03-5014
R & W FLAMMANN GmbH
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
John R.
Keys, Jr., Winston & Strawn, of Washington, DC, argued for
plaintiff-appellee.
Joseph
Trautwein, Attorney, Commercial Litigation Branch, Civil Division,
Department of Justice, of Washington, DC, argued for defendant-appellant. On the brief were David M. Cohen,
Director; Brian M. Simkin, Assistant Director; and Allison Page,
Trial Attorney. Of counsel on the brief
were LTC Douglas K. Mickle and Major Paul T. Salussolia, U.S.
Army Litigation Division, of Arlington, Virginia.
Appealed
from: United States Court of
Federal Claims
Senior
Judge Reginald W. Gibson
United States Court of Appeals for the Federal Circuit
03-5014
R & W FLAMMANN GmbH,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
______________________
DECIDED:
August 7, 2003
______________________
Before MAYER, Chief Judge, NEWMAN and LOURIE, Circuit
Judges.
MAYER, Chief Judge.
The
United States appeals the judgment of the United States Court of Federal Claims
enjoining the Department of the Army from awarding a resolicited bid
contract. R & W Flammann GmbH v.
United States, 53 Fed. Cl. 647 (2002).
Because the court erred as a matter of law, we reverse.
In
January 2001, the Army awarded Contract No. DAJA02-01-D-0007, the incumbent
contract, to R & W Flammann GmbH (“Flammann”) to conduct between occupancy
maintenance (“BOM”) services for housing units in Heidelberg, Germany. Awarded in accordance with the sealed bid
procurement process, the incumbent contract called for Flammann to provide BOM
services for one year, with four one-year options, beginning in February
2001. In October 2001, the Army chose
not to exercise its option under the incumbent contract and resolicited bids
for a substantially similar BOM services contract. Using the two-step sealed bidding process, in
accordance with Federal Acquisition Regulation (“FAR”) subpart 14.5, the Army
first issued a Request for Technical Proposal, No. DAJA02-02-R-7001, on October
5, 2001, followed by an Invitation For Bid (“IFB”), Solicitation No.
DAJA02-02-B-0001, on July 2, 2002. In
October and November 2001, SKE GmbH (“SKE”), a competing bidder for the
resolicited contract, submitted Freedom of Information Act (“FOIA”) requests to
the Army for Flammann’s incumbent contract cost schedule. The Army gave Flammann submitter notice of
SKE’s FOIA requests and Flammann objected.
Based partly on its determination that Flammann’s unit prices were in
the public domain because the bid had already been publicly opened, the Army
provided SKE, by Contract Line Item Number (“CLIN”), Flammann’s unit price
information for the incumbent contract’s base year and unexercised option
years.
Following the Army’s rejection of
its pre-award bid protest, Flammann filed this suit on July 18, 2002, seeking
injunctive relief and arguing, inter alia, that the Army’s
disclosure of Flammann’s unit price information to SKE violated provisions of
FOIA and the Trade Secrets Act. The
parties cross-moved for summary judgment based on the administrative record. The trial court found that although
Flammann’s unit prices were “generally subject to release under FOIA”, the Army
did not act in accordance with law because the “peculiar facts at bar” created
an appearance of impropriety. 53 Fed.
Cl. at 654. It therefore enjoined the
Army from awarding the resolicited contract, and required that all bidders
receive copies of Flammann’s unit prices and that Flammann receive copies of
its competitor’s bids. Id. at
657-58. The government appeals. We have jurisdiction under 28 U.S.C. §
1295(a)(3).
We review the grant or denial of
motions for summary judgment de novo, Impresa Construzioni
Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1330 (Fed. Cir.
2001), independently examining the administrative record to determine whether
any “genuine issue[s] as to any material fact” are present and whether the
“moving party is entitled to a judgment as a matter of law,” Fed. R. Civ. P.
56(c). Because no genuine issues of
material fact exist here, we review the trial court’s decision as a matter of
law.
Bid protest actions are subject to
the standard of review established under section 706 of title 5 of the
Administrative Procedure Act (“APA”), 28 U.S.C. § 1491(b)(4) (2000), by which
an agency’s decision is to be set aside if it is “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law,” 5 U.S.C. § 706(2)(A)
(2000). See Impresa, 238
F.3d at 1332. Contracting officers are
given broad discretion in their evaluation of bids, E.W. Bliss Company v.
United States, 77 F.3d 445, 449 (Fed. Cir. 1996), and when an officer’s
decision is reasonable a court may not “substitute its judgment for that of the
agency,” Ray
v. Lehman, 55
F.3d 606, 608 (Fed. Cir. 1995).
The
government argues that the
release of Flammann’s unit price information to SKE was not improper. Because Flammann’s CLIN information was
already in the public domain as a result of the bid opening process, FOIA and
FAR mandated its release.
Flammann responds that because its unit price information was confidential, the Army violated FOIA, 5 U.S.C. § 552 (2000), and the Trade Secrets Act, 18 U.S.C. § 1905 (2000). Specifically, Flammann asserts that its unit prices fall within Exemption 4 of FOIA, which protects from disclosure “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential,” 5 U.S.C. § 552(b)(4) (2000). It further argues that the only applicable test for confidentiality is whether disclosure would be likely to “cause substantial harm to the competitive position of the person from whom the information was obtained.” Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974).
