Court Vetoes Air Force Release of Option, Vendor Prices
The Air Force wanted to divulge McDonell Douglas’s (MD) option year prices and vendor pricing under several contract line items to a competitor under the Freedom of Information Act (FOIA) while the contractor asserted such information violated Exemption 4 of FOIA which protects “trade secrets and commercial or financial information obtained from a person and privileged or confidential”. The majority of court judges ruled against the Air Force stating the release of the option year prices in the one year with nine option years contract would likely cause MD substantial competitive harm because it would increase the probability that MD’s competitors would underbid it in the event the Air Force rebids the contract. Further since the release of the CLINs were composed largely of materials and subcontractor services, the judge ruled it was “reasonable to presume” that MD’s competitors could obtain similar pricing from the various vendors which would enable them ot know the percentage markup MD receives from its vendors and subcontractors. The majority rejected the Air Force’s argument that disclosure would unlikely cause competitive harm because a rival can never understand precisely the business judgment that goes into another firm’s pricing, stating that disclosing constituent pricing information – as opposed to the bid price itself which is public information – can cause substantial competitive harm even though “pinpoint precision” cannot be derived (McDonnell Douglas Corp. v Dept of the Air Force, D.C. Cir., No. 02-5342).
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