Opinion ID: 373899
Heading Depth: 1
Heading Rank: 2

Heading: The Cost Proposals And Exemption 4

Text: 4 The Air Force's basis for the withholding of Tayko's cost proposals was Exemption 4 of FOIA, 5 U.S.C. § 552(b)(4), which provides that the Government is not required to disclose 5 trade secrets and commercial or financial information obtained from a person and privileged or confidential . . . . 6 The Air Force argued that because there had not been a final award of the contract, this information should remain confidential until a final award was made. To disclose this information before a final decision was made would make it more difficult for the Air Force to make its final decision and would be prejudicial to the low bidder, undermining his competitive advantage. 7 The District Court conceded that the decision was not yet technically final (452 F.Supp. at 322) and that, if there were no final award, Exemption 4 would apply (Id. at 324). However, the Court found that, for purposes of FOIA, the decision was final (Id. at 322), and that (a)ny need for secrecy (was) no longer present because the award (would) be made either to the successful bidder or the protester . . . . Id. at 324. Therefore, the Court concluded, the cost proposals were no longer confidential nor exempt. 8 The purpose of Exemption 4 is twofold to protect the interests of individuals who disclose confidential information to government agencies and to protect the Government as well. National Parks and Conservation Association v. Morton, 162 U.S.App.D.C. 223, 228, 498 F.2d 765, 770 (D.C. Cir. 1974). 5 This information concerning Tayko's cost proposals, in the hands of a competitor prior to the time of a final award, would jeopardize the Air Force's ability to discern clearly which bidder could do the best job for the lowest price. Moreover, the nondisclosure of this information is in keeping with the Armed Services Procurement Regulations (ASPR) policy prohibiting bidding with knowledge of competing bids. 6 Nondisclosure prior to final award also encourages competing bidders to enter bids which accurately reflect their capabilities and their costs; this secrecy protects the bargaining power of each competitor's bid. Absent the assurance of this confidentiality, bidders might be reluctant to disclose such information to the procuring government agency. 9 On appeal, the Air Force reasserts the same argument that their selection of Tayko as the lowest acceptable bidder did not amount to a final award. To support this contention it cites GAO briefing papers stating that the effect of a GAO ruling in favor of a protestor in a pre-award protest is not necessarily that he will be awarded the contract. It may mean the contract bidding will be reopened to choose the next lowest responsible bidder. Therefore, the reasons for withholding the cost proposals pursuant to Exemption 4 still exist. 10 We feel that the District Court misunderstood the bid protest procedure when it characterized the award as a final decision. The October 14th notice to Shermco was of a proposed award to Tayko; it was not a final decision. The District Court's statement that there was no need for secrecy because the award would be made either to Tayko or to Shermco is contrary to GAO protest procedure. It is amply clear from the record and from oral argument that there is a possibility that if the protest were to succeed either before the GAO, the SBA or some other forum, the bidding could be reopened. Thus, the Tayko pricing information is covered by Exemption 4 and should not have been disclosed. 7