Waste haulers, consulting firms and other contractors wanting to win business from the federal government face a dilemma with the content of their submissions.
Agency requests for bids and proposals require information and data on capabilities, performance methods, costs and price structures. On the one hand, a bidder wants to be as responsive and as forthcoming as possible in providing requested matter. On the other, a would-be contractor wants to be sure that its proposal is safe from a competitor's prying eyes.
The problem: After a proposal is in the government's hands, the contents may be disclosed in response to a request under the Freedom of Information Act (FOIA).
As a general rule, any member of the public can request and receive copies of "records" kept by federal agencies. Nevertheless, the government rightfully may deny a request for records if they fall within any of nine exempt categories. These exemptions protect, among other interests, privileged or confidential business data and financial information.
Take the case of a proposal that contains cost build-ups, indirect rates, staffing and management approaches, and product design data. The company probably will treat all such information as confidential, will shield it from competitors and will submit it to a potential federal customer with the expectation that the information will remain within the agency for proposal-evaluation purposes only.
Nevertheless, a bid or proposal in the hands of an executive or military department, or a regulatory agency becomes a "record" that could end up being disclosed.
As a rule, when an agency receives an FOIA request for records that contain material exempt from releases, e.g., confidential commercial information, the agency:
* must notify the submitter that such material has been requested, and
* must give the submitter a chance to object to the disclosure.
Two recent developments affect the release of contract proposals under FOIA. First, Congress has changed the law to clarify that to the extent a proposal contains information that does not become part of a contract, such information cannot be released in response to an FOIA request. The legislative history of the provision makes it clear that Congress wanted to relieve agencies from the chore of processing FOIA requests for contractor proposals.
Second, a series of court decisions suggests a trend that, where a government contract contains confidential commercial information (either expressly or by reference), the agency may release such matter unless the contractor (i.e., winning bidder) can prove that disclosure will result in substantial competitive harm. Thus, unsuccessful proposals now are exempt from release under FOIA.
What can a prospective government contractor do to increase its chances of winning a job without tipping off its competitors?
A contractor can organize a proposal into two separate sections:
* material intended to become part of the contract; and
* other material.
Obviously, the contract would include a statement of the services that the government will receive. However, the proposal would include separately designated explanatory, technical and/or proprietary information that would aid the procurement officer in evaluating the submission.
If the contract officer appears to be reluctant or hesitant about incorporating less than the offeror's entire proposal into the awarded contract, then the offeror must take the initiative: preferably, in a pre-submission conference; otherwise, during post-award contract negotiations. Sometimes, an agency will agree to change or clarify the proposal submission instructions to allow the offeror to identify or, even better, to segregate proprietary and confidential data.
A successful bidder must be ready to respond to post-award FOIA requests for disclosure of arguably protectable information and data. Blanket assertions of confidentiality will not be enough. To the extent that the contractor can fully and credibly spell out the likelihood of substantial competitive harm, disclosure can be prevented.
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