Federal Electric Corp. v. Carlucci
Federal Electric Corp. v. Carlucci
Opinion of the Court
MEMORANDUM
The plaintiff filed this action pursuant to the Administrative Procedure Act, 5 U.S.C. § 702, et seq.) the Armed Services Procurement Act, 10 U.S.C. § 2301, et seq.; the Trade Secrets Act, 18 U.S.C. § 1905; the Freedom of Information Act (FOIA), 5 U.S.C. § 552; and the Federal Acquisition Regulation (FAR), 48 C.F.R. Chapter 1 and the Department of Defense FAR Supplement (DFARS), 48 C.F.R. Chapter 2. In its complaint, the plaintiff seeks a judgment declaring that the Navy’s disclosure of the plaintiff’s cost data violated the law and declaring Solicitation -0695 (hereinafter sometimes referred to as the “Solicitation”), void and for injunctive relief restraining the Navy from taking further action under the Solicitation.
The case is now before the Court on the plaintiff’s motion for summary judgment and the defendants’ motion to dismiss or, in the alternative, for summary judgment. The motions were argued on April 18, 1988. Since the date of the argument, the parties have filed additional motions which need not be addressed in view of the ultimate disposition of this case.
I
Briefly, the underlying facts are as follows: The Navy awarded Contract No. 62467-84-R-C-0001 (Contract -0001) to the plaintiff on or about April 30, 1984. The contract was scheduled to expire in accordance with its terms on September 30, 1987.
The plaintiff contends that such cost data is proprietary information. Plaintiff contends that it disclosed the information to the Navy for the “limited and exclusive purpose” of allowing the parties to effectuate the contract’s “Incentive Price Revision Clause.”
On or about January 28, 1987, before the Navy issued the Solicitation, Schneider Services International (SSI), pursuant to the Freedom of Information Act (FOIA), 5 U.S. C. § 552, submitted a request seeking disclosure of the plaintiff’s JON Reports. SSI requested the last page for each annex containing the monthly total for that annex of the plaintiff’s 1986 and 1987 JON Reports. At all relevant times (January 28, 1987 to April 16, 1987), defendants were operating under the provisions of NAVFAC Instruction 5720.14A which was issued August 31, 1984 and is entitled “Availability To The Public Of Naval Facilities Engineering Command Records Under the Freedom of Information Act.”
On or about February 10, 1987, the Navy issued the Solicitation for the follow-on contract to Contract -0001 for the Base Operating Services. In mid-February 1987, a representative of the plaintiff was advised that an FOIA request had been made for information relating to plaintiff’s JON Reports. On or about February 20, 1987, the Release Authority at Kings Bay advised the Commanding Officer and the Initial Denial Authority, Naval Facilities Engineering Command, Charleston, South Carolina, that the JON Reports were non-releasable to competing contractors because (1) plaintiff prepared the JON Reports, (2) Contract 0001 required the plaintiff to submit the reports to the Navy and, (3) release of the reports would divulge privileged information.
By letter dated February 25, 1987, the plaintiff advised the Resident Officer in charge, that it considered the cost information in the JON Reports highly confidential and that the release of the reports would cause the plaintiff harm. Based upon all of the above information, the Navy denied SSI’s FOIA request as confidential pursuant to the Exemption 4 of the FOIA. 5 U.S.C. § 552(b)(4) (“trade secrets and commercial or financial information obtained from a person and privileged or confidential”). A representative of the plaintiff was advised that the FOIA request had been denied.
SSI’s Project Development Manager called a representative of the Navy on March 12, 1987 to check the status of the FOIA request. When the SSI representative was advised that the request had been denied, he stated that SSI was only interested in direct costs, and he asked the Navy to delete proprietary data and release only direct labor and material costs. Dennis Affidavit, par. 7.
After further conversations with other representatives of the Navy who were familiar with the contract and procurement procedures, the Navy representative determined that direct labor and material costs included in the JON Reports could be released without jeopardizing plaintiff’s competitive position and that all bidders should be given the same information.
The Navy created a new document identifying the direct labor and material costs incurred by the plaintiff between October 1986 and March 1987 for each of the 22
By letter dated May 5, 1987, the plaintiff advised the Navy that it regarded the release of the information relating to its cost data to be improper and a violation of its proprietary rights. Plaintiff filed a formal written protest on May 18, 1987. The Navy denied the request on June 16, 1987 stating that (1) the two contracts were substantially different, (2) there was no basis to withhold the release of the summary information, (3) there was no potential for competitive harm and, (4) the furnishing of the data to bidders was proper under applicable procurement regulations. Plaintiff filed this action on June 26, 1987.
