Case No. VFA-0369, 27 DOE ¶ 80,111

February 18, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:FOIA Group, Inc.

Date of Filing:January 20, 1998

Case Number:VFA-0369

On January 20, 1998, FOIA Group, Inc. filed an Appeal from a determination the Acting Senior Vice President of the Power Business Line (VP) of the Bonneville Power Administration (BPA) of the Department of Energy (DOE) issued to it on November 10, 1997. In that determination, the VP partially granted a request for information that FOIA Group, Inc. filed under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by the DOE in 10 C.F.R. Part 1004. The FOIA requires that a federal agency generally release documents to the public upon request. The FOIA, however, lists nine exemptions that set forth the types of information that a federal agency may withhold at its discretion. 5 U.S.C. § 552(b); 10 C.F.R. § 1004.10(b).

In its request for information, FOIA Group, Inc. sought a copy of “the contract and any relevant attachments, including all task orders and deliverables, concerning agreement executed between BPA and New Energy Ventures (NEV) for wholesale of [sic] power from BPA.” In his determination, the VP released a copy of the requested contract, but deleted annual prices, pricing terms, delivery terms, annual demand amounts of power BPA would supply, and annual revenue amounts in accordance with Exemption 4 of the FOIA, 5 U.S.C. § 552(b)(4). FOIA Group, Inc. contends that “contractors are aware that the disclosure of contract pricing data is a requirement of doing business with the Government.” Furthermore, FOIA Group, Inc. maintains that since the Government requires that firms submit contract pricing data, Exemption 4 does not protect the release of this information. Finally, FOIA Group, Inc. argues that “the failure to disclose the contract(s) [sic] pricing provides the incumbent contractor with a significant and unfair competitive advantage over other companies in any other comparable contract opportunity.”

Analysis

Exemption 4 exempts from mandatory public disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4); 10 C.F.R. § 1004.10(b)(4). In order to qualify under Exemption 4, a document must contain either (1) trade secrets or (2) information that is "commercial" or "financial," "obtained from a person," and "privileged or confidential." National Parks & Conservation Ass'n. v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (National Parks). In National Parks, the United States Court of Appeals for the District of Columbia Circuit found that commercial or financial information submitted to the federal government involuntarily is "confidential" for purposes of Exemption 4 if disclosure of the information is likely either (1) to impair the government's ability to obtain necessary information in the future or (2) to cause substantial harm to the competitive position of the person from whom the government obtained the information. Id. at 770; Critical Mass Energy Project v. NRC, 975 F.2d 871, 879 (D.C. Cir. 1992), cert. denied, 113 S. Ct. 1579 (1993) (Critical Mass). By contrast, information a submitter provides to an agency voluntarily is "confidential" if "it is of a kind that the provider would not customarily make available to the public." Critical Mass, 975 F.2d at 879. In choosing between these two tests, we have consistently held that a submitter involuntarily submits information in response to a request for proposals. Thus, the information is "confidential" if it meets the test set out in National Parks. See Glen M. Jameson, 25 DOE ¶ 80,191 (1996) (Jameson); Hanford Education Action League, 23 DOE ¶ 80,143 (1993).

FOIA Group, Inc. is incorrect when it argues that Exemption 4 does not protect the release of contract pricing data. In appropriate cases, Exemption 4 protects the release of the type of information the requester seeks. We have carefully reviewed the redacted information and have confirmed that the DOE withheld annual prices, pricing and delivery terms, annual demand amounts of power BPA would supply and total revenue amounts. We find that all of the contract pricing (including annual prices) and delivery terms, the annual power demand amounts, and revenue amounts are commercial information within the meaning of Exemption 4. The DOE obtained this material from a "person" as Exemption 4 requires, since the FOIA considers corporate entities as persons for the purposes of that exemption. See John T. O'Rourke & Associates, 12 DOE ¶ 80,149 (1985). We also conclude that the contract pricing and delivery terms, the annual power demand amounts, and revenue amounts are confidential because the release of any item would substantially harm the submitter's competitive position. We have stated in the past that a competitor could use the release of cost and financial information to undercut another firm's bids and thus effectively eliminate the disclosing firm from competition. See International Technology Corporation, 22 DOE ¶ 80,107 (1992); U.S. Rentals, 21 DOE ¶ 80,118 (1991). In this case, for example, if the submitter released its prices and delivery terms, annual power demand amounts, and revenue amounts, any competitor could easily determine how to adjust its proposal to offer more favorable terms than the submitter in a future bid process.

We do not find any merit to FOIA Group, Inc.’s other arguments. First, FOIA Group, Inc. argues that “contractors are aware that the disclosure of contract pricing data is a requirement of doing business with the Government.” The courts have not reached as broad a conclusion. For example, the District Court for the District of Columbia held that “[d]isclosure of prices charged the Government is a cost of doing business with the Government,” but only in the absence of a showing of competitive harm. Racal-Milgo Gov’t Sys. v. SBA, 559 F. Supp. 4, 6 (D.D.C. 1981). In this case, we find that the DOE properly identified a competitive harm to the submitter if the DOE were to release the withheld information. Accordingly, we find that withholding the requested information is appropriate here. Second, FOIA Group, Inc. argues that “the failure to disclose the contract(s) [sic] pricing provides the incumbent contractor with a significant and unfair competitive advantage over other companies in any other comparable contract opportunity.” We do not agree. Exemption 4 protects commercial information from disclosure when a contractor might experience competitive harm from that disclosure, but that protection is not set aside when a competitor claims that he has suffered a competitive disadvantage. As stated above, we find that the DOE properly applied Exemption 4. Therefore, FOIA Group, Inc.’s argument that they are at a competitive disadvantage with respect to the incumbent contractor is without merit. However, we find that the DOE should release some information, specifically, topic headings. Accordingly, we will direct the VP to release the topic headings on Revision No. 1, Exhibit C, Page 1 of 3, of Contract No. 96MS-95243 or provide a detailed explanation for withholding any of these headings.

The Public Interest in Disclosure

The DOE regulations provide the DOE should release to the public material exempt from mandatory disclosure under the FOIA if the DOE determines that federal law permits disclosure and it is in the public interest. 10 C.F.R. § 1004.1. In cases involving material determined to be exempt from mandatory disclosure under Exemption 4, we do not make the usual inquiry into whether release of the material would be in the public interest. Disclosure of confidential information that an agency can withhold pursuant to Exemption 4 would constitute a violation of the Trade Secrets Act, 18 U.S.C. § 1905, and is therefore prohibited. See, e.g., Chicago Power Group, 23 DOE ¶ 80,125 at 80,560 (1993). Accordingly, we may not consider whether the public interest warrants discretionary release of the information properly withheld under Exemption 4.

It Is Therefore Ordered That:

(1) The Appeal filed by FOIA Group, Inc. on January 20, 1998, Case No. VFA-0369, is hereby granted as set forth in paragraph (2) below, and is denied in all other respects.

(2) This matter is hereby remanded to the Acting Senior Vice President of the Power Business Line of the Bonneville Power Administration of the Department of Energy, who will release headings on Revision No. 1, Exhibit C, Page 1 of 3, of Contract No. 96MS-95243 or provide a detailed explanation for withholding any of these headings.

(3) This is a final Order of the Department of Energy of which any aggrieved party may seek judicial review pursuant to the provisions of 5 U.S.C. § 552(a)(4)(B). Judicial review may be sought either in the district where the requester resides or has a principal place of business or in which the agency records are situated or in the District of Columbia.

George B. Breznay

Director

Office of Hearings and Appeals

Date: February 18, 1998