Case No. VFA-0371, 27 DOE ¶ 80,112

February 20, 1998

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner:Ruth Towle Murphy

Date of Filing:January 26, 1998

Case Number: VFA-0371

On January 26, 1998, Ruth Towle Murphy (Appellant), filed an Appeal from a determination the Manager of the Oak Ridge Operations Office (Manager) of the Department of Energy (DOE) issued to her on November 14, 1997. In that determination, the Manager partially granted a request for information that the Appellant 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 her request for information, the Appellant sought copies of "[A]ll of the entire work/service contracts between OSTI [Office of Scientific and Technical Information] and SAIC [Science Applications International Corporation], from the initial contract up to the contract covering 1997." In his determination, the Manager released copies of the contract and various contract modification documents between SAIC and the DOE pertaining to OSTI, but deleted 'key personnel [names], hourly rates, profit and G&A [General and Administrative] percentages, and the total estimated amounts in accordance with 5 U.S.C. § 552(b)(4).” The Appellant contends that “only information obtained from an individual, a partnership, or a corporation, other than a government agency, qualifies under the fourth exemption” of the FOIA (emphasis in original). She argues that since both the DOE and the submitter signed the contract she seeks, in essence, the DOE obtained the contract from itself. Since Exemption 4 does not apply to documents obtained from a government agency, the Appellant contends that the Manager improperly applied Exemption 4. The Appellant also asserts that she does not seek SAIC marketing plans or profit and loss information, or other similar SAIC commercial information but only the information contained in the contract documents. Because the information withheld in the documents is not SAIC financial information, Appellant believes that the Manager improperly applied Exemption 4.

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 (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).

The Appellant is incorrect when she argues that the DOE obtained the withheld information from itself. Simply because the DOE signed the contract is no indication that the DOE had anything to do with the creation of the information. In the present case, the submitter, SAIC, created and provided the redacted information in response to a request for proposal for the purpose of acquiring the contract. See Memorandum of telephone conversation with Amy Rothrock, FOIA Officer, Oak Ridge Operations Office, and Richard Cronin, OHA Staff Attorney (February 4, 1998).

The Appellant is also incorrect when she argues that essentially only information such as marketing plans, profit or loss statements or similar information can be construed as "commercial or financial information." The Court of Appeals for the District of Columbia Circuit has rejected the argument that the term "commercial" should be limited to records that "reveal basic commercial operations." Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1290 (D.C. Cir 1983). We believe that the types of information withheld in the present case are "commercial" since the information was submitted specifically for the purpose of acquiring a contract. See Industrial Constructors Corporation, 25 DOE ¶ 80,196 at 80,739 (1996) (ICC).

With respect to the particular information withheld here, we have obtained copies of the relevant portions of the documents and conducted a review as to the appropriateness of the Manager's withholdings under Exemption 4.

In reviewing the redacted information, we confirm that the DOE withheld only hourly rates, profit and G&A percentages, total yearly estimated labor cost amounts for two facilities (the financial service center and the radiation exposure database), and the names of key personnel to implement the contract. As discussed above, we find that all of this redacted information is commercial information within the meaning of Exemption 4. The DOE obtained this material from a "person" as required by Exemption 4, since the FOIA considers corporate entities, such as SAIC, as persons for the purposes of that exemption. See ICC; John T. O'Rourke & Associates, 12 DOE ¶ 80,149 (1985). We also

conclude that each withheld item - the estimated yearly labor cost amounts, hourly rates, profit and G&A percentages, and the names of key personnel - is confidential because its release would substantially harm the submitter's competitive position. We have stated in the past that release of cost and financial information could be used by a competitor to undercut another firm's bids and thus effectively eliminate the disclosing firm from competition. See ICC; 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 estimated costs for completing specific tasks, a competitor could easily determine how to adjust its own costs to arrive at a lower contract price and plan to undercut the submitter's best price and procedures in a future bid process. Furthermore, if the DOE were to release the names of key personnel involved in the contract, a competitor could offer employment to these people in an effort to make his firm more competitive in a future bid process at the expense of the submitter. See Jameson. Accordingly, the withheld information was properly found to be within the scope of Exemption 4.

The Public Interest in Disclosure

The DOE regulations provide that 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). Thus, we may not consider whether the public interest warrants discretionary release of the information properly withheld under Exemption 4. Consequently, we must deny the Appellant's Appeal.

It Is Therefore Ordered That:

(1) The Appeal filed by Ruth Towle Murphy on January 26, 1998, Case No. VFA-0371, is hereby denied.

(2) 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 20, 1998