Honeywell Technology Solutions, Inc. v. Department of the Air Force ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
HONEYWELL TECHNOLOGY
soLUT1oNs, INC.
Civ. No. 05-1772 (TFH)
VS.
DEPARTMENT OF THE AIR FORCE,
\/\y\y\_/\y\y\./\a\/\/
Defendant.
Mem0randum Opinion
Pending before the Court are the parties’ cross motions for Summary Judgment and a Motion
to Strike by HTSI. This is a "reverse-FOIA" suit in which plaintiff Honeywell Technology Solutions,
Inc. ("§”§”) asks the Court to permanently enjoin the Air Force from disclosing certain information
contained in and related to a contract between the two parties pursuant to a FOlA request that the Air
Force received. After carefully considering the motions and the record of this case the Court remands
in part, grants HTSl’s summary judgment motion in part, denies the Air Force``s summary judgment
motion in part, orders production of certain documents, and holds the Motion to Strike in abeyance.
I. Background
A. The Air Force-HTSI Contract
The Air Force has procured technical services for its satellite and other space-systems and
their associated ground systems for decades. One such system is the Air Force Satellite Control
Network (the "). ln 20()0, the Air Force wished to contract a company to assist with
maintaining and evolving the AFSCN, so it issued a Request for Proposals No. FO47()l-O0-R-0O06
(the "§'f"). "l``he RFP included a perfor1nance-based statement of work (the "PB-SOW”), which
only described desired outcomes of the contract. lt also provided the "color" of money (z``.e.,
procurement, research and development, etc.), identified applicable contract line items ("QL_.L"),
and the award fee percentage for each CLlN.
HTSI thus developed its own Statement of Work ("SO*W"), Integrated Master Plan ("I_M£")
and Integrated Master Schedule ("L") that described its own unique technical solutions showing
how to achieve the outcomes described in the PB-SOW. HTSI then allocated costs among various
CLINs that the Air Force provided. The RFP apparently broke down the CLlNs substantially as
follows:
FY Color of Est. Core Hrly Est. Cost Award Total Est. Cost +
$ Hours Hours Rate Fee Award Fee
02 (340()) xxx xxx $Xxx $xxx %yy $XXX
03 (3400) xxx xxx $xxx $xxx %yy $xxx
04 (3400) Xxx xxx $xxx $xxx %yy $xxx
05 (340()) XXX xxx $xxx $Xxx %yy $XXX
06 (34()0) xxx xxx $xxx $xxx %yy $Xxx
07 (3400) xxx xxx $xxx $xxx %yy $Xxx
Compl. ‘ll 13. The CLlN breakdowns support HTSI’s SOW, IMP, and IMS. The PB-SOW also
contained a section describing the criteria that would be used in evaluating the bidders" proposals
("Section 3.1"). The RFP indicated that bidders could propose amendments to Section 3.1. Admin.
R. ("Al§”) 60. HTSl apparently amended Section 3.1 to make it better conform to its proposals.
those "necessary to maintain the AFSCN at its minimum operational level without impacting the
AFSCN mission.” PB-SOW 11 l.l; AR 5814. Non-core work was apparently anything beyond core
The RFP designated some work activities as "core" requirements. Core requirements were
work and "may be authorized" under the Contract. Id.
The Air Force awarded HTSI Contract No. F0470l-02-D-00O6 (the "Contract") effective
December 21, 2001 for supplies and services to sustain and evolve the AFSCN. The Contract
consists of a base period of six years and three option periods of three years each.
B. The FOIA Request and initial Responses
On January 20, 2005 the Air Force received a FOIA request from The FOIA Group, Inc.
seeking a copy of the Contract (the "FOIA Reguest"), including the PB-SOW, loaded rates, all
modifications, delivery orders, and task/delivery orders. AR 13. The FOIA Group apparently
gathers competitive information for govemment contractors like Lockheed l\/Iartin-z``.e., HTSI’s
competitors.
The Air Force notified HTSI of the FOIA Request via letter on February 2, 2005. AR l7. On
February 28, 2005, HTSI responded, objecting to the release of several types of inforrnation. AR 20-
24. HTSI considered such information protected under FOIA Exemption 4, which prohibits
disclosure of "trade secrets and commercial or financial information obtained from a person and
privileged or confidential." 5 U.S.C. § 552(b)(4). Specifically, HTSI claimed that release of the
information would cause "substantial competitive harm [to HTSI] and give an unfair business
advantage to the FOIA requestor/competitor." AR 2l.
