Latest Mcdonnell Douglas Decision Solidifies D.C.Circuit As Best Forum to Prevent Contract Pricing Disclosures

Contents

Case History and Parties' Positions

No New Arguments during Judicial Review

Disclosing Prices Would Cause Competitive Harm

But Pricing is Not Shielded if Arguments are Mistimed

D.C. Federal Courts Remain Best Forum to Shield Price Disclosure

On July 27, 2004, the U.S. Court of Appeals for the District of Columbia issued its latest decision on whether government contract pricing information should be disclosed to the public, including competitors, under the Freedom of Information Act (FOIA). McDonnell Douglas Corporation v. U.S. Dept. of the Air Force, D.C. Cir. No. 02-5342 (decided July 27, 2004) (Ginsburg, J.) (Garland J., concurring in part and dissenting in part). The case involved a 1997 McDonnell Douglas contract to perform maintenance and repair work on the Air Force's fleet of KC-10 and KDC-10 aircraft. Lockheed Martin, a competitor of McDonnell Douglas, had asked the Air Force in July 1998 to provide a complete copy of the contract under FOIA, 5 U.S.C. ß 552. The Air Force notified McDonnell Douglas of the Lockheed Martin request, and McDonnell Douglas promptly objected.

Case History and Parties' Positions

McDonnell Douglas agreed that the bottom line pricing for the contract's base year should be disclosed, but the company objected to the release of option year prices and the prices listed in certain Contract Line Items (CLINs) containing vendor prices and prices for "Over and Above Work."1 McDonnell Douglas cited FOIA Exemption 4, which exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. ß 552(b)(4). McDonnell Douglas also cited the Trade Secrets Act, 18 U.S.C. ß 1905, which prohibits an agency from releasing information that is subject to FOIA Exemption 4. Over a two-year period (1998 - 2000), McDonnell Douglas sent 11 submissions to the Air Force advancing its arguments that option year prices, vendor pricing CLINs, and Over and Above Work CLINs are exempt from disclosure. The Air Force ultimately disagreed with McDonnell Douglas and issued a Final Administrative Decision Letter in June 2000 concluding that FOIA Exemption 4 was inapplicable and stating that it would release the contract pricing information to Lockheed Martin.

McDonnell Douglas then filed suit in the U.S. District Court for the District of Columbia to prevent disclosure, alleging that the Air Force's final decision was arbitrary, capricious, and contrary to law, in violation of 5 U.S.C. ß 552(b)(4) and 18 U.S.C. ß 1905. On cross-motions for summary...