Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The issue presented in this appeal is whether the City of Louisville properly relied upon KRS 61.878(1)(c)1. in partially denying the open records request of Mike Youngwirth, on behalf of PeopleSoft, U.S.A., Inc.
On February 5, 2002, Mr. Youngwirth faxed an open records request to the City for a copy of the following:
(1) Signed Contract for implementation of financial software applications between Jefferson County/City of Louisville and SIS as it relates to RFP # 20010427-489;
(2) Copy of SIS Proposal as it relates to RFP # 20010427-489;
(3) Copy of Purchase Order and attachments between Jefferson County and Oracle Corporation as it relates to RFP # 20010427-489;
(4) The evaluation score sheet of all the vendors for RFP # 20010427-489.
Responding to the request on behalf of the City, Kris M. Carlton, Assistant Director of Law, by letter to Mr. Youngwirth, explained:
I have been advised by Paulla Felts, in Purchasing, that you have had subsequent conversations with her by telephone and/or e-mail regarding these requests. You are aware that the companies named above (SIS and Oracle) were contacted regarding their wish to claim an exemption from disclosure of a portion of the documents requested. Additionally, Ms. Felts has already provided you with the records you seek in requests numbered (1) and (4), above.
We have now been able to review the requested documents for disclosure in accordance with the provisions of the Kentucky Open Records Act, and have also received direction from both SIS and Oracle with regard to any disclosure of their records relating to your request.
KRS 61.878(1)(c)(1), exempts the following records from disclosure in response to an Open Records request:
In addition, several Kentucky Attorney General opinions state that portions of RFP responses may be properly categorized as fitting within the exemption granted to information that may be considered to be proprietary to the submitting entity. With regard to request # 2, above, Ms. Felts is sending you a redacted copy of the SIS response to RFP # 20010427-489. The following sections are being excluded from disclosure:
According to SIS, the above referenced sections are considered to be confidential and/or proprietary. SIS asks that we exclude them from disclosure in accordance with the provisions of KRS 61.878(1)(c)(1). The redacted version of this document is 258 pages in length. Ms. Felts will be happy to send you a copy upon receipt of $ 31.00 (which represents 258 pages @ $ .10 per page, and postage of $ 5.20 for the document. You may mail her a check in this amount, payable to the Louisville/Jefferson County Division of Purchasing.
With regard to # 3, the attorney for Oracle also states that entire document is confidential and/or proprietary to that corporation, and asks that we exempt it under the same provision of KRS 61.878(1)(c)(1).
On behalf of PeopleSoft, Inc., Paul Levy, Corporate Counsel, appealed the City's partial denial of Mr. Youngwirth's request to this Office. Disagreeing with the City's interpretation of KRS 61.878(1)(c)(1), Mr. Levy, in his letter of appeal, argues, in part:
PeopleSoft contends that the contract, by definition, is a matter of public record. PeopleSoft further contends that, by definition as delineated in the RFP, the proposal is part of the contract and therefore, the proposal is part of the public record. Moreover, all parties submitting proposals in response to the RFP waived any objection to the inclusion of their proposal in the contract via the terms and conditions of section 3-26 of the RFP as quoted above, and consequently, any winning proposal that is part of the public record contract is also public record and is subject to the Open Records request.
The items requested are of a general commercial nature. They are computing hardware, operating system configuration, responses to RFP inquiries regarding functional aspects of the products at issue, cost schedules and sample documents. As these items typically appear in RFP responses, and, as it is commonplace that responses to RFP's are often included in resulting public sector contracts, one is hard pressed to imagine a viable claim that these items are "generally recognized as confidential or proprietary" , as is required by 61.787(1)(c)(1).
Further, PeopleSoft would respectfully submit that the Assistant Director of Law who responded to PeopleSoft's request did not make an independent determination that the requested items are "generally recognized as confidential or proprietary" . Rather, it appears from the content of the Assistant Director's letter that the Assistant Director "received direction" from the winning vendor and drafted the response to PeopleSoft's request in accordance with those "directions", as opposed to making an independent determination as to the validity of any such contention.
