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By
Vern Edwards on Friday, September
13, 2002 - 01:45 pm:
See: McDonnell Douglas Corp. v. U.S. Air Force,
U.S. District Court for the District of Columbia, Civil Action
No. 00-1693, August 27, 2002. You should be able to reach it
through this link:
http://www.dcd.uscourts.gov/00-1693.pdf
By
Linda Koone on Monday, September
16, 2002 - 11:50 am:
Vern:
I read that decision and stupidly thought that maybe our OC
would also see it as a sign that not all unit pricing will be
considered as exemption 4 material under EO 12600. Sometimes I
don't know where I get such crazy ideas.
They're convinced that the DOJ guidance on release of unit
prices is gospel and the prevailing authority on the issue, so
we should not release unit prices under our fixed price,
definite quantity/definite delivery supply contracts. (As though
we aren't 'disclosing unit pricing' when we release the award
amount when the solicitation was publicly available!)
By
Eric Ottinger on Monday, September
16, 2002 - 12:29 pm:
Linda,
Here is the DOJ guidance.
If your OC is saying that the contractor must be notified prior
to the release of unit price information IN RESPONSE TO A FOIA
REQUEST, OC is following the direction given by the court in the
MCI case, and the DOJ guidance.
http://www.usdoj.gov/oip/foiapost/2002foiapost13.htm
If your OC is saying that unit prices are always under exemption
4, your OC is taking its guidance from certain private side
legal commentators, not from DOJ or recent case law.
Eric
By
Linda Koone on Monday, September
16, 2002 - 01:03 pm:
Eric:
They are, in essence, saying both.
By
formerfed on Monday, September 16,
2002 - 03:56 pm:
I hear preliminary feedback from DOJ that the latest
(8/27/02) decision isn't inconsistent with their guidance.
Rather the decision is based on rather a very instance that
isn't completely apprent even from reading the decision.
By
Eric Ottinger on Monday, September
16, 2002 - 04:06 pm:
Formerfed,
You've got me confused.
Could you elaborate.
Eric
By
Larry Edwards on Monday, September
16, 2002 - 05:44 pm:
The revised DOJ guidance focuses on adequately
documenting the decision to release or not release based on an
objective review. It looks to me like the Air Force documented
their decision and reasonably determined there would be no
competitive harm. They backed away from their original decision
to release the material handing factor which, in my opinion,
would have been cost and pricing information.
Therefore, I think the decision is consistent with the DOJ
guidance even though the case began well before the guidance was
issued. You can no longer automatically release or not release
unit prices. You have to get the contractor’s opinion and do a
comparative harm analysis, then document the reasons for your
decision. That is difficult and time consuming, but you are
likely to be upheld in court if it is done well.
By
Linda Koone on Tuesday, September
17, 2002 - 07:37 am:
I don't believe the decision is inconsistent with DOJ
guidance. In fact, it appears that the Air Force followed the
submitter notification process that DOJ is advocating.
Unfortunately, some people take the DOJ guidance too far and
make the interpretation that all unit prices are protected from
disclosure under exemption 4. I say that in some cases, you can
make the decision that the notice requirments do not apply
because the information has been made publicly available.
In our particular circumstance, where we --
- typically buy a single item of supply under a firm fixed price
contract, and
- we make the solicitation publicly available, so quantities are
publicly known (and synopsized when the buy meets the synopsis
requirements), and
- we are required by statute to provide the contract award
amount,
the idea of protecting the unit price is laughable. It's public
knowledge.
Sorry for ranting, but I had some very frustrating exchanges
with our OC on this issue last week.