HTSI argued that the release of labor rates would allow competitors to underbid HTSI in
future competitions. Also, estimated labor hours and other price information would allow
competitors to formulate a total contract price which would allow competitors to underbid HTSI in
future bidding scenarios. Finally, HTSI argued that release of Section 3.l would cause HTSI harm
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because "these specific performance objectives were part of our proposal effort and are distinct
HTSI-generated objectives." AR 23.
The Air Force responded on J unc 15, 2005, opining that HTSI had not met its burden to
demonstrate that release of the information would likely cause substantial competitive harm. AR 26-
29. The Air Force rejected HTSI’s position that releasing labor rates would result in competitive
harm because the "labor rates in themselves . . . do not reveal [HTSI’S] overhead, profit margins, skill
levels, labor mix or other sensitive information that might, if released, cause substantial harm to your
competitive position." AR 27. The Air Force rejected HTSI’s argument that releasing pricing
information (estimated labor hours, rate information, line item pricing and total price infonnation in
the Contract, delivery orders, modifications and work authorization) would cause HTSI substantial
competitive harm because the "total contract and program value [were] already public information."
ld. The Air Force also argued that "there are so many variables used in calculating these figures that
competitors cannot derive actual labor or material costs, indirect costs, or profit from obtaining this
information." Id. The Air Force rejected HTSI’s objection to the release of Section 3.1 because
"[a]lthough offerors were able to make comments to and thereby affect the PB SOW, the PB SOW
was funded and developed by the govemment. Even if the PB SOW were developed by mixed
funding, you have not demonstrated that you have retained a legitimate proprietary interest in this
data, necessary to prevent its release." ld. Thus, the Air Force indicated it would release
[T]he price infonnation, rate information, estimated labor hours, line item prices, and [Section
3.1] contained within the basic contract, and the labor hours, labor costs, material costs, rate
information, total price and task descriptions contained within the work authorizations . . . .
Only loaded rates, also referred to as "wrap rates" will be released, however. To the extent
such information is further broken down into individual cost elements such as direct costs,
labor skill mixes, overhead rates, and profit margins, this [information] will be withheld.
Id.
On June 2], 2005, HTSI asked the Air Force for permission to submit a more detailed
response due July 30, 2005. AR 28. The Air Force Agreed, AR 30.
C. HTSI’s Final Response
ln its final response letter of July 30, 2005, HTSI continued to object to the release of the
following infonnation:
(l) the estimated hours, core hours, hourly rate, estimated cost and total estimated cost plus
award fee for each CLIN;
(2) the estimated hours, estimated cost and related funding values, and task description for
those modifications, delivery orders, and work authorizations and later revisions from
earlier included work scope that resulted from HTSI’s proposals and incorporates HTSI’s
proposal that was developed voluntarily (collectively with category (l) above, the
"Technical and Financial lnformation" or the "T&F Info"); and
(3) Section 3.l.
AR 31-32. HTSI argued that such infonnation was protected under FOIA Exemption 4. Citing the
well-established standards that govern that exemption elucidated in the seminal cases of Natz``onal
Parks & Conservatz``on Ass ’n v. Morton, 498 F.Zd 765 (D.C. Cir. l974) and Crz``tical Mass Energy
Project v. Nuclear Regulalory C0mm 'n, 975 F.Zd 871 (D.C. Cir. 1992), HTSI made two main
arguments as to why FOIA Exemption 4 protected the disputed information from disclosure.
First, HTSI argued that all the infonnation was "voluntarily" submitted to the Air Force and it
was not the type HTSI customarily releases to the public. Also, HTSI argued that the "non-core"
technical solutions specifically were not required to be submitted by the RFP. Thus, such
information was protected from disclosure under FOIA Exemption 4 as interpreted by Critz``cal Mass.
AR 36-37. Second, HTSI argued that even if the information was involuntarily submitted its release
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would likely impair the govemment’s ability to obtain necessary information in the future, and/or
would likely cause HTSI substantial competitive harm. Thus, the infonnation was protected from
disclosure under National Parks.
