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FEDERAL ELEC. CORP. v. CARLUCCI

April 28, 1988

Federal Electric Corporation, Plaintiff
v.
Honorable Frank Carlucci, et al., Defendants



The opinion of the court was delivered by: PENN

 JOHN GARRETT PENN, UNITED STATES DISTRICT JUDGE.

 The plaintiff filed this action pursuant to the Administrative Procedure Act, 5 U.S.C. § 702, et seq.; the Armed Services Procurement Act, 10 U.S.C. § 2301, et seq.; the Trade Secrets Act, 18 U.S.C. § 1905; the Freedom of Information Act (FOIA), 5 U.S.C. § 552; and the Federal Acquisition Regulation (FAR), 48 C.F.R. Chapter 1 and the Department of Defense FAR Supplement (DFARS), 48 C.F.R. Chapter 2. In its complaint, the plaintiff seeks a judgment declaring that the Navy's disclosure of the plaintiff's cost data violated the law and declaring Solicitation -0695 (hereinafter sometimes referred to as the "Solicitation"), void and for injunctive relief restraining the Navy from taking further action under the Solicitation.

 The case is now before the Court on the plaintiff's motion for summary judgment and the defendants' motion to dismiss or, in the alternative, for summary judgment. The motions were argued on April 18, 1988. Since the date of the argument, the parties have filed additional motions which need not be addressed in view of the ultimate disposition of this case.

 I

 The plaintiff contends that such cost data is proprietary information. Plaintiff contends that it disclosed the information to the Navy for the "limited and exclusive purpose" of allowing the parties to effectuate the contract's "Incentive Price Revision Clause."

 On or about January 28, 1987, before the Navy issued the Solicitation, Schneider Services International (SSI), pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, submitted a request seeking disclosure of the plaintiff's JON Reports. SSI requested the last page for each annex containing the monthly total for that annex of the plaintiff's 1986 and 1987 JON Reports. At all relevant times (January 28, 1987 to April 16, 1987), defendants were operating under the provisions of NAVFAC Instruction 5720.14A which was issued August 31, 1984 and is entitled "Availability To The Public Of Naval Facilities Engineering Command Records Under the Freedom of Information Act."

 On or about February 10, 1987, the Navy issued the Solicitation for the follow-on contract to Contract -0001 for the Base Operating Services. In mid-February 1987, a representative of the plaintiff was advised that an FOIA request had been made for information relating to plaintiff's JON Reports. On or about February 20, 1987, the Release Authority at Kings Bay advised the Commanding Officer and the Initial Denial Authority, Naval Facilities Engineering Command, Charleston, South Carolina, that the JON Reports were non-releasable to competing contractors because (1) plaintiff prepared the JON Reports, (2) Contract 0001 required the plaintiff to submit the reports to the Navy and, (3) release of the reports would divulge privileged information.

 By letter dated February 25, 1987, the plaintiff advised the Resident Officer in charge, that it considered the cost information in the JON Reports highly confidential and that the release of the reports would cause the plaintiff harm. Based upon all of the above information, the Navy denied SSI's FOIA request as confidential pursuant to the Exemption 4 of the FOIA. 5 U.S.C. § 552(b) (4) ("trade secrets and commercial or financial information obtained from a person and privileged or confidential"). A representative of the plaintiff was advised that the FOIA request had been denied.

 SSI's Project Development Manager called a representative of the Navy on March 12, 1987 to check the status of the FOIA request. When the SSI representative was advised that the request had been denied, he stated that SSI was only interested in direct costs, and he asked the Navy to delete proprietary data and release only direct labor and material costs. Dennis Affidavit. par. 7.

 After further conversations with other representatives of the Navy who were familiar with the contract and procurement procedures, the Navy representative determined that direct labor and material costs included in the JON Reports could be released without jeopardizing plaintiff's competitive position and that all bidders should be given the same information.

 By letter dated May 5, 1987, the plaintiff advised the Navy that it regarded the release of the information relating to its cost data to be improper and a violation of its proprietary rights. Plaintiff filed a formal written protest on May 18, 1987. The Navy denied the request on June 16, 1987 stating that (1) the two contracts were substantially different, (2) there was no basis to withhold the release of the summary information, (3) there was no potential for competitive harm and, (4) the ...


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