Request By:
Mr. Jim Clarke
Principal Assistant
Finance and Administration Cabinet
Department for Administration
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Thomas R. Emerson, Assistant Attorney General
Mr. William J. Provost has appealed to the Attorney General pursuant to KRS 61.880 your denial of his request to inspect and copy various documents in the possession of the Finance and Administration Cabinet.
After being permitted to inspect numerous records and documents submitted by The Computer Company, a competitor of Mr. Provost's employer, Electronic Data Systems, he contacted the Finance and Administration Cabinet relative to his inspection of what he called "Schedules B through D4 of the Business Proposal submitted by The Computer Company."
In a letter to Mr. Provost, dated November 9, 1987, Mr. Harold M. Staton, Purchasing Officer/Engineer, Division of Purchases, advised that pursuant to Section 60.560 of the Request for Proposals bidding process (RFR) The Computer Company has declared the schedules involved "proprietary. " It is the Cabinet's position that the cost breakdown schedules fall under Section 60.560 which provides in part as follows:
Informational areas which normally might be considered proprietary must be limited to: individual personnel data, customer references, selected financial data, formulae, and financial audits, which if disclosed would permit an unfair advantage to competitors . . . .
Mr. Staton concluded by stating that in the Cabinet's opinion the cost breakdown "formula" used by The Computer Company to calculate the final price could be used by competitors of The Computer Company to their advantage.
In a letter to you, dated December 4, 1987, Mr. Provost made a formal request that he be permitted to inspect Schedules B through D4 of the business proposal submitted by The Computer Company in response to RFP SR-30-88 issued by the Division of Purchases. In his opinion the denial of the information designated as proprietary was improper and in violation of the Open Records Act.
In a letter to Mr. Provost, dated December 10, 1987, a copy of which was not sent to this office, you advised him in part as follows:
It is the policy of this Cabinet to honor a request of confidentiality for particular data submitted in response to a Request For Proposal by potential vendors. The data being sought by EDS was deemed "proprietary" by the bidding firm under the RFP section 60.560 and, as such, will be so honored.
Mr. Provost in his letter of appeal to this office, received January 7, 1988, has asked for a review of your handling of his request and has provided copies of the letters and documents referred to above.
The undersigned Assistant Attorney General spoke with you briefly by telephone on January 13, 1988, and you referred me to Charles Wickliffe, Esq., General Counsel to the Cabinet. That same day I talked by telephone with Mr. Wickliffe and Mr. Staton. Arrangements were made to inspect the material withheld from inspection and I personally examined those records and documents on January 14, 1988.
OPINION OF THE ATTORNEY GENERAL
Before proceeding to the ultimate issue of whether the material in question was properly withheld, we direct your attention to several statutory provisions in regard to your letter of December 10, 1987, to Mr. Provost.
KRS 61.880(2) provides in part that a copy of the written response denying inspection of a public record shall be forwarded immediately by the public agency to the Attorney General. You never did send a copy of your letter of December 10, 1987, addressed to Mr. Provost, to this office.
KRS 61.880(1) states in part that a response of a public agency denying a request to inspect a record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld. Your letter did not set forth which of the statutorily authorized exceptions to public inspection you relied upon and how it applied to your specific situation. Presumably, in the future, you and your Division and Department will adhere to the requirements set forth in KRS 61.880(1) and (2).
The RFP process with which we are concerned here was conducted pursuant to KRS 45A.085 dealing with competitive negotiation. As discussed in OAG 83-256, copy enclosed, at page three, the RFP process is a relatively new way for a public agency to advertise for bids on contracts for services. Rather than the agency stating firm specifications to be met by the bidder, the agency sets forth in the RFP the objective to be accomplished and requests that the bidder propose a plan, method, equipment to be used and a demonstration of how the bidder has the personnel and capability to accomplish the objective. Bidders who respond to the RFP must 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, a matter of public record and, in this particular case, the Installation Price, the Three Year Firm Fixed Price Per Claim Line and the Three Year Firm Fixed Price Composite Hourly Rate For Program Support set forth by The Computer Company in its bid have all been furnished to the requesting party.
The Computer Company has designated some of the material furnished in connection with its bid proposal as proprietary. It desires that such information be kept confidential, in part, because its release would cause its competitors to gain an unfair advantage. While the company and the state agency rely upon Section 60.560 of the RFP such an exception to public inspection, to be valid, must be based upon statutory authorization.
The undersigned Assistant Attorney General has personally examined the material withheld from inspection. The material is contained in a black loose leaf binder and while I have not read every page I would place the documents withheld into five major categories: 1) consolidated financial statements, four in number; 2) project narratives and summary experience charts; 3) personnel resumes; 4) work plan - this company's methods of checkpoints and techniques for systems management, as well as details of its operation methods; 5) pricing schedules - the company's costing and pricing strategy.
Among those public documents which may be withheld from public inspection in the absence of a court order authorizing inspection are those set forth in KRS 61.878(1)(b):
Records confidentially disclosed to an agency and compiled and maintained for scientific research, in conjunction with an 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 another statute;
The above quoted provision has a clause to the effect that records confidentially disclosed to an agency may be withheld if to openly disclose those records would permit an unfair advantage to competitors. There is a similar clause in Section 60.560 of the RFP bidding process. Thus the promise of confidentially set forth in the RFP bidding process is not inconsistent with or in conflict with the provisions of the Open Records Act.
Having examined the records and documents withheld from public inspection, I believe that the consolidated financial statements, the project narratives and summary experience charts, the work plan and the pricing schedules can be considered as secret commercially valuable plans and formulae which if openly disclosed would permit an unfair advantage to competitors of The Computer Company. In addition, the contents of the personnel resumes can be withheld from public inspection pursuant to the exception to public inspection set forth in KRS 61.878(1)(a). To release personnel resumes would be a clearly unwarranted invasion of the personal privacy of those persons who are the subjects of those resumes. See OAG 83-256, OAG 83-302 and OAG 85-68, copies of which are enclosed.
It is, therefore, the opinion of the Attorney General that although a copy of your letter of denial should have been sent to this office and the letter should have contained the information required by KRS 61.880(1), your decision not to release those documents designated as "Schedules B through D4 of the Business Proposal submitted by The Computer Company," consisting of consolidated financial statements, project narratives and summary experience charts, personnel resumes, the work plan and pricing schedules, can be justified by the exceptions to public inspection set forth in KRS 61.878(1)(a) and (b).
As required by statute, a copy of this opinion is being sent to Mr. William J. Provost, the requesting party, who has the right to challenge it in the appropriate circuit court pursuant to KRS 61.880(5).
1987
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