The letter attached two affidavits that supported HTSI’s arguments The first was from
Kimberly Ann Quail, Manager, Contract Drafting and Proposal Support for the HTSI unit that deals
with the AFSCN. AR 44~51. The second affidavit is by Debra Brown, HTSI’s Remote Tracking
Station Block Change Program Manager for the HTSI unit that primarily serves the AFSCN. AR 52-
58.
D. The Air Force’s Final Response
On August 18, 2005, the Air Force issued its final decision letter. The Air Force concluded
that HTSI had not met its burden of showing that any of the contested information was exempt from
disclosure under FOIA Exemption 4. A declaration of a Mr. J ames Batchelor accompanied and
supported the letter’s findings Thus, the Air Force stated it would release HTSI’s T&F Info over its
objections, including "estimated hours, core hours, hourly rate, estimated cost and total estimated cost
plus award fee for each CLIN, [Section 3.l], and the estimated hours, estimated cost, related funding
values and task descriptions contained within the modifications, delivery orders, and work
authorizations." AR 4. Again, the Air Force stressed that only "wrap rates" would be released, and
not individual cost elements. Further, the Air Force "agreed to withhold unit prices, whether option
or CLIN prices, to the extent they relate to future work" in deference to the holding in McDonnell
Doug/as Corp. v. U.S. Dep ’t ofthe Air Force, 375 F.3d 1182 (D.C. Cir. 2004). AR 9. The letter
defined "future work" as work occurring after September 30, 2005. Id.
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E. lnitial Lawsuit and Re1nand
HTSI filed its complaint in this case in September 2005. On November l, 2006, the Court
stayed the case pending the D.C, Circuit Court’s ruling in Canadian Commercia/ Corp. v. Dep ’r of
the Air Force, 514 F.3d 37 (D.C. Cir. 2008), a case involving substantively similar issues to those
raised in this case. Following the D.C. Circuit’s ruling in Canadian Commercial, this Court
remanded this case to Defendant for reconsideration of its decision to release the documents at issue
in this matter. On August 24, 2009, the Air Force determined that its original decision to release the
contested information over HTSI’s objections was still appropriate. AR l. The Air Force argued that
the ruling in Canadian Commercz``al was narrow and fact-specific and contained nothing that would
undermine its August 18, 2005 decision. Thereafter, HTSI and the Air Force filed Motions for
Summary Judgment.
II. Standard of Review and the Parties’ Burdens
Summary judgment is appropriate when the record demonstrates that there is "no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.
Civ. P. 56(a). The C ourt reviews this case under the Administrative Procedures Act, and will set
aside the agency’s decision if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. § 706(2)(A). Under this standard, courts do not substitute their
judgment for that of the agency. See Motor Vehic/e Mfrs. Ass ’n of the Uniz‘ed States, Inc. v. State
Farm Muz. Auto. Ins. Co., 463 U.S. 29, 43 (1983). lnstead, the Court need only determine whether
the agency made "a clear error of judgment.” McDonnell Douglas Corp. v. U.S. Dep ’t of the Air
Force, 215 F. Supp. 2d 200, 204 (D.D.C. 2002) (citations and intemal punctuation omitted), cy_ff'a’ in
part, rev ’d in part, 375 F.3d ll82 (D.C. Cir. 2004).
"[T]he party seeking to prevent a disclosure the govemment itself is otherwise willing to
make assumes [the] burden" of justifying nondisclosure. Marlz``n Marz``etra Corp. v. Dalton, 974 F.
Supp. 37, 40 n.4 (D.D.C. l997). Thus, HTSI had the burden before the Air Force to justify non-
disclosure. However, the Air Force must meet [HTSI’S] arguments and evidence to the contrary with
a "well-reasoned, logical[,] and consistent" decision that is "at least as compelling” as HTSI``s.
McDonnell Douglas, 375 F.3d at l 191 (citations and intemal quotations marks omitted). In short,
"[i]t is enough that the agency’s position is as plausible as the contesting party’s position."
McDonnellDouglas, 215 F. Supp. 2d at 205.
III. Analysis
FOIA Exemption 4 protects from mandatory disclosure "trade secrets and commercial or
financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4).
The Trade Secrets Act, l8 U.S.C. § l905, prohibits the govemment's discretionary disclosure of
information in its possession "not [otherwise] authorized by law," i.e., FOIA. For disclosure
purposes, the Trade Secrets Act’s scope is "at least co-extensive with that of Exemption 4 of
FOIA." CNA Fin. Corp. v. Donovan, 830 F.2d ll32, ll5l (D.C. Cir. l987), cert. dem``ed, 485 U.S.