By
Larry Edwards on Tuesday, September
17, 2002 - 10:54 am:
Linda, I share your frustration and I am sure many
other contract specialists do also. One of the unintended
consequences of the new DOJ policy of asking contractors if they
object to having their unit prices disclosed is an increase in
controversy. Given the opportunity to object, many contractors
do. This increases our workload over the former policy of
routinely releasing bid schedules as public information and will
probably result in many more court cases down the road. One
awkward issue that you allude to is that we have already
released the unit prices publicly as part of the debriefing
procedure for most existing contracts. FOIA should not then
apply. However the MCI WorldCom decision stated this was only a
FAR provision rather than statute. There is a conflict here that
will need to be worked out by a FAR committee and will probably
be part of future court decisions. Should we argue that FOIA
does not apply if we have released the information in a
debriefing? Here is what the Executive Order on FOIA says about
it:
Sec. 8. The notice requirements of this Order need not be
followed if:
(a) The agency determines that the information should not be
disclosed;
(b) The information has been published or has been officially
made available to the public;
(c) Disclosure of the information is required by law (other than
5 U.S.C. 552);
By
Linda Koone on Tuesday, September
17, 2002 - 11:29 am:
Larry:
Disclosing the contract award price is statutory
[41USC253b(e)(2)(B); 10 USC 2305(b)(5)(B)(ii)]. Disclosing unit
pricing is not. . . that is a FAR requirement.
I can distinguish that difference and I can even accept that the
FAR coverage speaks in circles when it states in one paragraph
that, at a minimum, unit prices should be disclosed and then in
another paragraph says that you shouldn’t disclose information
that is protected under FOIA.
My point is that if I had a copy of the solicitations that
resulted in the MCI and McDonnell Douglas contracts that were
litigated, and I was provided the contract award values for
each, I’m quite certain that I wouldn’t be able to deduce unit
pricing. But if I gave that same information on most of our
contract awards (i.e., the solicitation and award value) to an
average 10-year old, I’m pretty confident that the 10-year old
child could calculate the unit price.
I believe there are times when unit pricing can be considered
public knowledge, other times it’s not. Where it clearly is
public knowledge (passes the test of an individual being able to
deduce unit pricing by knowing the quantity solicited and
contract award value), we shouldn’t have to go through the whole
submitter notification process. Our OC doesn’t agree, however.
By
joel hoffman on Tuesday, September
17, 2002 - 02:29 pm:
Gosh, I wonder how the commercial construction
industry stays "solvent", since unit prices are routinely
released on most projects, including muti-million to billion
dollar public works and state transportation contracts. For some
reason, competition and the industry are thriving, despite the
public and competitors being aware of the winners' unit prices.
Can it be that the first real problem is that the DOD
extortionists - uh, excuse me - I meant to say the "DOD
Supercontractors" want to keep everything secret and they have
the political clout to get their way? I could POSSIBLY see where
those unit prices, which one could derive the contractor's pure
markups from the price, ought to be protected, although those
are also publicized in the construction/transportation industry,
without major problems that I'm aware of. The second real
problem is that some Government lawyers overextend that
rationale to protect disclosure of any unit price. That is crazy
and inconsistent with local and state government contracting.
happy sails! joel hoffman
By
bob antonio on Tuesday, September
24, 2002 - 04:13 pm:
Here is another case in this area.
R& W FLAMMAN Gmb H., v. THE UNITED STATES
The link is below.
http://www.uscfc.uscourts.gov/2002.htm
By
Larry Edwards on Tuesday, September
24, 2002 - 08:42 pm:
Thanks for the link, Bob. This is a very strange case.
Just when you think FOIA court decisions involving release of
unit prices can’t get any sillier, they do. Here unit prices on
the incumbent contract were a matter of public record because it
was a sealed bid with a public opening. The Army elected not to
exercise any options and issued a new solicitation. Under FOIA,
a competitor asked for a copy of the existing contract including
the bid schedule and the Army gave it to him. The court said
this created an “appearance of impropriety” and granted the
plaintiff injunctive relief! So you can’t release public
information during a solicitation?
By
Anon2U on Tuesday, September 24,
2002 - 10:19 pm:
At one point in the decision, the court said that the
public opening made the unit prices public information so it did
not meet the two step criteria another case set as a precident
but apparently they felt that giving the prices to one offeror
and not all gave them an unfair advantage. I think this may not
be a good case to use as a precident. They seemed to affirm the
right to give sealed bid units prices out in a FOIA but not in
this case.