FOIA’s
broad policy is one of disclosure, as a “check against corruption and to hold the governors
accountable to the governed,” NLRB v. Robbins Tire & Rubber Company,
437 U.S. 214, 242 (1978), and government agencies have a “general
obligation . . . to make information available to the public,” Chrysler
Corporation v. Brown, 441 U.S. 281, 292 (1979). Under
FOIA, which is incorporated into FAR, 48 C.F.R. §§ 24.201-24.203 (2000), “[a] federal agency must
disclose agency records unless they may be withheld pursuant to one of the nine
enumerated exemptions listed in § 552(b),” United States
Department of Justice v. Julian, 486 U.S. 1, 8 (1988). Even if information meets the standards of an otherwise
valid exemption, FOIA logically requires that if it is already in the public
domain “the government may not . . . justify withholding [such]
information.” Students Against
Genocide v. Dep’t of State, 257 F.3d 828, 836 (D.C. Cir. 2001).
In this case, the incumbent contract’s bids were publicly opened and became immediately available to the public as required by FAR. 48 C.F.R. § 14.402-1(a) (2000) (requiring the bid opening officer to “personally and publicly open all bids”); id. § 14.402-1(c) (2000) (“Examination of bids by interested persons shall be permitted . . . .”). When a sealed bid is available to the public, whether or not it is consulted, it enters the public domain and is therefore not confidential under Exemption 4 of FOIA. See CNA Financial Corp. v. Donovan, 830 F.2d 1132, 1154 (D.C. Cir. 1987) (“To the extent that any data requested under FOIA are in the public domain, the submitter is unable to make any claim to confidentiality--a sine qua non of Exemption 4.”); see also Davis v. United States Dep’t of Justice, 968 F.2d 1276, 1280 (D.C. Cir. 1992) (“[A] showing of public availability renders the FOIA exemptions inapplicable . . . .”). Flammann’s unit price information, which was included in its bid for the incumbent contract, entered the public domain upon bid opening and, therefore, we agree with the trial court that the information did not fall within Exemption 4 of FOIA.
The Trade Secrets Act, a criminal statute, bars government officials from disclosing or making known “to any extent not authorized by law” numerous categories of information, including confidential and trade secret information. See 18 U.S.C. § 1905 (2000). The Army did not violate the Trade Secrets Act because FOIA, also approved by Congress, logically authorizes release of information already within the public domain. See Students Against Genocide, 257 F.3d at 836.
Flammann also argues that the Army’s conduct tainted the integrity of the procurement process. It primarily asserts that the Army’s actions created an appearance of impropriety when: (1) Flammann’s unit prices were released only to SKE and not to other bidders, (2) the Army released not only the base year but the unexercised option years of the incumbent contract, and (3) the release of Flammann’s unit prices occurred at a time when SKE could use the information to gain a competitive advantage. As a result, Flammann claims that it was prejudiced and competitively harmed.
The
trial court relies on NKF Engineering, Incorporated v. United States,
805 F.2d 372 (Fed. Cir. 1986), for the proposition that procurement officers
must act to prevent even an appearance of impropriety in order to meet FAR requirements
of “safeguarding the interests of the United States in its contractual
relationships,” 48 C.F.R. §
1.602-2 (2000), and ensuring that “contractors receive impartial, fair, and
equitable treatment,” id. § 1.602-2(b) (2000). NKF Engineering found an appearance of
impropriety where a former government employee was suspected of providing
sensitive procurement information to a contractor who had employed the
informant. 805 F.2d at 374. However, NKF Engineering did not hold
that a procurement officer should violate a statute in order to meet these
regulatory requirements. Thus the case
is not applicable here.
A
regulation that contravenes a statute is invalid. See United States
v. Vogel Fertilizer Co., 455 U.S. 16, 26 (1982) (a regulation is invalid
unless it “harmonizes with [a] statute’s ‘origin and purpose.’”); see also
Hamlet v. United States, 63 F.3d 1097 (Fed. Cir. 1995). The FOIA statute obligates the government to
disclose non-exempt information, Julian, 486 U.S. at 8, and supercedes
purportedly contradictory regulatory requirements found within 48 C.F.R. §
1.602-2. A procurement officer’s general
regulatory duty to ensure fair treatment under FAR is therefore superceded by
FOIA’s mandatory disclosure requirement.
Furthermore, where the “basic objective of [FOIA] is disclosure,” there
can be no appearance of impropriety because the Army was required to disclose
Flammann’s publicly available unit price information to any interested
party, including Flammann’s other competitors for the resolicited bid
contract. Chrysler, 441 U.S. at
290. A disinterested observer knowing
all the facts and the applicable law would see nothing improper in the actions
of the Army, and neither do we. Cf.
Lachance v. White, 174 F.3d 1378, 1381 (Fed. Cir. 1999).
Accordingly,
the judgment of the Court of Federal Claims is reversed.
REVERSED