977 (1988). Thus, the Trade Secrets Act prohibits disclosure of information covered by Exemption
4. The parties do not dispute that the contested information is "commercial or financial"
information, or that HTSI is a "person" within the meaning of Exemption 4. The parties do dispute
several other aspects of the exemption, however, discussed in turn below.
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A. Voluntary v. involuntary Submissions
If commercial or financial infonnation is submitted to the government involuntarily then
the government must treat such information as "``confidential” under Exemption 4 if its disclosure
would be likely either to "impair the govemment's ability to obtain necessary information in the
future”, or to “cause substantial harm to the competitive position” of the submitter. Nationa/
Parks, 498 F.2d at 770. lf the information is submitted voluntarily, then the information is
"confidential" under Exemption 4 if it "would customarily not be released to the public by the
person from whom it was obtained." Critical Mass, 975 F.2d at 878 (intemal quotation marks and
citation omitted). HTSI argues that Critical Mass govems, while the Air Force argues that
Natz``onal Parks is the correct standard.
Precedent in this circuit "uniformly and firmly points to the conclusion" that, as a general
matter, when HTSI submitted this information to the Air Force, it did so involuntarily because it
had to submit such infonnation in order to be considered for the Contract. See Martz``n Marz``elta,
974 F. Supp. at 39 (collecting cases). Indeed, HTSI tells the Court that
[T]he language in the RFP put offerors on notice that the Air Force would make award
based on which proposal offered the best value to the govemment and further stated that it
would determine the best value to the government by evaluating the specific allocation of
the costs . . . by CLIN . . . . This information was fundamental to [HTSI’s] strategy to win
the Contract and is the very information being sought in the FOIA request.
Pl.’s Br. Summ. J. 4~5, jl 8. The wording of the RFP supports this statement. See AR 60-61; RFP
jj 2.2 ("The Offeror shall prepare the proposal as set forth in Table 2.1", a table listing many
documents, including the SOW/lMP/IMS, PB-SOW, and other documents likely to contain
_ 10 _
information at issue here) (emphasis added). HTSI points to nothing in the RFP indicating that
HTSI could have omitted portions of its submissions (other than those discussed below) and still be
considered for the Contract. The Air Force explained that “[a]ny offeror . . . was compelled to
submit a comprehensive proposal covering each aspect of the govemment’s requirements . . . if it
hoped to be competitive for award." AR 5-6. The Air Force’s argument here is at least as
plausible_indeed, it is more plausible-as HTSI’s argument, and is amply supported by legal
precedent. The Court, therefore, has little trouble determining that the contested information is
generally govemed by the Naz‘ional Parks standard unless some specific exception applies.
Such exceptions may apply. Indeed, there is precedent in this Circuit for treating certain
information submitted as part of a bid for a government contract as voluntarily submitted while
treating accompanying information as involuntarily submitted. See Mallinckrodl, Inc. v. West, l40
F. Supp. 2d l, 6 (D.D.C. 2000) (reverse FOIA suit) (distinguishing between information that was
"required" to be submitted under the contract solicitation and information that "should" be
included under the solicitation); Cortez 111 Se)'v. Corp. v. NASA, 921 F. Supp. 8, l2-l3 (D.D.C.
l996) (reverse FOIA suit) (finding some information submitted as part of a bid "voluntary"
because there was no firm evidence that the information "was required . . . in order [for the bidder]
to continue to compete for the contract.").
Applying such distinctions to this case, the parties contest whether the RFP required the
submission of "non-core" work solutions. In making their arguments, the parties rightly focus on
the wording of the RFP. Although the record contains the PB-SOW, it only contains portions of
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the rest ofthe RFP (see AR 59-l l l), and two pages of such portions are illegible (AR 59 and 63).'
Because the wording of the RFP is the crucial factor here, the Court finds that without a complete
and legible version of the RFP before it there exists a genuine dispute as to a material fact. Thus,
summary judgment is inappropriate at this stage regarding this issue.z
The Court will therefore order the parties to file a complete and legible version of the RFP
with the Court for its consideration before the Court rules on whether the RFP required submission of
"non-core" work solutions. See Public Ci``ti``zen Health Research Grp. v. FDA, 964 F. Supp. 413, 416
(D.D.C. l997) (deferring a summary judgment ruling in a FOIA case until the parties submitted
certain documents in camera so the court could review them in order to determine the likelihood of
competitive injury flowing from their release).
