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JOWETT, INC. v. DEPARTMENT OF THE NAVY

October 30, 1989

JOWETT, INC., Plaintiff,
v.
THE DEPARTMENT OF THE NAVY, Defendant


Charles R. Richey, United States District Judge.


The opinion of the court was delivered by: RICHEY

This is a suit brought under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, by Jowett, Inc., a government contractor seeking disclosure by the Navy of certain audit reports. The Navy has released the reports with substantial redactions, which it claims are justified by Exemption 5 of the FOIA, 5 U.S.C. § 552(b)(5). This matter is before the Court on the parties' cross-motions for summary judgment. Having conducted an in camera review of the requested documents at Jowett's suggestion, the Court will grant summary judgment for the Navy.

 I. FACTUAL BACKGROUND

 This dispute began after Jowett sought an "equitable adjustment" in connection with one of its contracts with the Navy for cost overruns of $ 698,488 allegedly attributable to government-caused delays. As is common when a contractor requests such an adjustment, the Navy had the Defense Contract Audit Agency ("DCAA") conduct audits of Jowett and three of its sub-contractors. These audits and accompanying reports have long since been completed, but the Navy has not yet issued a decision on Jowett's request for an adjustment.

 On October 11, 1988, Jowett submitted a FOIA request seeking disclosure of the relevant audit reports. On October 26, 1988, the Navy denied the request and claimed that the reports in their entirety were exempt from disclosure under Exemption 5 of the FOIA. After formally appealing to the Navy's Office of General Counsel and receiving an acknowledgement but no decision, Jowett filed this action on January 12, 1989. The Navy has since provided Jowett with the audit reports pertaining to the plaintiff itself and its sub-contractors. However, relying upon Exemption 5, the Navy substantially redacted these reports, leaving only the various amounts claimed by Jowett and the sub-contractors and excising the auditor's questioned amounts and accompanying explanations. Understandably dissatisfied with getting only what it already knows, Jowett argues that it is entitled to receive the rest of the reports and learn the results of the audits.

 II. ANALYSIS

 Exemption 5 specifically exempts from the FOIA's disclosure requirements all "inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. § 552(b)(5). *fn1" The express language of this exemption thus provides that an agency has basically the same privileges and protections during the civil discovery process as any other litigant.

 A. The Audit Reports Are Pre-decisional

 Jowett argues that its demand for the audit reports should be treated as a post-decisional request because the Navy has "in effect" made a decision to deny its claim for an equitable adjustment by not issuing its decision within a "reasonable time," as required by the Contracts Dispute Act of 1978 ("1978 Act"), 41 U.S.C. § 605(c)(3). Jowett points out that under the 1978 Act the failure of the contracting officer to issue a decision on the claim within the required period will be deemed to be a decision denying the claim. Id. § 605(c)(5).

 Although this argument seems, at first glance, to have some merit, closer scrutiny reveals serious flaws. As a threshold matter, Jowett merely asserts, but does not explain, why the 1978 Act's definition of a "decision" should govern the issue of whether materials requested under FOIA are pre- or post-decisional. By relying almost exclusively on the 1978 Act, Jowett ignores the numerous cases that have construed in great detail when something is a "final decision" for the purposes of Exemption 5. See, e.g., Taxation With Representation Fund v. IRS, 207 U.S. App. D.C. 331, 646 F.2d 666, 677-681 (D.C.Cir. 1981); Bristol-Myers, Co. v. Federal Trade Comm'n, 194 U.S. App. D.C. 99, 598 F.2d 18, 24-26 (D.C.Cir. 1978).

 Putting to one side the 1978 Act definition of final decision, the audit reports do not bear any indicia of finality. Jowett has not demonstrated that the DCAA has any authority to make final decisions on government contractors' equitable adjustment claims. Moreover, the audit reports were prepared at the request of one of the Navy's contracting officers for the express purpose of advising the contracting officer as to the merits of Jowett's equitable adjustment claim. Thus, although technically the reports were not prepared by a subordinate for a superior official within the same agency, this minor distinction cannot change the conclusion that "this flow of advisory material is exactly opposite to the paradigm of 'final opinions," which typically flow from a superior with policy-making authority to a subordinate who carries out the policy." Brinton v. Department of State, 204 U.S. App. D.C. 328, 636 F.2d 600, 605 (D.C.Cir. 1980), cert. denied, 452 U.S. 905, 69 L. Ed. 2d 405, 101 S. Ct. 3030 (1981); see also Taxation With Representation, 646 F.2d at 681 ("[A] document from a subordinate to a superior official is more likely to be pre-decisional, while a document moving in the opposite direction is more likely to contain instructions to staff explaining the reasons for a decision already made." (quoting Coastal States Gas Corp. v. Department of Energy, 199 U.S. App. D.C. 272, 617 F.2d 854, 868 (D.C.Cir. 1980)).

 Finally, assuming arguendo that Jowett's argument did not have the flaws mentioned above, the case law is clear that, even after a final decision has been made, a pre-decisional inter- or intra-agency memorandum that is part of the deliberative process does not lose the protection of Exemption 5 unless it has been expressly incorporated into the final decision. NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 161, 44 L. Ed. 2d 29, 95 S. Ct. 1504 (1975) ("if an agency chooses expressly to adopt or incorporate by reference an intra-agency memorandum previously covered by Exemption 5 in what would otherwise be a final opinion, that memorandum may be withheld only on the ground that it falls within the coverage of some exemption other than Exemption 5" (emphasis in original)); see also Bristol-Myers Co. v. Federal Trade Comm'n, 194 U.S. App. D.C. 99, 598 F.2d 18, 24 (D.C.Cir. 1978); Shermco Industries, Inc. v. Secretary of the Air Force, 613 F.2d ...


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