On February 2, 1988, the Court heard the plaintiffs motion for summary judgment and the defendants’ motion to dismiss or in the alternative, for summary judgment. On February 29, 1988, the Court denied the plaintiff’s motion and granted the defendants’ motion to dismiss on the grounds on lack of ripeness. On March 17, 1988, the Navy awarded the contract which is the subject of this action to United Airlines Services. The plaintiff then moved to reopen the case and for a temporary restraining order. The Court granted the motion to reopen but denied the motion for a temporary restraining order. See Order filed March 31, 1988. In denying the motion for a temporary restraining order, the Court noted that the plaintiff’s contract with the Navy would remain to May 1, 1988. The Court scheduled arguments on the disposi-tive motions for April 18, 1988.
In its motion for summary judgment, the plaintiff seeks to have the Court issue a declaratory judgment declaring that the release of the plaintiff’s cost data was unlawful and enjoining the defendants from expending public funds or otherwise implementing performance of the contract awarded March 17, 1988 pursuant to the Solicitation. As an alternative to the second request, the plaintiff seeks to have the Court issue a preliminary injunction and “during its pendency require that the final cost proposals for each offeror, whose offers were previously found to be within the competitive range under RFP-0695 be made available to each other, and a new ‘best and final’ round be conducted to determine the awardee”; or in the alternative, “to issue a preliminary injunction and require the parties to seek a negotiated disposition by April 25 under the supervision of a magistrate.”
The defendants seek to have the Court grant their motion to dismiss or, in the alternative, for summary judgment, and dismiss the case with prejudice.
II
The first issue which must be addressed relates to the release of the information taken from the JON Reports prepared and submitted to the Navy by the plaintiff.
Plaintiff contends that the Navy improperly released the information over its objection. The record reflects that initially the Navy refused to release information re
Plaintiff contends that the release of the information was “unlawful” and that the Navy was required to give written notice to the plaintiff before releasing the information. The plaintiff argues that written notice is required by NAVFAC Instruction 5720.14A (NAVFAC). That document provides, in part, as follows:
a. Upon receipt of a request for records provided by contractor, corporation or other non-U.S. Government source, immediately notify the source of the record that a request has been received. That notification should be followed by a certified letter to the same affect. A sample letter is contained at enclosure (4). The source of the record should be given five working days to comment on the release of the record. Additional time may be granted if the requester agrees to an extension of the original time limit.
NAVFAC at par. 7(a) (emphasis the Court’s). The defendants contend that the document does not require written notification, it only suggest that written notice be given. In this connection, the defendants cite to the fact that the document contains the language “should” rather than “shall”. Thus, they argue, written notice is not mandatory.
The Court observes that it would be far better to require a written notice for two reasons. First, the actual fact of the notice is easily provable by producing a copy of the notice. Second, a written notice would eliminate any question as to the information furnished to the contractor concerning the request. Here, Mr. Sartain for the plaintiff and Mr. Garvin for the Navy do not agree as to what was meant by the “bottom line.”
A reading of NAVFAC reveals that it permits oral notice, no doubt because of the time constraints. It provides that: “Upon receipt of a request for records ... immediately notify the source of the record that a request has been received.” That language permits oral notice to the source of the record. This much is made clear by the sentence that follows: “That notification should be followed by a certified letter to the same effect.” The use of the word “should” suggest that written notice is not required but should be given in the appropriate case. For example, once the contractor is given oral notice, it may determine that it has an objection and so inform the Navy. If this is the case, then the purpose of the notice has been satisfied. This is apparently what occurred when the plaintiff objected to the initial FOIA request submitted by SSI. Of course, the contractor may require additional time within which to submit a formal detailed objection, but at least the Navy is on notice that a formal objection will be filed, if indeed, such objection or further comment is required.
It is also significant that NAVFAC does not contemplate a detailed written notice;
Thus, the Court concludes that the Navy was not required to give written notice and that oral notification would suffice.
Unfortunately, the inquiry cannot stop at that point. The next issue raised is whether the Navy gave a proper oral notice. Again, such notice should include advice to the contractor that a request has been made and the nature of the request. The problem presented here is that the parties apparently agree that there was a conversation on April 9, 1987 between Mr. Garvin, on behalf of the Navy, and Mr. Sartain, plaintiffs Project Manager. As stated by the plaintiff, Garvin “mentioned” to Sar-tain that the Navy was “leaning toward releasing the bottom line.” Plaintiffs Amended Findings of Fact and Conclusions of Law, par. 23. The defendants’ version differs slightly in that they contend that Garvin “told” Sartain that the Navy was “leaning toward releasing the bottom line.” Id., Garvin I Affidavit at 14. And, as noted, a further dispute relates as to what was meant by “bottom line.”
The Court concludes that whether the request was “mentioned” to the plaintiff or whether Sartain was “told” makes no difference in the outcome of this case. Sar-tain and the plaintiff understood what was being said by the Navy because the plaintiff had also been advised of the previous request. A FOIA request had been made and the Navy was required to make a response, and make that response within a given time frame. Moreover, both sides agree that the plaintiff was on notice as of April 9, 1987. Under these circumstances, the plaintiff was on notice that an immediate response was required. When the plaintiff did not protest or object or even comment on the release of the information the Navy could assume that there was no objection to the release. It must be noted that the Navy had refused an earlier request for release of information, but that the Navy had determined that the pending request was not for proprietary information. Indeed, the requester had made it clear that it was not requesting proprietary information. Finally, the information was not released for seven days.
