Request By:
Mr. Danny Shearer, Director
Division of Purchases
Finance and Administration Cabinet
Room 348
New Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; Carl T. Miller, Jr., Assistant Attorney General
You have requested an opinion of the Attorney General as to the legality of the pledge of confidentiality by a state agency concerning the contents of proposals submitted to the agency in response to an RFP (request for proposal) advertised by the agency. You state the following current factual situation:
"The Division of Purchases recently advertised in accordance with KRS 45A.085 and 200 KAR 5:307, for proposals for competitive negotiations for the development, design and implementation in coordination with the Department for Social Insurance in the Cabinet for Human Resources (CHR), of an automated certification and issuance system for the food stamp program administered by CHR. The successful proposer will be obliged to provide all computer hardware, software, and communications programs necessary to the operation of the system. The magnitude of the undertaking dictated that an elaborate request for proposals (RFP) be developed and issued with equally elaborate responses required in answer to RFP.
Proposals were received from four firms and after a period of evaluation, it was determined that Electronic Data Systems (EDS) of Bethesda, Maryland, had submitted the best proposal with the lowest evaluated price and contingent upon approval by the United States Department of Agriculture, EDS' proposal has been provisionally accepted.
The automated certification and issuance system to be developed under the contract to be established on the basis of this REP is a be established on the basis of this RFP is a demonstration type program that may well serve as a prototype for similar programs to be developed and implemented in other states. It was considered probable at the outset that responses would contain information that proposers would consider to be confidential. Accordingly, paragraph 1.16 of the RFP authorized proposers to mark as confidential information contained in their proposals that they considered to be of a proprietary nature or that they otherwise desired to be held in confidence, within parameters of the Open Record Act. Since this program may become the basis for similar systems across the country, proposers' desires to hold the details of their proposals in confidence as proprietary information of commercial value is readily understandable. Two firms, including EDS, have classified their entire proposals as confidential and the other two firms classified parts of their proposals as confidential.
A representative of the Task Force on Hunger, a nonprofit organization, has requested that it be allowed to inspect the entire EDS proposal. We do not wish to deny access to records that are required by the terms of the Open Records Act to be available for public inspection and, indeed, we have made available to the Task Force many records relating to this RFP including our "green file," but likewise, we do not wish to cause any harm to the provisonally successful firm through improper disclosure of information that might be properly held in confidence and which should be, in all good faith, withheld from public inspection. "
Along with your opinion request to the Attorney General you delivered for our consideration the original proposal of EDS, a copy of the RFP, a copy of the Oral Presentation presented by EDS and a copy of the cost proposal of EDS, which have now been accepted by the Commonwealth subject to the approval of the Department of Agriculture. You also furnished us with letters dated May 6, 1983 and May 10, 1983 from EDS stating that EDS objects to the release of substantial portions of its technical proposal and cost proposal and the reasons for the objection. (The technical proposal is a loose leaf book containing over a 1000 pages, 8-1/2" x 11").
In an interview on this Open Records problem you explained that an RFP is a relatively new way for a public agency to advertise for bids on contracts for services. Instead of the agency stating firm specifications to be met by the contractor, the agency states in its RFP the objective to be accomplished and requests that the bidders propose a plan, method, equipment to be used, and demonstration of how the bidder has the personnel and capability of accomplishing the objective. (In this case the objective is to administer the Food Stamp Program for the State of Kentucky including issuance to qualified persons and redemption in 6,500 retail stores with proper verification.) Bidders who respond to the RFP must, therefore, submit, in addition to data about their experience and capability to accomplish the designated objectives, a technical plan and the price they will charge for the services. The total price of the contract is, of course, made public, but EDS is asserting that both its technical proposal and cost proposal ("the proposal documents") should be kept confidential because the release of the documents would cause harm to EDS' position. EDS also includes the Oral Presentation booklet compiled to answer questions presented by Kentucky officials after the technical proposal had been received as entitled to the same confidentiality as it claims for the other proposal documents.