B. The National Parks Test
i. Government Impai``rment Prong
HTSI argues that if the information being sought is released, it would likely impair the
government’s ability to obtain similar infonnation in the future. AR 38-39. Specifically, HTSI
l The Quail affidavit apparently refers to at least one of these two illegible pages to support HTSI’s arguments
regarding the voluntary submission of the "non-core" inforination. Quail Aff. 11 14; AR 48 .
l~)
The record also suggests that Section 3.l, as revised by HTSI, may have been voluntarily submitted under
these standards. The RFP indicated that "Government supplied documents may be revised provided the
changes enhance rather than degrade RFP requirements." AR 60 (emphasis added). The RFP identifies the
PB-SOW as a Government-supplied document AR 61. Thus, it is unclear that revising Section 3.l was
necessary for the bid. However, because HTSI did not raise this specific argument, and because the Court
finds that Section 3.l should not be released even under the more stringent Nationa/ Parks test, the Court
need not determine this issue.
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claims that "without an understanding that the infonnation would be treated confidentially, [HTSI]
would not likely have cooperated and submitted the [T&F Info and Section 3. l] to the Air Force."``
AR 39. The Air Force claims that it is in the best position to gauge its interests in this context, and
that "the type of information to be released here has been routinely released in the past in response
to similar requests and yet the Government finds no dearth of proposals for its multi-million dollar
contracts." AR 6.
"The govemment agency from which disclosure is sought is in the best position to
determine whether an action will impair its information gathering in the future. . . . [A] party
opposing disclosure makes little headway in raising the issue of impairment of information
gathering on the agency's behalf." McDonne/l Douglas, 215 F. Supp. 2d at 206. Underlying this
reasoning is the policy that when an agency "wants to disclose the disputed . . . information, it
would be nonsense to block disclosure under the purported rationale of protecting govemment
interests." Comdisco, Inc. v. Gen. Servs. Aa’min., 864 F. Supp. 5l0, 5l6 (E.D. Va. 1994) (emphasis
in original).
The Court agrees with the Air Force. First, nothing in the record indicates that the
Government ever assured HTSI that this information could not or would not be released pursuant
to a FOIA request. Second, as a large govemment contractor, HTSI surely was aware that courts
have authorized release of similar information in other FOIA cases. See, e.g., Martin Mari``etta,
974 F. Supp. 37 (finding that CLIN information, unit pricing, and cost and fee infonnation in
certain contracts was not protected by Exemption 4 and ordering its release). Third, the claim that
HTSI would abjure the opportunity for a multi-million-dollar contract to avoid a FOIA disclosure
strains credibility. Fourth, the Court notes HTSI’s inconsistent positions in the record regarding
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the likelihood that HTSI would not have produced the infonnation to the govemment under these
circumstances. Compare HTSI Final Position Letter (July 30, 2005) (AR 35) ("[I]t is likely that
[HTSI] would not have produced the [T&F Info] voluntarily if it understood this sensitive
information would have been made public.") (emphasis added) with Quail Aff. il l5 (AR 48)
("[HTSI] would not have voluntarily submitted the [T&F Info] to the Air Force if it had known it
would ultimately be released to the public . . . .") (emphasis added). Fifch, HTSI presents no
evidence that it or any other govemment contractor has withheld such information for fear of FOIA
disclosure. Finally, if HTSI could successfully invoke the government-impairment prong with
conclusory and unintuitive statements as those offered here, it could transform the prong into a de
facto prohibition on disclosure. The Air Force’s position here is more compelling than HTSI’s,
and thus HTSI’s argument must be rejected
ii. Substantial Competitz``ve Harrn
The main issue in the record is whether releasing the infonnation would likely "cause
substantial harm to the competitive position" of HTSI. National Parks, 498 F.2d at 770. The Air
Force’s reasoning that HTSI would not likely incur substantial competitive harm as a result of
disclosure can be categorized as follows: (i) HTSI did not demonstrate that it faces "actual
competition"; (ii) The T&F Info did not reveal sensitive information such as cost elements; and
(iii) Section 3.l merely described criteria by which HTSI would be judged in meeting the
Govemment’s needs, and did not reveal any sensitive information such as cost elements or
technical solutions. The Court addresses each in tum.
