Letter from Keith D. Ernst, Director, DCMA East, to Alan M. Cohn, WTNH-TV (May 7, 2004). The reporter then appealed the denial within DCMA. [5] In response, the DCMA FOIA Appeal Authority reviewed the documents and reversed DCMA East's decision. DCMA's Office of General Counsel then notified Sikorsky by letter that it planned to release the CARs, stating DCMA's new position that none of them fell under Exemption 4. Sikorsky disagreed. Citing National Parks, Sikorsky argued that Exemption 4 applied because the documents' release would likely cause Sikorsky substantial competitive harm and would significantly impair DCMA's future ability to obtain the same detail and quality of information from Sikorsky and other DoD contractors. Letter from Robert K. Huffman, Miller & Chevalier, to Richard N. Finnegan, Associate General Counsel, DCMA, at 3 (Feb. 11, 2005). Specifically, it asserted that the CARs included proprietary information regarding Sikorsky's manufacturing process and procedures and that [r]elease of this proprietary information would substantially harm Sikorsky's competitive position because its competitors would use this information to their advantage in ... adjusting their manufacturing techniques. Id. at 11 n. 4. Nevertheless, in a letter dated December 1, 2005, the DCMA FOIA Appeal Authority informed Sikorsky that DCMA had made a final agency decision to release the CARs to the reporter. Letter from Colonel Jamie L. Adams, DCMA Appeal Authority, to Robert K. Huffman, Miller & Chevalier, at 5-6 (Dec. 1, 2005). In so doing, it rejected Sikorsky's substantial competitive harm argument, stating that the asserted harm appears to be one of suffering embarrassment in the market place, which is an insufficient basis on which to prevent disclosure. Id. at 5. It also rejected Sikorsky's impairment argument, stating that the question of impairment is a question for the agency and not for Sikorsky and concluding that release of the CARs would not impair the Government's ability to obtain the same kind of information in the future. Id. at 3.
In December 2004 a Hartford, Connecticut newspaper reporter submitted a FOIA request to DCMA East for (1) a report of a November 2004 DCMA audit of Pratt's Middletown, Connecticut Engine Center; (2) a CAR that resulted from the audit and (3) any and all other documents regarding the audit. DCMA East identified documents responsive to the request, including (1) the November 2004 audit report; (2) November 2004 DCMA post-audit briefing of Pratt; (3) a resulting Level III CAR [6] issued to Pratt in December 2004; (4) internal DCMA correspondence about the audit and the Level III CAR and (5) reports of audits of Pratt that DCMA conducted in July and September 2004. [7] DCMA East notified Pratt of the request and asked Pratt to flag any documents it believed were exempt from disclosure. Pratt responded that most of the information contained in these documents is exempt from disclosure under Exemption 4. Letter from Lester K. Katahara, Associate Counsel, Pratt & Whitney, to JeanMarie C. Faris, Counsel, DCMA-Hartford, at 1 (Mar. 24, 2005). Citing National Parks, it argued that the exemption applied because disclosure would likely cause substantial harm to [its] competitive position and would likely impair the ability of DCMA to obtain information of the same quality, reliability, and detail in the future. Id. at 3. It submitted several affidavits supporting its claim to the Exemption. For example, its Director of Quality Military Engines attested that a competitor with similar expertise could and would use th[e] information to gain insights into the strengths and weaknesses of P & W's quality control system as well as manufacturing techniques and use those insights to revise and improve its own quality control and manufacturing systems. Affidavit of William H. Forthofer ¶ 18 (Mar. 18, 2005) (Forthofer Aff.). It also offered a set of the documents from which it had redacted the purportedly exempt information. DCMA East replied to Pratt in October 2005, concluding that Exemption 4 did not cover the documents except for the portions DCMA had itself redacted. It stated: Applying the criteria established in National Parks to the documents at issue here, we conclude that release of the documents will not impair the Government's ability to obtain from Pratt & Whitney (or any other contractors) essential information about their quality systems. With respect to the competitive harm prong of National Parks, we concluded that, with the exception of the actual quality system provisions themselves, [which were redacted,] the release of the documents would not likely result in substantial competitive harm to Pratt & Whitney. Letter from Steven T. Bogusz, Deputy Director, DCMA East, to Lester K. Katahara, Pratt & Whitney, at 1 (Oct. 12, 2005). Pratt sought reconsideration, elaborating on the same arguments it had originally made. But DCMA East did not budge; it said, While we agree that National Parks is the appropriate legal standard of review, we disagree that release of the documents (as redacted) would significantly impair DCMA's ability to obtain necessary quality assurance system information from P & W and other contractors in the future, a decision solely within DCMA's purview. Letter from Steven T. Bogusz, Deputy Director, DCMA East, to Robert K. Huffman, Miller & Chevalier, at 2 (Nov. 21, 2005). In addition, it said: We acknowledge that competition in the propulsion industry is fierce. However, with the exception of the information that we have already redacted, we do not believe that P & W has established the likelihood of substantial competitive harm flowing from P & W's competitor's [sic] affirmative use of the information contained in the DCMA documents. At most, we believe that release of the information could be embarrassing to P & W. But, embarrassment does not rise to the level of substantial competitive harm of the type recognized by the courts. Id. at 3.