LEGAL ANALYSIS
The Kentucky Open Records Law, KRS 61.870 to 61.884, mandates that all public records shall be open to inspection by any person unless the records are exempted from the mandatory provisions by KRS 61.878(1) or some other state or federal statute. The right of inspection is mandatory, but the exemptions are permissive. OAG 79-275.
The Federal Freedom of Information Act, 5 U.S.C. § 552, the Privacy Act, 5 U.S.C. § 552(a) and 18 U.S.C. § 1905 have no bearing on the question being dealt with in this opinion. Those federal statutes deal with federal records in the hands of federal agencies and employees and no state official has the power to commit the state to treat those statutes as though they were state statutes. Those statutes make no pretense of controlling state records, either to make them open or to make them closed. Federal cases interpreting those statutes are of no help in this opinion.
A public agency cannot abrogate the mandatory provisions of the Open Records Law by a promise of confidentiality which is not authorized by KRS 61.870 to 61.884. A public agency can, as was done in the case of the RFP discussed herein, promise confidentiality as far as the permissive exemptions permit and such a promise should be honored.
The advertised RFP stating the objectives to be accomplished by the eventual contract is a public record open to public inspection. Bidding documents are made open to public inspection by KRS 45A.080(4). OAG 80-327. (We believe that the legislature did not contemplate RFP bids in enacting this statute, only bids on advertised specifications. )
Under the Open Records Law a document is either open to all persons or closed to all persons except governmental agencies and officials. KRS 61.872; 61.878(4).
QUESTION: CAN A PROPOSAL BE HELD CONFIDENTIAL?
You have stated that you believe that the proposal of EDS, which has now been accepted subject to the approval of the Department of Agriculture, can be kept confidential and closed to public inspection by the exception provided in KRS 61.878(1)(b) which reads as follows:
"The following public records are excluded from the application of KRS 61.870 to 61.884 and shall be subject to inspection only upon order of a court of competent jurisdiction:
* * *
(b) Records confidentially disclosed to an agency and compiled and maintained for scientific research, in conjunction with the application for a loan, the regulation of commercial enterprise, including mineral exploration records, unpatented, secret commercially valuable plans, appliances, formulae, or processes, which are used for the making, preparing, compounding, treating, or processing of articles or materials which are trade commodities obtained from a person and which are generally recognized as confidential, or for the grant or review of a license to do business and if openly disclosed would permit an unfair advantage to competitors of the subject enterprise. This exemption shall not, however apply to records the disclosure or publication of which is directed by other statute."
We have examined the proposal documents and we believe that the technical proposal and the oral presentation booklet contain material which can be classified as trade secrets, "unpatented, secret commercially valuable plans, appliances, formulae, or processes." The technical proposal describes in particular the various items of equipment which will be used in performing the services, discloses the personnel which will be relied upon and includes biographic information of individuals in the employ of the company, contains charts, maps, diagrams, -- all of which has been especially designed and organized for the purpose of carrying out the objectives of the Department of Social Insurance in accordance with the RFP. We believe that EDS has a proprietary interest in these plans presented in its proposal and which, when the contract is finalized, will be utilized in the execution.
We reserve any opinion as to whether the cost proposal contains any information which should be treated as secret until such time as a specific question may arise.
The Oral Presentation booklet is an extension and an elaboration of the material in the technical proposal and we believe it should be treated in the same manner.
Our study of the proposal documents has convinced us that it would not be feasible to require the agency to separate for inspection material in the documents which does not qualify for the trade secrets, etc., exemption. The only Open Records request so far is for "a copy of Electronic Data Systems' response to the Food Stamp Procurement bid. " Since the request designated the proposal as a unit we believe that it may be rejected as a unit. If a request is made with more specificity it may be dealt with in particular. It is our opinion that the RFP supplies sufficient information about the Food Stamp Program to satisfy the needs of the public in a general fashion. As we have already stated, the RFP is open to public inspection.
This opinion is advisory only and should not be considered to hold the Attorney General to a particular ruling in the event an Open Records appeal is made under the provisions of KRS 61.880. Such an appeal will be considered according to the particulars of the request and the response of the agency. As we have indicated above a more specific request to inspect a portion of the proposal documents might evoke from us a different response.