The plaintiff did not object to release until almost one month later, after the information had been released, apparently because it then realized that the information to be released was more extensive than the plaintiff originally believed. Under these circumstances the Court cannot conclude that the Navy violated NAVFAC notwithstanding the apparent misunderstanding as to what was actually going to be released. Nothing in the record suggest that the Navy acted in bad faith. Moreover, the plaintiff being interested in what was going to be released could have asked for more details before deciding whether or not to object. It seem clear that the plaintiff did not object to the release of the information, but now objects to the form in which the information was released.
The plaintiff contends that the information should not have been released in any event because it was proprietary. As noted above, the plaintiff did not object to the release of the information in a timely fashion, therefore, it cannot now complain that the information should not have been released. Moreover, assuming that the plaintiff had made a timely objection to release, and the information was released notwithstanding the objection, the plaintiff has not established that the information should not have been released.
While the Court does not find that the Navy violated any applicable statute, there were certain problems in the manner in which they handled the FOIA request for information. Obviously, it is far better to inform a contractor in writing when a request for information is received. The written submission could have been made in almost the same time frame as the oral communication. Additionally, while the Navy was operating under time limitations in notifying the plaintiff and responding to SSI, it is noted that SSI’s second request was made on or about March 12, 1987, but
In sum, under the undisputed facts in this case, the Court concludes that the release of the information was not unlawful and that plaintiff is not entitled to a declaratory judgment that defendants violated the law.
Ill
While the manner in which the information was released raises some questions, the primary question is whether the plaintiff has established that it was prejudiced by the release of the information. After giving careful consideration to the facts in this case, the Court concludes that the plaintiff has not done so.
When the Navy determined that the subject portions of the JON Reports should be released, they also determined that the information should be released to all offerors. Thus, each of the offerors, including the plaintiff, had access to the information. In that sense, all were on equal footing, except perhaps the plaintiff since it had performed under the earlier contract and to that extent had, at least, a slight advantage. But, the record reflects that the plaintiff submitted the highest bid of the four finalists.
Moreover, of all of the finalists, the plaintiff had the lowest technical score. Technical Excellence is separate from costs and the technical evaluators were not given access to the pricing data.
Plaintiff, as a disappointed bidder, “bear[s] heavy burden of showing either that (1) the procurement official’s decision on matters committed primarily to his own discretion had not rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations.” Kentron Hawaii, Limited v. Warner, 156 U.S.App.D.C. 274, 277, 480 F.2d 1166, 1169 (1973) (emphasis this Court’s, footnotes omitted).
The record here demonstrates that the plaintiff lost on two counts, it submitted the highest bid, and it had the lowest score on technical excellence. Plaintiff has failed to establish that it suffered any lost due to the release of the information.
After careful consideration of the record in this case, the Court concludes that the plaintiff’s motion for summary judgment should be denied and that the defendants’ motion for summary judgment should be granted.
. The contents of the conversation between the plaintiffs representative, Mr. Sartain, and the Navy’s representative, Mr. Garvin are disputed. The dispute arises over what was meant by “bottom line.” Sartain contends that when Gar-vin advised him that he intended to release the "bottom line" figure, he thought that Garvin was referring to the total costs for labor and materials as a "single lump sum number" and not an annex-by-annex breakdown of labor and material costs covering six months of actual cost experience in 264 cost categories. Sartain Affidavit dated October 12, 1987, par. 27. Garvin contends, on the other hand, that, while he and Sartain discussed “bottom line” costs, that the discussion were in adequate detail so that they were discussing total labor and material costs by annex, and Garvin felt that it was clear that Garvin was referring to the release of the JON Report data exclusive of overhead, G & A and earned profit. Garvin Affidavit dated November 3, 1987.
. See Footnote 1.
. The information concerning the actual bids has been filed under seal. See Affidavit of Mary P. Mimms.
. The plaintiff submitted the affidavit of Woodle in an effort to demonstrate that such information is normally not released and the information furnished to the other offerors must have assisted them in the bidding process. While it may have helped the others, the same information was also available to the plaintiff. The affidavit cannot overcome the fact of the great discrepancy between the plaintiffs bid and that of the successful bidder and even the other two finalists.
. The plaintiff has cited two cases to the Court which it contends would support plaintiffs argument; Payne Enterprises, Inc. v. United States, 837 F.2d 486 (D.C.Cir. 1988) and AT & T Information Systems, Inc. v. General Services Administration, 258 U.S.App.D.C. 254, 810 F.2d 1233 (1987). The Court has reviewed each case and does not find them controlling.
Reference
- Full Case Name
- FEDERAL ELECTRIC CORPORATION v. Honorable Frank CARLUCCI
- Cited By
- 5 cases
- Status
- Published