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Ethics Corner 

FOIA: Protect Your Competitive Information 

2,009 

By Jim D’Agostino and Andrew Belofsky 

Companies often generate Freedom of Information Act (FOIA) requests to the government seeking information on potential competitors. Some of these FOIA letters ask for pricing information in a proposal, while others request general information about a contractor’s services or products. Several protective measures should be considered regarding potentially sensitive information submitted to the government.

First, all information that a company does not want released should be clearly marked as proprietary. Second, whenever the agency gives notice of an outside request for corporate-submitted information, there should be steps taken to safeguard that which is legitimately proprietary. Non-response to a notification may be deemed an agreement to release the requested information to the third party.  

The federal government receives millions of FOIA requests yearly. Each company should have an internal policy of reviewing such requests promptly, to determine the level of concern that release would entail, both for ongoing and future contracts.

Agency notifications invariably include the notice letter itself, a copy of the FOIA request, and instructions to the contractor that it must justify nondisclosure of the information. The FOIA Exemption 4 protects against disclosure of confidential and/or proprietary information, including anything that would give an unfair, competitive advantage to a requestor. This would include protection against disclosure of any matter that is a trade secret or that constitutes commercial or financial information that is privileged or confidential. Exemption 4 was intended to encourage contractors to provide to the government accurate commercial or financial information that would help the government as a consumer of that contractor’s services or goods. To the extent that contractors feel they are secure in providing such information, the information provided should be more reliable.

Unless the company does not care about release, it is important to respond, and note specific objections and applicable FOIA exemptions. Indeed, this is a necessary predicate to a “Reverse FOIA Action,” if the agency decides to release what should be protected corporate information.  

Courts reviewing these actions generally follow one of two schools of thought in adjudicating Reverse FOIA Actions (see Tybrin Corp. v. U.S. Depart. of the Air Force, et al., No. 08-002, 2009 WL 425035 (S.D. Ohio Feb. 19, 2009).

The broader reading of Exemption 4, tracking the holdings in Critical Mass Energy Project v. Nuclear Regulatory Commission, 975 F. 2d 871, 879 (D.C. Cir. 1992)(en banc) and Public Citizen Health Research Group v. FDA, 702 F.2d 1280, 1290 (D.C. Cir. 1983) provides protection from release as to any requested information that a contractor nowhere discloses in its general business practices.

A more narrow reading is found in New York Public Interest Group v. USEPA, 249 F. Supp. 2d 327 (S.D.N.Y. 2003), which requires disclosure unless the requested information would compromise the nature or character of a contractor’s business, or otherwise constitutes competitive injury.

The decision last month in Tybrin accorded the broader FOIA Exemption 4 protection prescribed above, i.e., any information that the contractor had never previously released to the general public would not be released pursuant to a FOIA request.  

The bottom line for any contractor that submits to the government information that a competitor can use to its advantage is simple. The company should conspicuously mark all information that even arguably deserves protection, ensure a process is in place to monitor carefully all government notices under FOIA, and notify the agency in writing of objection to release whenever appropriate, explaining if needed why the information is not in the public domain, and how its release will prejudice the originating company.

L. James D’Agostino (dagostinoj@gtlaw.com) and Andrew J. Belofsky (belofskya@gtlaw.com), are attorneys with the international law firm of Greenberg Traurig LLP, and specialize as  members of the firm’s government contracts practice group.  The views expressed are solely those of the authors.
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