Case No. VFA-0478, 27 DOE ¶ 80,196

March 23, 1999

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Appeal

Name of Petitioner: International Brotherhood of Boilermakers

Date of Filing: February 16, 1999

Case Number: VFA-0478

On March 2, 1999, the law firm of Blake & Uhlig, on behalf of the International Brotherhood of Boilermakers (IBB), filed an Appeal with the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) in response to a determination that DOE’s Oak Ridge Operations Office (OR) issued to IBB on January 28, 1999. The determination concerned a request for information that IBB submitted pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as implemented by DOE in 10 C.F.R. Part 1004. The Appeal, if granted, would result in the release of any existing responsive material to IBB.

I. Background

On September 22, 1998, IBB filed a FOIA request with OR for: (1) a copy of the contract that Lockheed Martin Energy Systems, Inc., the management and operating contractor of Oak Ridge National Laboratory (ORNL), awarded to Thermal Engineering International (TEI) for work performed on the boilers at the X-10 Steam Plant at ORNL; (2) the request for proposal (RFP) that preceded the contract, and (3) information about the hourly wages of the individuals who worked on the boilers. Letter from IBB to OR (September 22, 1998) (Request Letter). OR released some responsive documents to IBB, but withheld unit prices and the total price of the contract. In a determination letter, OR indicated that the release of this material would impair TEI’s competitive position and give TEI’s competitors an unfair advantage over TEI in future procurements. Letter from OR to IBB ( January 28, 1999). IBB then filed this Appeal, stating that OR provided very little

relevant wage information pertaining to the employees who worked on the X-10 Steam Plant project.(1) Letter from Blake & Uhlig, P.A. to Director, OHA (February 10, 1999).

II. Analysis

The FOIA generally requires that agency records be released to the public upon request. 5 U.S.C. § 552(a)(3). However, the FOIA provides nine exemptions for specific types of information that the agency may withhold at its discretion. 5 U.S.C. § 552(b)(1)-(b)(9); 10 C.F.R. § 1004.10(b)(1)-(b)(9). The exemption asserted in this case, Exemption 4, permits an agency to withhold from release “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). The contract material withheld in any case is clearly commercial information, and it was obtained from a person, defined to include a corporation such as TEI. See International Brotherhood of Electrical Workers (IBEW), 27 DOE ¶ 80,152 (1998). Documents submitted on a non-voluntary basis, such as material submitted as part of a contract with the agency, are confidential for purposes of Exemption 4 if disclosure of the information is likely either to impair the government’s ability to obtain necessary information in the future or to cause substantial harm to the competitive position of the person from whom the information was obtained. National Parks & Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974) (National Parks).

In its determination letter, DOE/OR indicated that the disclosure of TEI’s unit and total pricing information would “seriously impair TEI’s competitive position, thus giving competitors a clear advantage over TEI for future procurements . . . .” Letter from OR to IBB (January 28, 1999). Thus, OR implies that the National Parks standard of confidentiality has been met. However, we have previously stated frequently and it is well accepted that an initial DOE determination that material should be withheld under Exemption 4 because its disclosure is likely to cause substantial harm to the submitter must include the reasons for believing that such harm will result to the competitive position of the person from whom the information is obtained. William E. Logan, Jr. & Associates, 27 DOE ¶ 80,185 (1999);Baker, Donelson, Bearman & Caldwell, 27 DOE ¶ 80,164 (1998); IBEW, 27 DOE ¶ 80,152 (1998); Larson Associated, Inc., 25 DOE ¶ 80,204 (1996); Milton L. Loeb, 23 DOE ¶ 80,124 (1993); Covington & Burling, 20 DOE ¶ 80,124 at 80,569 (1990) (Covington & Burling). An adequate explanation would, for example, indicate the type of competitive injury that would result from disclosure, or the manner in which the information, if disclosed, could be utilized by a competitor to damage the firm’s market position. See Covington & Burling, 20 DOE at 80,569.

We reviewed the withheld material, and all other documents released to IBB. Our review disclosed that although OR withheld unit prices for two of the three items in the contract, they disclosed the unit price of Item No. 002, the installation of two economizers. See Memorandum of Telephone Conversation between Linda Chapman, OR, and Valerie Vance Adeyeye, OHA (March 16, 1999); Facsimile from Linda Chapman, OR, to Valerie Vance Adeyeye, OHA, at 10 (March 2, 1999). Thus, the only prices not disclosed were Item 001, the economizers (total of two), and Item 003, access doors (total of four).

We find that OR presented an inadequate justification for withholding the unit prices and the total contract price. This office has consistently held that the total price of a contract, after the contract has been awarded, usually does not reveal details of the submitter’s bidding strategy and thus cannot normally be withheld under Exemption 4. See Baker, Donelson, Bearman & Caldwell, 27 DOE ¶ 80,164 (1998) (citing Covington & Burling, 20 DOE at 80,571); Morgan, Lewis & Bockius, 20 DOE ¶ 80,165 at 80,688 (1990) (stating that after contract is awarded, the proposal as a whole ceases to be unique and confidential). As for unit prices, this office generally has approved withholding such prices provided there is adequate demonstration of the potential for competitive harm in their disclosure. See FOIA Group, Inc., 27 DOE ¶ 80,111 (1998); Cascade Scientific, Inc., 26 DOE ¶ 80,156 (1997). We note, however, that in this case, even though this contract contains only three items, OR has already disclosed the unit price of a very significant item. Under these circumstances, it is possible that disclosure of the contract’s total price would allow TEI’s competitors to calculate unit prices, causing substantial harm to TEI’s competitive position. OR, however, has not demonstrated such harm. (2) Therefore, we will remand this matter to OR for the issuance of a new determination. In the new determination, OR shall either release the price information in the contract or present a specific explanation as to why each component of the pricing information the appellant seeks should be withheld under Exemption 4. (3) If OR is considering releasing the material, DOE regulations require it to solicit TEI’s views on the matter. See IBEW, 27 DOE ¶ 80,152 (1998).

It Is Therefore Ordered That:

(1) The Appeal filed on February 16, 1999 by International Brotherhood of Boilermakers, OHA Case No. VFA-0478, is hereby granted as set forth in paragraph (2) below and denied in all other respects.

(2) This case is hereby remanded to the Oak Ridge Operations Office, which shall promptly issue a new determination in accordance with the guidance set forth in the above Decision.

(3) This is a final Order of the Department of Energy from 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 in the district in which 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: March 23, 1999

(1)OR supplemented its initial response; however, IBB did not receive the supplement until after it had filed this Appeal. In the supplement, OR informed IBB that some of the requested wage information had never been prepared and did not exist because it was not required by the Service Contract Act, 41 U.S.C. § 351, et seq. Letter from OR to IBB (February 10, 1999).

(2)We draw OR’s attention to recent court decisions that deny Exemption 4 protection to unit prices when the submitter fails to demonstrate substantial harm “with sufficient specificity.” See Martin Marietta Corp. v. Dalton, 974 F. Supp. 37, 40-41 (D.D.C. 1997); Comdisco, Inc. v. General Services Administration, 864 F. Supp. 510, 516 (E.D. Va. 1994)

(3)IBB also requested the hourly wages of all employees who worked on the contract. We have previously held that labor rates can properly be withheld under Exemption 4. See Morgan, Lewis & Bockius, 20 DOE at 80,688. Nonetheless, OR should also address this issue in its new determination.