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a. Actual Cornpetition
ln its final decision letter of August l8, 2005, the Air Force argued that HTSI had not
shown that it faced "actual competition" regarding the AFSCN Contract because "the government
ha[d] no intent of re-competing this contract before its natural termination. . . . Therefore, HTSI
does not presently face actual competition for work related to the [AFSCN] contract." AR 7.
HTSI argues that this reasoning is too narrowly focussed, and the Court agrees
lt is true that HTSI must put forward evidence of actual competition. See Gulf``& W. Ina’us.,
Inc. v. United States, 615 F.2d 527, 530 (D.C. Cir. 1979). But "such evidence need not be of actual
competition over th[is] particular contract[.]” Genera/ Elec. Co_ v. Dep ’t of the Air Force, 648 F.
Supp. 2d 95, 103 (D.D.C. 2009) (citing National Parks, 498 F.2d at 77l). Thus, HTSI need only
present evidence that it faces competition regarding the types of services offered under the
Contract.
HTSI presents such evidence. HTSI asserted before the Air Force that it faced competition
with respect to at least four other upcoming contracts in the govemment space industry including
(l) the Eastem Range Test Support contract for the Air Force 45"‘ Space Wing; (2) Engineering
Development and Sustainment; (3) Joint Base Operations and Support contract for the NASA
/Kennedy Space Center and Patrick AFB, and (4) Network Support Operations and Maintenance
for the Air Force 50"1 Space Wing. AR 50. Indeed, the very names of such contracts indicate they
probably involve similar if not identical services as those offered under the AFSCN Contract.
Also, because the AFSCN Contract is such a comprehensive contract, it is reasonable to assume
_]_5_
that some of the myriad of services offered thereunder would be relevant to some other upcoming
govemment coiitract. Finally, the Court is mindful that a group representing HTSI’s major
competitors is apparently behind the FOIA request at issue here. HTSI thus did indeed present
sufficient evidence of "actual competition" under the legal standards of this circuit.
b. The T&F mfg
At last, the Court arrives at the thrust of the case, and the specific issue to which the lion’s
share of the record is dedicated: Would the release of the T&F Info likely cause substantial harm
to the competitive position of HTSI‘? Regarding the T&F Info_as the Court has defined it in this
opinion-the Court concludes that the record suffers from a frustrating ambiguity, i_e., what
HTSI’s arguments were, and to what arguments the Air Force reasonably thought it was
responding. The Court detects three possible theories of why the T&F Info is sensitive:
0 Argiiment lt Because it reveals how work is being done. That is, the unique,
substantive work solutions presumably described in the SOW/lMP/IMS. Competitors
can then copy such work solutions.
0 Arggiment 2: Because it reveals how HTSI allocates resources This is distinct from
Argument l because the facial CLIN values and perhaps other information such as
work orders are sensitive here, even if it is unclear how the underlying work is being
done. For example, competitors may be able to take a HTSI-completed CLIN, shave
off a cost percentage, and submit that as a bid in a future option year for this contract
or a similar future contract, thus underbidding HTSI. Or, competitors can adjust
"core" versus "non-core" allocations of work to copy HTSI’s allocations
¢ Arg_ument 3: Because it reveals granular cost elements such as HTSI profits, skilled
labor rates, or materials costs Competitors can then use the information to construct
how much HTSI will bid in future jobs and thus underbid HTSI. HTSI customers may
also be able to use this information to "ratchet down" costs of certain goods or
services in future negotiations with HTSI.
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But HTSI’s July 30, 2005 letter and its supporting affidavits seem to muddle these three
theories Examples of this trend include, but are not limited to:
l. Stating that the CLINs reveal HTSI``s "complex and strategic work allocation and
pricing strategies". AR 34. This substantially states Arguments l and/or 2.
2. Stating that disclosure would show HTSI’s "allocation of skilled workers amongst the
CLlNs, allocation of development versus sustainment work, allocation of core versus
non-core work, insight into trends in [HTSl’s] rates and estimated hours over time. . ."
AR 34. This substantially states Argument 2 and possibly Argument 3.
3. Stating that disclosure would "permit competitors to determine the components of
[HTSI’s] costs and undercut [HTSI] in competition." AR 34. This is a clear statement
of only Argument 3.