By
Linda Koone on Wednesday, September
25, 2002 - 08:17 am:
I believe the court's decision revolves solely on the
issue of providing unit prices to only one bidder and not all
bidders. The decision doesn't protect unit prices from
disclosure, it protects the 'level playing field' concept. The
court is requiring contracting officers to give unit pricing to
all potential bidders, not just one.
Which is also an interesting concept. I can remember when we
proposed to include price history in our solicitations to reduce
the number of phone call inquiries that we got for price
history. Our Office of Counsel told us that including this
information could be misleading if a company relied on it in
formulating its price and was either not awarded a contract
because its price was too high, or awarded a contract but
couldn't perform at the offered price. We suggested including a
disclaimer with the price history information, but the OC didn't
buy off on that either. We certainly didn't provide price
history to everyone, only to those companies that requested it.
According to this decision, that was an unfair practice.
I wonder if the Army argued that the same information would have
been provided to any bidder seeking it. . .
By
Larry Edwards on Wednesday,
September 25, 2002 - 02:59 pm:
Anon2U: I agree this may not be good precedence. This
occurred overseas where bidders were used to negotiated
acquisitions which are more restrictive in information
disclosure and where local country rules are less open on public
information. These may have contributed to misunderstandings on
why the bid schedule was released.
Linda: Here is an interesting footnote on page 15 of the
decision:
22 Flammann stated that it submitted a FOIA request to the Army
on April 22, 2002 to obtain the unit prices of its predecessor
and, as of July 18, 2002, had not received them. Pl. Mot. for
Prelim. Inj. at 3.
The information won’t automatically be released to each bidder.
Each FOIA case will stand on its own and will take time to
resolve, especially if an information provider such as an
unsuccessful bidder from the last solicitation objects. Even if
he has lost before, he can object again, delaying the process
and the solicitation. In the past, I have sped up the process by
asking requestors to withdraw their FOIA requests and let me
give them public information. I’m not sure I can continue to do
that in the face of this decision on publicly available
information. At least the court decision to release the same
information to everyone at the same time will preempt this
piecemeal FOIA procedure. I can see why bidders from another
country would perceive this to be unfair.
By
Vern Edwards on Saturday, September
28, 2002 - 03:37 pm:
All:
I think that the unit price disclosure cases show that the
federal courts cannot deal consistently and effectively with the
issue of disclosure of contract unit prices under the FOIA and
trade secret statutes.
I think it's fundamental that in a democracy the public's
business ought to be knowable to the public, unless disclosure
would be detrimental to the public interest. Any member of the
public ought to be able to learn what kinds of deals the
public's representatives are making.
Congress should enact legislation that takes contracting
information out from under FOIA and the trade secrets act.
Instead, the law should be: (1) that the contents of a
government contract--including unit and total prices and
excepting only classified information and indirect cost
rates--must be disclosed to any member of the public upon
request, and (2) that the contents of proposals (as defined in
FAR § 2.101) submitted to the government may not be disclosed.
The law should provide that an agency head may refuse to
disclose the contents of a government contract only upon a
reasonable finding that such disclosure would harm the public
interest. Harm to the public interest would include concerns
about national security and the ability to obtain competitive
proposals. The law should require that any such finding must be
made and documented prior to the issuance of the solicitation
for the contract. It should also permit class findings in that
regard. The law should require that such findings be announced
in the public announcement (in FedBizOpps) preceding issuance of
the solicitation, unless the procurement is exempt from the
requirement for such an announcement.
The law should prohibit protests against an agency head's
refusal to make such a finding and should also provide that any
court challenge to such a decision must be made within 10 days
of the first date of publication of the announcement. The law
should require that in the event of such a challenge, the
contracing officer must notify prospective offerors that a court
might decide that their prices must be disclosed and they should
submit proposals or not with that possibility in mind.
This approach would put prospective offerors on notice, so that
they could decide whether or not to submit a proposal. Then,
only decisions not to disclose the contents of contracts would
be subject to challenge. Such a law would not end all litigation
about disclosure, but it would end much of the uncertainty about
the status of contract unit prices by extracting from the
current legal chaos. And it would free contractors of the
burdent of fighting disclosure of their prices.
