Opinion
Opinion By: Gregory D. Stumbo, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The issue presented in this appeal is whether the Louisville Regional Airport Authority (Authority) violated the Open Records Act in denying the open records request of Ricky Russ for "a copy or copies of the sub-contractors listed with Whittenberg Construction Co., Messer Construction Co. and Abel Construction Co. Inc., on the Wyndham Hotel @ Louisville International Airport, that was bid on October 7, 2004." For the reasons that follow, we conclude that when the bid proposals were opened, they became open for public inspection and, thus, the Authority improperly denied Mr. Russ' request.
Responding on behalf of the Authority, Rande Swann, Public Relations Director, denied the request, advising:
The Act requires that public agencies, such as the Authority, make certain of their public records available for inspection and copying. However, KRS 61.878(1)(i) and (j) exclude from the Authority's general disclosure obligations under the Act "[p]reliminary drafts, notes, correspondence with private individuals, other than correspondence which is intended to give notice of final action of a public agency; " and [p]reliminary recommendations, and preliminary memoranda in which opinions are expressed or policies formulated or recommended[.]" Kentucky's Attorney General has concluded that until negotiations are completed, as may be evidenced by a signed contract or the rejection of the offered contract by the chosen bidder, the records are preliminary. See e.g., OAG 91-97 and OAG 87-21. The Attorney General has stated that such records are "preliminary pending . . . the adoption of a contract between the parties involved." OAG 87-21 (emphasis added). The Authority has not yet entered into a contract with a company to construct a hotel. The Authority therefore denies your request for a copy of the sub-contractors listed on the submitted contract bids.
Shortly after receipt of the Authority's denial of his request, Mr. Russ initiated the instant appeal. In his letter of appeal, Mr. Russ argued that the Open Records Act had been violated, arguing:
I have included newspaper articles dated October 15, 2004, that clearly state that the project will be re-bid at a later date. Therefore there is no negotiations or a chosen bidder.
After receipt of notification of the appeal and a copy of the letter of appeal, C. T. "Skip" Miller, Executive Director, Authority, provided this office with a response to the issues raised in the appeal. In his response Mr. Miller stated, in relevant part:
The Authority's decision to deny Mr. Russ' request should be affirmed as proper under KRS 61.878(1)(i) and (j). The Proposals fall outside of the Act's general disclosure obligation. Project negotiations remained incomplete, no contract had been awarded, and the Proposals had not been rejected. Moreover, even if the Proposals were required to be disclosed, they include information described in KRS 61.878(1)(a). This includes financial statements and other information, generally recognized as confidential, the disclosure of which would constitute an unwarranted invasion of personal privacy. The Authority would be entitled to first redact such information.
Preliminary Documents
Essentially, Mr. Russ contends that the Proposals had lost their preliminary character because a representative of the Authority told a reporter that the hotel project would be rebid at a later date. Mr. Russ fails to note that the Authority had neither accepted nor rejected any of the Proposals. The Authority retained the right to accept or reject any of the Proposals. For this reason, the Authority's response to Mr. Russ correctly concluded that the requested records were preliminary in nature and were excluded from the Act's general disclosure obligation under KRS 61.878(1)(i) and (j). The Authority's statement to the press of its intention to reject the Proposals does not amount to a rejection of the Proposals. Such statements may even have constituted a method of encouraging proposers to make concessions by indirectly threatening to reject all Proposals. Although the Authority declines to confirm or deny its intentions in this letter, it does confirm that it had neither accepted nor rejected any of the Proposals at the time it responded to Mr. Russ' request.
The Authority's treatment of Mr. Russ' request is consistent with prior reported decisions of the Attorney General's Office. In a decision involving lease negotiations, the Attorney General concluded that "if the competitive process is ongoing, records relating to the proposed lease are exempt . . . . [O]nce as offered leasing rate, service and concession package has been accepted or rejected . . . the matter is final and inspection proper." OAG 91-97 (citing OAG 84-90). As is noted above, the Authority had neither accepted nor rejected any of the Proposals. Although it stated its current intention to solicit new proposals, it retained the power to alter its intentions.
Mr. Russ requested records involved in an ongoing competitive procurement process. The Authority had neither accepted nor rejected any of the Proposals. The Proposals remained preliminary documents, excluded from the Act's general disclosure obligation under KRS 61.878(1)(i) and (j).
