Release of Wrap Rates Does Not Cause Competitive Harm

(Editor’s Note. The following case addresses the evolving issue of how much financial data can the government release under FOIA requests until those releases cause competitive harm.)

Boeing was awarded a contract to build six satellites with options for 27 more. The Air Force received a Freedom of Information Act (FOIA) request for a copy of the contract from one of the other offerors. Boeing objected to the disclosure of its “wrap rates” (i.e. reflecting employee wages, taxes, benefits, overhead and profit) for 2000-2004 arguing that the FOIA’s Exemption 4 prevented disclosure of the rates because they could be used to predict its future labor rates but the Air Force disagreed. The Court stated FOIA’s Exemption 4 protects trade secrets and commercial or financial information from disclosure when they are obtained from a person that is privileged or confidential where “likely” harm can occur. Here the Court said Boeing provided no evidence to prove the release would cause substantial competitive harm and rejected Boeing contention that if competitors obtained pricing data going back several years it would be able to underbid Boeing because the prior years’ rates varied substantially. The Court concluded Boeing overstated the ease which competitors could use the information and the harm it would be exposed to (The Boeing Company v. Air Force, D.D.D. No 05-365).

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