After receipt of Notification of Mr. Levy's appeal and a copy of his letter of appeal, Ms. Carlton, on behalf of the City, provided this office with a response to the issues raised in the appeal. In her response, Ms. Carlton advised:
The City does not dispute that the contract and proposal related to RFP # 20010427-489 are both public records, and that they may be subject to the laws governing Open Records requests, as set forth in KRS 61.872-61.884. However, portions of those records were withheld in accordance with the exception set forth in KRS 61.878(1)(c)(1), as being confidential or proprietary, which, if released, may give an unfair advantage to competition. PeopleSoft was the unsuccessful bidder during the RFP process in question. After careful consideration, the City stands by its determination that the withheld documents are exempt from disclosure in accordance with KRS 61.878(1)(c)(1).
With regard to Mr. Levy's statement that the City "did not make an independent determination that the requested items are . . . proprietary . . . [but, instead] 'received direction' from the winning vendor, " this statement is misplaced. When an Open Records request is received, the City will inquire as to whether the creator or custodian of the records would like to claim any valid exemptions, or whether the records may be disclosed in their entirety. The City did receive a request, or direction, from the vendors, SIS and Oracle, to hold their RFP and supporting materials as proprietary. The City did not believe that the entire RFP would fit within the valid exemptions from disclosure set forth in the Kentucky Open Records Act. Instead, the Law Department conducted a section-by-section review of the submitted RFP responses, and its contents compared with the Kentucky Attorney General's opinions governing the disclosure of this type document. Those portions deemed to be "proprietary and/or confidential" in accordance with these opinions were redacted or withheld from the portions that were released under the provisions of the Kentucky Open Records Act.
The City copied its response to PeopleSoft to both SIS and Oracle. After receiving PeopleSoft's appeal to the Attorney General regarding the partial denial, a letter was written to those companies on May 6, 2002, indicating that they should submit any arguments in favor of their positions directly to the Attorney General's office by the May 15, 2002 deadline; a copy of the City's letter was forwarded to you for your file.
Both SIS and Oracle submitted letters to this office in support of their respective positions that release of the exempted information, which they deemed was of a confidential or proprietary nature, would place them at a competitive disadvantage and was properly withheld under KRS 61.878(1)(c)(1). The substance of these letters will be discussed below.
We are asked to determine whether the City properly withheld portions of the SIS RFP proposal and the Oracle purchase order with attachments, as exempt under KRS 61.878(1)(c)1. For the reasons that follow, we conclude that the City's initial response was inadequate because it failed to properly explain how the cited exception applied to the records withheld, as required by KRS 61.880(1). However, we conclude that the City's response to the letter of appeal, along with the responses of SIS and Oracle, established that the withheld portions of the requested records contained information of a confidential or proprietary nature which fell within the parameters of KRS 61.878(1)(c) 1. and properly withheld disclosure of the materials under that exception. 1
KRS 61.880(1) provides, in part:
An agency response denying, in whole or in part, inspection of any 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.
The City's initial response did not explain how the information in the records withheld was information of a confidential or a proprietary nature and how, if openly disclosed, would permit an unfair commercial advantage to SIS and Oracle. An unsupported statement that the records are exempt or that the companies state the information is confidential and proprietary and qualifies for exemption under KRS 61.878(1)(c)1. is not sufficient to meet the agency's burden under KRS 61.880(1).
KRS 61.878(1)(c)1. provides:
Upon and after July 15, 1992, records confidentially disclosed to an agency or required to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records.
In 99-ORD-201, we discussed the application of KRS 61.878(1)(c)1., as it applied to RFP bid proposals and the type of records and information that may qualify for exclusion from disclosure under that exception. It is instructive to quote at length:
In 96-ORD-135, this office, in discussing the application of KRS 61.878(1)(c)1., noted that although the exemption had not generally been construed to exclude bid proposals, once those bids are opened and the vendor selected, the Attorney General had recognized RFP bid proposals which contained secret commercial plans and formulas may qualify for exclusion under KRS 61.878(1)(c)1. Citing OAG 83-256, OAG 88-1, and 92-ORD-1134, at pages 3 and 4 of 96-ORD-135, we explained:
Similarly, in OAG 88-1 we held that a bid proposal submitted in response to an RFP issued by the Finance and Administration Cabinet, Division of Purchases, contained secret commercially valuable plans and formulas which if openly disclosed would permit an unfair advantage to competitors of the entity submitting the proposal, including consolidated financial statements, project narratives, summary experience charts, work plans, and pricing schedules.