Conclusion
The Authority properly and timely denied Mr. Russ' request because the records were excluded from the Act's general disclosure obligation under KRS 61.878(1)(i) and (j). Until such time as the Authority discontinued efforts to enter a contract, rejected the Proposals, or awarded a contract, the Proposals remained preliminary records, the release of which would harm the ongoing procurement process by potentially providing an unfair competitive advantage to other potential proposers. (Emphasis in Original.)
Under authority of KRS 61.880(2)(c), this office requested additional information from the Authority asking it to describe under what statutes or authority it was proceeding in requesting bid proposals for the Wyndham Hotel project at the Louisville International Airport and what the current status of the project's bidding process? In addition, stating that this office had consistently recognized that once bids are opened, they are subject to public inspection and citing 96-ORD-135, 93-ORD-113, and 93-ORD-5 we asked the Authority to explain why these decisions did not apply to the facts present in the instant appeal.
In a letter dated December 14, 2001, Rande Swann responded to our request on behalf of the Authority, advising in relevant part:
. . . The Authority conducted its request for proposal process in accordance with KRS 424.260 and the related statutes. The Authority has not adopted the Kentucky Model Procurement Act ("KMPA").
You further inquire as to the current status of the project's bidding process. Although the Authority currently does not anticipate accepting any of the Proposals, it continues to review them to attempt to reconcile the proposed prices with its estimates and expectations. The Authority is undertaking this review as it considers revising its expectations and the scope of the project for a potential notification of a renewed request for proposal and re-solicitation. As of the date of this letter, the Authority has not committed to re-soliciting proposals or another course of action. In any event, the Authority had not taken final action on the Proposals at the time of Mr. Russ' request.
In response to this office's question regarding the application of 96-ORD-135, 93-ORD-113, and 93-ORD-5 to the instant appeal, Ms. Swann explained:
Finally, you ask the Authority to explain why certain Attorney General opinions relating to proposals do not apply in this situation. The Authority does not contend that these opinions do not apply to this situation. The Authority concluded that the referenced opinions support its determination that the requested proposals were subject to disclosure only after final agency action.
You first cite an opinion addressing whether a public agency can rely upon KRS 61.878(1)(c)1 to exclude bid proposals on advertised specifications. 96-ORD-135. Although the Authority did not rely upon KRS 61.878(1)(c)1 to justify excluding the bid proposals from the general disclosure obligation, the holding of the opinion does support its position. In that opinion, the Attorney General expressly stated that "bids having been opened, and vendors selected, [an agency] must release the documents included in the sealed bid package in their entirety." Id. (emphasis added) Thus, it is not the opening of the bids alone that make them subject to public disclosure, but the final agency action upon the bids that renders them subject to the general disclosure obligation.
You next cite to an opinion which considered the issue of "whether documents revealing the identities of the corporations or individuals who submitted bids . . . are public records for purposes of the [Act], and if so, whether [the documents revealing the identities] are exempt from inspection pursuant to KRS 61.878(1)(h)." 93-ORD-113 (emphasis added). The opinion mentioned that bids are subject to public inspection once opened when they are solicited under the KMPA [Kentucky Model Procurement Act] . Id. As noted above the KMPA does not apply to the Authority.
Finally, you refer to an opinion ordering disclosure of bid documents pursuant to a city ordinance specifically requiring such disclosure. 93-ORD-5. That opinion involved proposals received by the City of Maysville in response to a request for proposal. The request for proposal was issued pursuant to the city's competitive bidding ordinance which provided: "After bid opening, each bid, together with the name of the bidder, shall be recorded and shall be open to public inspection. " Id. Since this language is similar to that of KRS 45A.365 the Attorney General relied upon previous holdings under that statute to compel disclosure. Id. Thus, where a public agency solicits bids under the KMPA, or local law with similar language, it is legally bound to permit public inspection of bid documents once opened. Neither the KMPA, the City of Maysville's ordinance nor any similar law applies to the Authority here.
We are asked to determine whether the Authority's denial of Mr. Russ' request violated the Open Records Act. For the reasons that follow, we conclude that the denial constituted a violation of the Act and the bid proposals were open public records when opened and subject to disclosure.
