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MCI WORLDCOM, INC. v. GENERAL SERVICES ADMIN.

September 7, 2001

MCI WORLDCOM, INC., PLAINTIFF,
V.
GENERAL SERVICES ADMINISTRATION, DEFENDANT. SPRINT COMMUNICATIONS COMPANY, L.P. PLAINTIFF, V. GENERAL SERVICES ADMINISTRATION, DEFENDANT.



The opinion of the court was delivered by: Kessler, District Judge.

MEMORANDUM OPINION

These matters are before the Court on the Motions for Summary Judgment of Defendant General Services Administration ("GSA"), and upon the Cross Motions for Summary Judgment of Sprint Communications Company, L.P. ("Sprint"), and of MCI Worldcom, Inc. ("MCI"). These cases are consolidated for the purposes of this Memorandum Opinion and Order. Upon consideration of the motions, oppositions, replies, and the entire record herein, for the reasons stated below, the Court denies Defendant's Motions for Summary Judgment and grants Plaintiffs' Motions for Summary Judgment.

I. BACKGROUND

Plaintiffs, MCI and Sprint, bring this "reverse" Freedom of Information Act ("FOIA") action to enjoin disclosure by Defendant GSA of pricing information that was submitted in connection with Plaintiffs' contracts to provide telecommunications services to the Government. Plaintiffs contend that disclosure would violate FOIA, Exemption 4, 5 U.S.C. § 552(b)(4), the Trade Secrets Act, 18 U.S.C. § 1905, and applicable federal regulations.

A. The FTS2001 Contracts and B-Tables

The GSA, through its Federal Technology Service ("FTS"), provides government agencies and other government related entities throughout the world with long distance telecommunications services. GSA currently provides these services by means of two multi-year, long-distance contracts known as "FTS2001 Contracts." GSA awarded one FTS 2001 Contract to Sprint on December 18, 1998, and the other to MCI on January 11, 1999.

Among other things, the FTS2001 Contracts require that Plaintiffs provide various types of long distance services to the Government for a base term of four years. GSA has the option to renew the Contracts for up to four additional years thereafter, making the total life of the FTS2001 Contracts eight years. At the time of the writing of parties' briefs, Plaintiffs were performing "Contract Year 2."

In order to obtain the FTS2001 Contracts, Plaintiffs were required to submit detailed proposals covering a broad array of telecommunications services to be provided to the Government, including services for voice, data and internet. Plaintiffs also submitted detailed pricing schedules known as "B-Tables." The B-Tables are complex matrices in computer data base format that contain detailed line-item pricing information. In particular, the B-Tables contain a "break down" of the price of every call, transmission or service into its component parts.*fn1 There are separate B-Tables for each of the eight years of the FTS2001 Contracts, and together the B-Tables total tens of thousands of pages of pricing data for all services and features to be provided to the Government under the FTS2001 Contracts.

B. GSA's Decision to Release FTS2001 Contract B-Tables

On April 11, 2000, when Plaintiffs were performing Year 2 of the FTS2001 Contracts, GSA announced that it was adopting a new policy regarding the disclosure of pricing data. GSA informed Plaintiffs that, pursuant to this policy, it would now publicly disclose all "contract unit prices" contained in the FTS2001 Contracts. In particular, GSA indicated that it would disclose Plaintiffs' B-Tables for the remaining years, or "future-years," of the FTS2001 Contracts (i.e., Years 3-8).

GSA acknowledged that its decision to release all pricing data for future years differed from its previous' long-standing policy and practice of disclosing only current-year prices.*fn2 GSA explained that its new policy was adopted in response to the 1997 revisions to the government procurement regulations known as the Federal Acquisition Regulations ("FAR"), 48 C.F.R. § 15.500 et seq. ("1997 FAR rewrite").*fn3 In particular, GSA relied upon two FAR regulations concerning disclosure of "unit prices" to unsuccessful offerors, namely FAR §§ 15.503(b)(1) and 15.506(d)(2). 48 C.F.R. § 15.503(b)(1) and 15.506(d)(2). GSA concluded that these two regulations as revised mandated disclosure of the pricing information found in Plaintiffs' B-Tables for the remaining years of the FTS2001 Contracts.*fn4

On April 18, 2000, GSA received a FOIA request from Qwest Communications Company ("Qwest"), seeking, among other things, all "unit pricing" information submitted by Plaintiffs in connection with the FTS 2001 Contracts. On April 27, 2000, Plaintiffs filed this action seeking to enjoin disclosure of this information to Qwest for FTS2001 Contract Years 3-8. On May 5, 2000, parties entered into a stipulation whereby GSA agreed not to release any of the contract pricing information at issue in this litigation.

II. STANDARD OF REVIEW

Under Fed.R.Civ.P. 56, a motion for summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, and affidavits show that there is no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Plaintiffs' challenge to GSA's decision to disclose their B-Tables arises under the Administrative Procedure Act ("APA"). The APA permits a person "affected or aggrieved by agency action" to seek "judicial review thereof." 5 U.S.C. § 702. If upon review of the administrative record, the court determines that the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," then the court "shall . . . hold unlawful and set aside" that agency action. 5 U.S.C. § 706.

While an agency's interpretation of regulations is normally entitled to considerable deference, Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), the Court will not grant such deference in this case. The FAR is not written or prepared by GSA, but rather is a joint product of several agencies.*fn5 Accordingly, only minimal deference is due. See e.g., Caiola v. Carroll, 851 F.2d 395, 399 (D.C.Cir. 1988) (deference to agency interpretation inappropriate where regulation written and promulgated by several agencies); Novicki v. Cook, 946 F.2d 938, 941 (D.C.Cir. 1991) (same).

III. ANALYSIS

MCI and Sprint challenge GSA's April 11, 2000, decision to disclose the pricing information found in Plaintiffs' B-Tables for FTS2001 Contract Years 3-8. As discussed below, the Court finds that GSA's decision is arbitrary and capricious because: (1) it is contrary to §§ FAR 15.503 and 15.506, the Trade Secrets Act, and FOIA Exemption 4; (2) violates GSA's own FOIA regulations; and (3) represents a departure from GSA precedent without reasoned explanation.

A. GSA Acted Arbitrarily and Capriciously Because FAR §§ 15.503 and 15.506, FOIA Exemption 4, and the Trade Secrets Act Prohibit Disclosure of Plaintiffs' B-Tables.

GSA's principal argument is that FAR ยงยง 15.503(b)(1) and 15.506 require that Plaintiffs' B-Tables be publicly disclosed. Section 15.503(b)(1), which concerns postaward notices ...


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