In 92-ORD-1134, we identified the distinguishing feature which led to the results in these decisions:
92-ORD-1134, p. 5-6. In the latter decision, we held that the City of Paducah properly relied on KRS 61.878(1)(c)1. in withholding a proposal for an 800 MHZ Trunked Radio Communication System which contained specific detail relative to items of equipment to be used in implementing the system, as well as site selection, charts, maps, and diagrams designed by the entity submitting the proposal for the purpose of carrying out the city's objectives. The city amply demonstrated that the system might serve as a prototype for similar systems elsewhere, and that the entity submitting the proposal therefore had a proprietary interest in that proposal such that disclosure would provide its competitors with an unfair commercial advantage.
In the instant case, the information provided by SIS and Oracle was in response to the City's request for RFP proposals and was disclosed to the City as part of the RFP process in question.
On behalf of SIS, Steve Welch, Executive Vice President, submitted a response to the letter of appeal to this office describing the nature of the information withheld and argument in support of nondisclosure. The response explained that the selection of a winning proposal for a software product vendor or implementation vendor, in situations such as this, is "largely determined" by the materials submitted in the initial responses submitted to the RFP. SIS argued that the withheld sections of its proposal were confidential and proprietary and explained that the material was unique to SIS, setting forth its particular "implementation methodology and approach for implementing successful computer solutions" and that "release of the information contained in these sections would provide our competitors with material that has been developed by SIS as part of our unique implementation methodology. " SIS described the information withheld as including implementation methodology and training strategy used delivering successful computer system solutions, samples of types of documents prepared for other clients, and stated that if this information was made available to their competitors, they could "easily, and unjustifiably, modify their proposed implementation methodology and approach to mirror the very successful methodology and approach of SIS" and thus obtain an unfair commercial advantage.
On behalf of Oracle, Brent L. Caldwell, counsel for Oracle, also submitted a response to this office with a description of the records withheld and argument in support of nondisclosure. The response submitted by Oracle stated that the withheld purchase order and ordering documents contained confidential and proprietary information related to the pricing of Oracle's product. Oracle argued that this information should not be released because it would reveal pricing strategies and structures that could give Oracle's competitors an unfair business advantage. In addition, the response indicated that Oracle had objected to the release of the documents on the ground that the contract entered into by Oracle and the City specifically provides for the non-disclosure of confidential information between the parties without the written consent of both parties.
As noted above, prior opinions of this office have recognized that RFP proposals or portions thereof, that contain confidential or proprietary information, the disclosure of which would permit an unfair advantage to competitors, may properly qualify for exclusion under KRS 61.878(1)(c)1. Examples of information found to have been properly excluded, include: "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," (OAG 83-256); "consolidated financial statements, project narratives, summary experience charts, work plans, and pricing schedules," (OAG 88-1); "the method and equipment to be used, and that the bidders demonstrate that they have the personnel and capability to accomplish the objective," (92-ORD-1134). 99-ORD-201.
As in 99-ORD-201, we believe that the companies are in the best position to assess the confidential and proprietary nature of the information submitted in response to the RFP process and whether its release would permit an unfair commercial advantage to their competitors and find that their arguments clearly demonstrate that the withheld information and records fall within those types of records which qualify for exemption under KRS 61.878(1)(c)1. Accordingly, we conclude that the City's responses, in tandem with the responses of SIS and Oracle, support the City's partial denial of the records in question, under authority of KRS 61.878(1)(c) 1.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Paul LevyPeopleSoft, Inc.6903 Rockledge Drive, Ste. 1100Bethesda, MD 20817
Kris KarltonCity of LouisvilleDepartment of LawRoom 200, City HallLouisville, KY 40202-2771
Steve WelchStrategic Information Solutions, Inc.200 North La Salle St.Chicago, IL 60601
Brent L. CaldwellMcBrayer, McGinnis, Leslie & Kirkland201 East Main StreetSuite 1000Lexington, KY 40507
Footnotes
Footnotes
1 We remind the City, and all other public agencies, that a 40 KAR 1:030 Section 2 response should be viewed as an opportunity to supplement, and not to supplant, its original denial. The Open Records Act presumes that the agency's KRS 61.880(1) response is complete in and of itself, and this office will only consider those supplemental responses which correct misstatements or misunderstandings which appear in, or arise from, the complainant's letter of appeal, or which offer additional support for the agency's original denial.