In OAG 98-11, we held that documents tendered as part of competitive sealed bidding become open public records at the time the bids are opened, even if the bids are rejected. In that opinion, we held that public disclosure of bid documents associated with a competitive sealed bid could not be delayed, until the contracting public agency determined whether to move to competitive negotiation and that if a determination was made to proceed into competitive negotiation, the original bid documents could not be considered part of the negotiation process and remain closed until a contract is awarded or negotiations are cancelled. In reaching these conclusions, we stated:
We begin our analysis by describing the procedures involved in a procurement that uses competitive sealed bids followed by competitive negotiation. Competitive sealed bidding begins with public notice of an invitation for bids. The invitation designates the time and place the bids will be opened. Once opened, the bids are subject to public inspection. If all the bids exceed the funds available, there are no additional funds available, time will not allow another round of sealed bidding, and there is more than one bidder, the procuring agency may award a contract through competitive negotiation. KRS 45A.090(1). The procuring agency then promptly issues a request for proposals based on revised specifications or quantities. KRS 45A.095(2)(b).
An agency may, of course, utilize competitive negotiation from the beginning; it is not necessary to start every procurement process with sealed bids. KRS 45A.085. Competitive sealed bidding and competitive negotiation are two separate procurement processes, each with its rules and procedures. The competitive sealed bidding process may not be transformed midstream into a competitive negotiation process. On the contrary, the competitive sealed bidding process ends when the bids are opened. The procuring agency may then, if it chooses, invoke a new process of competitive negotiation, but that does not constitute a continuation of the competitive sealed bidding process. The processes do not overlap; they are successive, not simultaneous.
We perceive no interpretation of the Kentucky Model Procurement Code that would permit an agency to avoid the public disclosure requirements associated with sealed bidding on the basis that it might later choose to begin a competitive negotiation process. Documents generated during the competitive negotiation process may be held in confidence as the statutes and regulation provide, and documents generated during the competitive sealed bidding process must be disclosed as the statute provides.
While our analysis in OAG 98-11 involved procurements under KRS Chapter 45A (Kentucky Model Procurement Code), we hold that the same analysis and application would apply to procurements under KRS 424.260, the statute under which the Authority conducted its bid proposal process, and adopt that reasoning here. Moreover, this office has traditionally taken the view that once opened, bids and proposals are subject to public inspection. See 96-ORD-135 and authorities cited therein. The Authority cites 96-ORD-135 as authority that the bid proposals do not become open for inspection until they are opened and a vendor accepted. Although this is normally what happens when public bids are opened, and is probably what occurred in 96-ORD-135, we do not retreat from our position in OAG 98-11, that sealed competitive bids are subject to public inspection when opened regardless of whether the vendor is accepted or all the bids rejected.
The Authority explained in its responses, that it has neither accepted nor rejected any of the opened bids, which remains an option. However, the competitive sealed bids become open for public inspection once they are opened. Moreover, as noted in OAG 98-11, the original bid documents could not be considered part of the new process and could not remain closed until a contract is awarded through competitive negotiation process or the negotiations are cancelled.
Sections or portions of the opened bids may be withheld from disclosure if the Authority meets its burden of establishing that they qualify for exemption under an applicable exemption provision of KRS 61.878(1). For example, KRS 61.878(1)(c)1. which authorizes withholding from disclosure: "[r]ecords confidentially disclosed to an agency or required by an agency 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." This would include such information as trade secrets or confidential or proprietary information, financial information, plans and formulas which if openly disclosed would permit an unfair advantage to competitors. 97-ORD-177.
If all the bids are rejected and the Authority decides to utilize and proceed with competitive negotiations, this is a new process. The Authority has indicated that it does not anticipate accepting any of the opened bid proposals, but that it continues to review the opened bids to try and reconcile the proposed prices with its estimates and expectations. Should the Authority pursue a competitive negotiation process, records generated during the negotiation process or while the negotiations are ongoing may be withheld from disclosure until the contract is awarded or negotiations cancelled. See OAG 87-21.
Based on the foregoing, we find the Authority improperly denied Mr. Russ's request for "copies of the sub-contractors listed with Whittenberg Construction Co., Messer Construction Co. and Abel Construction Co. Inc., on the Wyndham Hotel @ Louisville International Airport" in the opened bid proposal and that the requested records should be made available for his inspection.
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.
Distributed to:
Ricky RussBusiness Agent/OrganizerPlumbers' & Pipefitters' Local 5021317 Berry Blvd.Louisville, KY 40215
Randy SwannPublic Relations DirectorLouisville Regional Airport AuthorityP.O. Box 9129Louisville, KY 40209-0129
Irvin G. MazeJefferson County AttorneyLouisville Metro Hall527 W. Jefferson StreetLouisville, KY 40201