4. Stating that the T&F Info contains HTSI’s "technical solution to perform the work
[i.e., Arguments l and/or 2], labor hours and loaded rates, and its cost structure and
allocation of costs [i.e., Argument 2]." AR 35.
5. The Brown Affidavit indicates that competitors can "easily determine [HTSI’s]
strategy for performing and growing work under the Contract", substantially stating
Argument l and/or 2, but then ties this harm to the danger of "out bid[ding HTSl] in
future govemment contract competitions", which appears to be a concern primarily
raised by Argiments 2 and 3. AR 55.
6. The Quail Affidavit states that cost allocation between CLINs "forms the heart of
[HTSl``s] strategy to win the Contract" (Argument 2; AR 47) but then immediately
launches into a much more particularized discussion of how the T&F Info can be used
to derive certain costs and concludes that "[i]f [HTSl’s] competitors have its [T&F
Info] they can easily determine [HTSI’s] costs [i.e., Argument 3] and adjust their own
technical strategies and cost structures [i.e., Argument 2] to underbid [HTSl] in future
govemment contract competition." AR 49.
Also, HTSI’s July 30, 2005 letter focused its attention on Argument 3. Indeed, many of the clearest
statements of Arguments l and 2 are found in the "Background" section of the letter, and in the
section discussing competitive harm HTSI states, apparently summarizing its position, that
ln the instant case, [HTSI] has asserted that disclosure of its CLIN price information, along
with estimated hours and loaded labor rates would allow its competitors to derive the values
that [HTSI] assigns to certain costs, much in the same way as McDonnell Douglas’[s]
competitors could potentially calculate its subcontractor markup percentage [in McDonnell
Douglas, 375 F.3d 1182].
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AR 40. This appears to be a clear statement of only Argument 3. The Air Force apparently only
responded to Argument 3. Thus, if the Court credits HTSI with having made Arguments 1 and 2,
then the Court could find that the Air Force did not meet its burden in rebutting those arguments
The Court first notes that HTSI at least appears to state Arguments 1 and 2 in the record, as
demonstrated by the examples discussed above. HTSI’s statements regarding Argument 2 appear
relatively clear. However, the Court also considers HTSI’s framing of these two arguments as
confusing, particularly given HTSI’s focus on Argument 3. To borrow an of``t-cited policy of contract
law, the Court considers it equitable to resolve this ambiguity against the party who drafted the
ambiguous document, i.e., HTSI. C_``f Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52, 62
(1995) ("[T]he common-law rule of contract interpretation [is] that a court should construe
ambiguous language against the interest of the party that drafted it."). At this summary judgment
phase, this specific policy can be more generally stated as the principle that "the evidence must be
analyzed in the light most favorable to the non-movant, with all justifiable inferences drawn in his
favor." Graves v. Dist. ofColum., Civ. Action No. 07-156 (CKK), 2011 U.S. Dist. LEXIS 40463, at
*15 (D.D.C. Apr. 14, 201 l) (citing Ana'erson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (l986)).
Under these circumstances, it is the Air Force that benefits from such principles
The Court therefore remands the case to the Air Force so that the Air Force may clarify its
position as to what it considers HTSI’s arguments to be, and to respond to Arguments 1 and 2 to
the extent that it feels that HTSI raised them in the existing record.3 See McDonnell Douglas, 375
F.3d at 1188 n.2 ("[W]e will remand a matter to an agency where the agency’s initial explanation
of its decision was inadequate . . . .”); McDonnell Douglas Corp. v. l/Via'nall, 57 F.3d 1162, 1167
3 The Court reserves final judgment as to what it considers HTSI’s arguments to be until after this remand
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(D.C. Cir. 1995) (ordering a remand when the court was presented with a "confusing
administrative record"). The Court stresses that it envisions no further remands lest the case
become "a never ending loop from which aggrieved parties would never receive justice."
McDonnell Douglas Corp. v. NASA, 895 F. Supp. 316, 319 (D.D.C. 1995). The Air Force shall file
its response within 90 days from the date of this order. The Court will determine at that time
whether supplemental summary judgment briefing is necessary.
c. Section 3. 1
HTSI argued that Section 3.l is sensitive because, on its face, it shows how HTSI structures
its outcome criteria, and thus "reflects . . . its strategic approach" which "would provide great insight
for competitors to determine how to structure their award fee plans in any future competitions.”
