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CORTEZ III SERV. CORP. v. NASA

March 28, 1996

CORTEZ III SERVICE CORP., INC., Plaintiff,
v.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, Defendant.



The opinion of the court was delivered by: SPORKIN

 This case arises under the Freedom of Information Act ("FOIA") and comes before the Court on cross motions for summary judgment. Plaintiff is an incumbent contractor ("Cortez III"). Defendant is the National Aeronautics & Space Administration ("NASA"). In a "reverse FOIA" action, Plaintiff is seeking to prevent the Defendant from releasing certain information that was submitted in connection with a successful bid for a government contact. Specifically, Plaintiff wishes to prevent the release of its General and Administrative expense rate ceilings ("G&A rate ceilings") to its competitors. *fn1"

 FACTS

 Contract Proposal

 In December 1990, NASA issued a Request for Proposals ("RFP") for a cost reimbursement contract for Consolidated Logistics & Administrative Support Services II ("Class II Contract") at the NASA Lewis Research Center in Cleveland, Ohio. The RFP required the bidder to submit a detailed cost proposal. Neither the RFP nor any NASA order or regulation required the bidder to submit proposed G&A ceiling rates. (Wilson Aff., at P19). Cortez III submitted an initial proposal in response to the RFP on March 1, 1991. This proposal did not include G&A rate ceilings. (Wilson Aff at P4).

 On or about March 20, 1991, the contracting officer issued written questions to Cortez III "asking whether it would be willing to propose a cap on the G&A rates contained in its proposal" (Manthey Aff. at P3). On March 27, 1991 Cortez III submitted its Best and Final Offer to NASA. As part of that proposal, Cortez II agreed to negotiate a cap or ceiling on its G&A rates if it were the successful bidder. (Wilson Aff. at P5). After Cortez III was selected for the award, NASA and Cortez III negotiated a G&A rate ceiling which was incorporated into the contract. (Wilson Aff. at P6). NASA Awarded the contract to Cortez III on June 28, 1991. By its terms, the contract expires on September 30, 1996. As awarded, the contract contains G&A rate ceilings for both Cortez III and one of its subcontractors. (Wilson Aff. at P10).

 FOIA Requests

 On March 6, 1995, NASA notified Cortez III of several FOIA requests it had received from Cortez III's competitors. On March 27, 1995, Cortez III objected to the release of information relating to the G&A rate ceilings. Cortez III argued that the information was exempt from release under the FOIA. It stated that the release of such information would cause substantial harm to its competitive position.

 By letter dated August 23, 1995, NASA made an initial determination that the G&A rate ceiling information was exempt form disclosure under the FOIA, 5 U.S.C. § 552(b)(4). In that letter NASA stated:

 
"Such information reveals the unique methods, procedures, and/or techniques employed by the contractor to accomplish the contract, and therefore, is considered to be confidential." (Admin. Record p. 18).

 After an appeal was taken from the initial determination, Cortez III made several submissions to NASA in further support of its position that the material was exempt from disclosure under the FOIA. By letter dated January 22, 1996, NASA reversed its original position and advised Cortez III that it intended to release the information that it had previously withheld. (Admin. Record p. 24).

 On January 29, 1996, Cortez III filed this action seeking to enjoin the release of the information. Plaintiff makes two arguments in support of its position that the information should not be disclosed:

 
1. Cortez III provided the G&A rate ceiling information to NASA on a voluntary basis and therefore, under the Critical Mass, test, the information is confidential and exempt from disclosure;
 
2. Whether or not the G&A ceiling rates were submitted on a voluntary basis, they are confidential financial information and are therefore exempt under FOIA Exemption 4.

 By agreement of the parties confirmed by Order of this Court, the material in question will not be released until the matter has been decided. ...


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