Case No. VFA-0638, 28 DOE ¶ 80,137

January 17, 2001

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

APPEAL

Name of Petitioner:Kelly, Anderson & Associates, Inc.

Date of Filing:December 19, 2000

Case Number: VFA-0638

This decision addresses a Freedom of Information Act (FOIA) appeal filed by Kelly, Anderson & Associates, Inc. (Kelly) pursuant to 5 U.S.C. § 552, as implemented by the Department of Energy (DOE) at 10 C.F.R. Part 1004. For the reasons set forth below, Kelly’s appeal will be granted and remanded for a new determination in accordance with this decision.

I. Background

With nine exemptions, the FOIA requires federal agencies to release documents to the public upon request. 5 U.S.C. § 552(a), (b); 10 C.F.R. § 1004.3, .10(b). On September 13, 2000, Kelly filed a FOIA request with the FOIA/Privacy Act Division of the DOE Headquarters, seeking a copy of the winning proposal (the winning proposal) that resulted in contract DE-AT01-00AD00165 (the resultant contract). In response, a Procurement Analyst for Headquarters’ Procurement Services, Corporate Services Division (the Analyst) withheld the requested document and issued a determination letter to Kelly on November 17, 2000, which stated:

The costs proposals are withheld in their entirety. They are authorized to be withheld pursuant to Exemption 3 of the FOIA, as authorized by the National Defense Authorization Act of 1997 (NDAA), Pub. L. No. 104-201, 821, 110 Stat. 2422, 2609 (1997). The NDAA contains a section prohibiting making a proposal in the possession or control of an executive agency available to any person under the [FOIA].

On December 19, 2000, Kelly appealed the Analyst’s determination. In its appeal letter, Kelly states:

By “winning proposal,” [we] meant to convey our request for the Technical and Management Sections of the winning proposal, not the Cost Section, which we understand is proprietary to the selected company. Therefore, it would be fully

acceptable to [Kelly] if the document provided included deletions of all such proprietary information.

II. Applicable Legal Principles

Exemption 3 of the FOIA allows agencies to withhold information that is

specifically exempted from disclosure by statute [other than the FOIA itself] provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld.

5 U.S.C. § 552(b)(3). As articulated by the U.S. Supreme Court in CIA v. Sims, 471 U.S. 159, 167 (1985) (Sims), application of Exemption 3 is a two-step process. First, an agency must determine whether the statutory provision in question satisfies the foregoing requirements of Exemption 3, and, if so, the agency must next determine whether the subject information falls within the purview of that statutory provision. Id.

III. Analysis

Applying the foregoing legal principles, the initial question in this case is whether the NDAA provides a statutory exemption to disclosure within the meaning of Exemption 3. We have previously held that it does. See, e.g., Chemical Weapons Working Group, Inc., 26 DOE ¶ 80,170 (1997) (Chemical Weapons); Patricia McCracken, 26 DOE ¶ 80,227 (1997). Section 821(b)(1) of the NDAA, “Prohibition On Release of Contractor Proposals, Civilian Agency Acquisitions,” (Section 821(b)(1)) provides that “a proposal in the possession or control of an executive agency may not be made available to any person under [the FOIA],” unless such proposal is set forth or incorporated by reference in a contract entered into between the agency and the contractor that submitted the proposal. (emphasis added).(1) The plain language of Section 821(b)(1) allows no discretion in withholding contractor proposals that are not set forth or incorporated by reference in a contract. The section therefore satisfies Subpart A of Exemption 3. See Chemical Weapons, supra.

We must next determine whether the subject information, i.e., the winning proposal, withheld by the Analyst is a “proposal” for purposes of Section 821(b)(1). We find that it is. Section 821(b)(3) of the NDAA defines “proposal” to mean “any proposal including a technical, management, or cost proposal, submitted by a contractor in response to the requirements of a solicitation for a competitive proposal.” The winning proposal was submitted by a contractor in response to solicitation DE-RQ01- 00AD77777, which sought competitive proposals.

Our finding that the Sims test is satisfied, however, does not end our inquiry in this case. Section 821(b)(1) further requires us to ask whether the winning proposal is set forth or incorporated by reference in the resultant contract. If so, by its own terms, Section 821(b)(1)’s shield is lifted. Examination of the resultant contract reveals that the proposal is incorporated by reference therein. The resultant contract provides that “[a]ll work will be in accordance with the attached statement of work and performed pursuant to [the winning] technical and price proposal of [a certain date] . . . .” Contract DE-AT01-00AD00165. This direct incorporation by reference places the winning proposal outside the protection of Section 821(b)(1) and, thus, also outside the protection of Exemption 3.

Although Exemption 3 is inapplicable to this case, it appears that the requested proposal may be protected under another FOIA exemption, such as Exemption 4, which protects from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4).

IV. Conclusion

Based upon the foregoing analysis, the winning proposal is not protected from disclosure under Exemption 3 but may be protected under another FOIA exemption. This matter is therefore remanded to the Supervisory Procurement Analyst (SPA) for a new determination. In its determination, the SPA must either release the requested documents or provide another reason for withholding them.

It Is Therefore Ordered That:

(1) The appeal filed by Kelly, Anderson & Associates, Inc. on December 19, 2000, Case Number VFA-0638, is hereby granted as specified in Paragraph (2) below.

(2) This matter is hereby remanded to the FOIA/Privacy Act Division of the Department of Energy Headquarters to issue a new determination in accordance with the instructions set forth in this Decision and Order.

(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 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: January 17, 2001

(1)Section 821(b)(1) of the NDAA may be found at 41 U.S.C. § 253(b)(m).