What do you think?
By
formerfed on Monday, September 30,
2002 - 09:26 am:
If you run for President, you have my vote.
Good thoughts and I'm in complete agreement.
By
Larry Edwards on Tuesday, October
01, 2002 - 11:54 am:
Vern: I whole-heartedly concur with the intent of your
message. I would make three points.
1. This is strong, clearly worded language, which we rarely see
in our laws anymore because of the need to make political
compromises. The same large firms who have successfully sent
high-priced lawyers to win their case in court will send
high-priced lobbyists and well-funded PAC’s to get compromised
language. Are contract specialists enough of a strong
constituency to counter that?
2. After Burnside-Ott, is there such a thing as an action that
cannot be appealed anymore? “Arbitrary and capricious”
structuring on line items which have the effect of revealing
markups may be appealed. It is tempting to set line items up
like that because it makes for easier modifications, but
contract specialists will need to resist that.
3. In the real world, Agency Head approval means it will be done
only for the biggest and most important actions because of the
delay. If we are talking about national security issues, there
already is an exemption for classified contracts, which would
need to be continued. There are far too many classified
contracts for going individually to the Agency Head to be
feasible.
By
ASK on Tuesday, October 01, 2002 -
01:12 pm:
To pick a nit, I believe that Vern's reference for the
FAR definition of "proposal" should be to 3.104-1, not 2.101.
By
Vern Edwards on Tuesday, October
01, 2002 - 05:32 pm:
Larry:
In the Burnside-Ott decision, the court held that an agency
cannot write a contract clause to eliminate a procedure that is
provided for by statute. In the case that I propose, the statute
would say that a contractor cannot protest a certain kind of
decision. Different problem.
ASK:
FAR § 2.101 defines "offer," and says that in a negotiated
procurement an offer is called a "proposal." That's the
definition to which I was referring, not the definition of "bid
and proposal information" in FAR § 3.104-1. The reason that I
would prefer to use the definition in § 2.101 is that I think it
is more all-encompassing than the one in § 3.104-1. I don't want
to leave the lawyers any wiggle room.
By
Larry Edwards on Tuesday, October
08, 2002 - 08:34 am:
Here is a link to the DOJ interpretation of the unit
price case with which Vern Edwards started this thread:
http://www.usdoj.gov/oip/foiapost/2002foiapost25.htm
By
formerfed on Tuesday, October 08,
2002 - 09:28 am:
If you think by chance the FOIA rules are becoming
clearer, here's a real curve. The Army decided to not exercise
an option under an existing contract and chose to do a
recompetition instead. A competitor of the incumbent then sought
the option prices of the existing contract under FOIA. Since the
contract was awarded as a sealed bid, the Army released them.
The Judge next ruled the Army was wrong in doing so.
Here's the link:
http://www.uscfc.uscourts.gov/Opinions/Gibson/02/GIBSON.R&WFlammann.pdf
By
Anon on Wednesday, October 09, 2002
- 08:00 am:
I read that case, thank the heavens I'm not a FOIA
officer. I always considered fixed prices (not the cost
breakdowns) releasable...hey, doesn't the taxpayer have a right
to know what we're paying with their money? If my better half
wants to know what I spent on an appliance doesn't she or he
have a right to know the bottom line, I may not give all the
finiancing details, but...why all the secrecy?
Bottom line in my opinion, the company's getting taxpayer
monies, the taxpayer has a right to know what their bucks are
going for.
By
Larry Edwards on Tuesday, February
04, 2003 - 05:29 pm:
Note the proposed FAR change on debriefings of
commercial items in the “Today’s News” on this site. This seems
to take out the requirement to disclose unit prices on
commercial items, citing the recent legal decisions, but does
not yet change FAR Part 15 to be consistent. Thus you would have
a difference between disclosure of unit prices on commercial and
non-commercial items. I would think commercial items would be
the more logical choice to have unit prices revealed. Logic
probably has little to do with it when the courts are involved.
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