Brown Aff. 11 12; AR 57. The Air Force countered that the criteria doesn’t contain "HTSI’s
assumptions . . . the skill mix, materiel, overhead profit or technical solutions proposed to meet
[these criteria] or any other information pertaining to HTSI’s unique technical approach." AR 9.
The Air Force``s response misses the mark. Unlike with the T&F Info, HTSI’s argument here
appears clear and coherent. HTSI argues that on its face the inforination’s structure is sensitive and
can be copied by competitors to HTSI’s detriment. The Air Force, rather, focuses on what can be
derived from the infonnation and thus does not rebut the substance of HTSI’s argument. Moreover,
the Court considers it illogical that a bidder such as HTSI would alter such criteria or why the Air
Force would even allow a bidder to do so unless the criteria alterations themselves were a substantive
part of the submission and were a relevant aspect of why HTSI won the Contract.
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The Air Force is further mistaken that HTSI never argued in the record that release of Section
3.l would likely result in competitive harm. HTSI objected to its release in the July 30, 2005 letter
(AR 34) and stated in its February 28, 2005 letter that "[r]elease of this . . . infonnation [including
Section 3.l] . . . would result in direct competitive injury to HTSI[.]” AR 23.
Thus, the Court awards summary judgment to HTSI regarding this issue. The Air Force will
therefore be permanently enjoined from releasing Section 3. 1 , as revised by HTSI, pursuant to this
FoiA Requesr."
IV. M0ti0n to Strike the Declaration of Timothy Pink
HTSI moves to strike the Declaration of Mr. Timothy Pink, which accompanies the Air
Force’s Reply in support of its summary judgment motion. Pl.’s Reply 6-7. Mr. Pink is the Chief of
the Contracting Office and Supervisory Contract Specialist for the Satellite Control and Network
Systems Group at the Space and Missile Systems Center. The declaration focuses on why
infonnation related to "‘non-core" work should be deemed involuntarily submitted under the RFP.
HTSI claims that it improperly supplements the existing administrative record with "a post-hoe
explanation of the Air Force’s decision that is not reflected in the Air Force’s August l8, 2005
4 This order accords with the Air Force’s submission that this injunction be limited in scope to this particular
FOIA Request. Def.’s Mot. Summ. J. 2 n. l. lt is unclear whether the Air Force included this remark because it
considered HTSI’s position to be that the Court should permanently enjoin the release of the infonnation in any
future context, or at least in any future FOIA context. See Compl. 15 (requesting a permanent injunction against
disclosure); Pl.``s Mot. Summ. J. 2 (same); Pl.’s Br. Summ. J. 35 (same); Pl.’s Reply 25 (same). Although HTSI
does ask for a permanent injunction, the Court considers the prayer as limited to this specific FOIA Request.
Indeed, the Court would exceed its mandate in issuing anything beyond that. "An injunction must be narrowly
tailored to remedy the specific harm shown." Aviation Consumer Action Project v. Washburn, 535 F.2d 101,
108 (D.C. Cir. 1976). Because this case is decided only upon the adequacy of this one particular administrative
record, the injunction is properly limited to this FOIA request.
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decision letter". Id. 7 (emphasis in original). "Although the record may be supplemented to provide,
for example, background information or evidence of whether all relevant factors were examined by
an agency, the new material should be merely explanatory of the original record and should contain
no new rationalizations.” AT&TInfo.-Sys., Inc. v. Gen. Servs. Admin., 810 F.2d 1233, 1236 (D.C.
Cir. 1987) (intemal citations and quotations marks omitted).
This motion directly relates to the main issue of whether the "non-core" information HTSI
submitted in response to the RFP was "voluntarily" submitted to the Air Force. The Court has
already explained that it feels the need to have a complete and legible version of the RFP before it
determines that issue. Accordingly, the Court will hold this motion in abeyance until it is in a
position to decide the main issue to which it relates
V. Conclusion
For the reasons stated above, the Court will therefore remand the case in part, grant summary
judgment for HTSI in part, deny summary judgment for the Air Force in part, order the parties to
produce documents to the Court, and hold in abeyance the Motion to Strike. An appropriate order
shall accompany this memorandum.
Aprii 19, 2011
Thomas F. HogatO
UNITED STATES DISTRICT JUDGE
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