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Boeing Co. v. U.S. Dep't of the Air Force

May 18, 2009

THE BOEING COMPANY, PLAINTIFF,
v.
U.S. DEPARTMENT OF THE AIR FORCE, DEFENDANT.



The opinion of the court was delivered by: Gladys Kessler United States District Judge

MEMORANDUM OPINION

Plaintiff The Boeing Company ("Boeing") brings this action against Defendant United States Department of the Air Force Space and Missile Systems Center ("Air Force") pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, as amended by the Freedom of Information Act of 1986 ("FIRA"), Pub.L. No. 99-570, § 1801-04, 100 Stat. 3207-48, 48-50; the Trade Secrets Act, 18 U.S.C. § 1905; and the Administrative Procedure Act, 5 U.S.C. § 702.

The present matter is before the Court on Defendant's Motion for Summary Judgment [Dkt. No. 20], and Plaintiff's Motion for Summary Judgment [Dkt. No. 21].

Upon consideration of the Motions, Oppositions, the entire record herein, and for the reasons set forth below, Defendant's Motion for Summary Judgment is granted, and Plaintiff's Motion for Summary Judgment is denied.

I. Background*fn1

The Global Positioning System ("GPS") is a "space-based radio- positioning system" that depends on a "24-satellite constellation that provides navigation and timing information to military and civilian users." Pl.'s Mot. for Summ. J. at 1. It has become increasingly widespread as a mapping tool in cars, cell phones, and fitness monitors used by runners and cyclists.

The technology depends upon a network of satellites that are updated and replaced over time. Id. at 2. There have been four generations of satellites: Block I, Block II, Block IIA, and Block IIR. Id.

After a competitive procurement in April 1996, the Air Force awarded the production contract for the Block IIF "next generation" satellites to Boeing. Id. The contract provided for Boeing to build and launch six satellites and included options for twenty-seven more. Id. In March 2000, the Air Force decided not to exercise all twenty-seven options. It contracted with Boeing to build the first twelve satellites and put the other fifteen contracts out for competitive bidding. Id.

On January 22, 2004, the Air Force received a FOIA request from Federal Sources, Inc. Federal Sources is a fee-based commercial service that submits FOIA requests on behalf of companies or individuals. Boeing believes that the requestor is Boeing's major competitor, Lockheed Martin.

The request sought a copy of Air Force contract F4701-96-C-0025, all modifications to that contract, and the Source Selection Decision Document. The contract was awarded in 1996 and will continue through 2012. Federal Sources subsequently agreed to accept a conformed version of the contract in place of the original contract and all modifications.*fn2

Boeing was notified of this request by a letter from the Air Force dated January 28, 2004. On March 31, 2004, Boeing responded to the request for the Source Selection Decision Document. The parties subsequently resolved their differences about this document, so it is not an issue in this litigation.

On April 12, 2004, Boeing submitted its objections to the release of the pricing information or wrap-around rates contained in sections B and H of the contract. Specifically, Boeing objected to the release of information in Sections H.17, H.23, and H.24, as well as the following contract line item numbers ("CLINs") in section B: CLINs 7, 16, 23, 40, 41, 43, and 45.*fn3 Boeing objected only to the release of rates, not to the release of the total contract price. Pl.'s Opp'n at 21. Boeing emphasized in all its pleadings that it is opposed to disclosing "wrap rates," i.e., rates that combine an employee's wages, employer-paid taxes, benefits, and allocated overhead costs. Id. at 23. The wrap rates include "labor rates, profit rates, or the combination of the two -- and any information that would enable a competitor to derive those rates." Id. at 21.

On October 22, 2004, the Air Force responded that information from 1996 through 2004 could not be used to produce projections with "sufficient validity to cause a likelihood of substantial competitive harm." It also agreed not to release information from 2005 through 2012.

On December 2, 2004, Boeing submitted additional comments. It agreed to the release of pricing information for the years 1996 through 1999. However, it objected to the release of such data for the 2000-2004 period on the ground that it could be used to predict Boeing's future labor rates.

On January 25, 2005, the Air Force issued its Final Administrative Decision Letter ("Decision Letter"). The Decision Letter indicated that the Air Force would release all requested pricing information for the period between 1996 and 2004 within two weeks of that date, although it agreed not to release prices for the years 2005-2012. The Decision Letter also indicated that Boeing was required to submit proposed unit prices when it submitted its contract bid and that Boeing had failed to establish that release of the requested information would be likely to cause substantial harm to Boeing's competitive position.

On February 16, 2005, Boeing responded to the Decision Letter, stating its disagreement with the agency's decision. On February 23, 2005, the Air Force responded further, stating that it had been careful in reaching its decision and indicating that it planned to release the contract, including the disputed information in sections B and H, for all years prior to 2005.

On that same date, Boeing filed its Complaint for Declaratory and Injunctive Relief. On August 18, 2005, a stay was ordered until December 28, 2005 to permit Boeing to submit comments in response to the Air Force's February 23, 2005 letter and to allow the Air Force to reply. Boeing submitted its comments on November 23, 2005, and the Air Force issued a final agency decision on December 27, 2005. In this final decision, the Air ...


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