Cuneo Gilbert & LaDuca, LLP: Pentagon and Sikorsky Losing Legal Battle with Lloyd Chapman's ASBL

Press Release

Cuneo Gilbert & LaDuca, LLP: Pentagon and Sikorsky Losing Legal Battle with Lloyd Chapman's ASBL

Cuneo Gilbert & LaDuca, LLP
November 20, 2017

WASHINGTON, Nov. 20, 2017 /PRNewswire/ -- The American SmallBusiness League (ASBL) has won release of most of the 2013 SikorskyAircraft Corporation small business subcontracting plan (plan) filed with theDepartment of Defense (DOD), after a four year Freedom of Information Actbattle.   Most of the plan was released November10, following the Justice Department's October 12notification to the U.S. District Court in SanFrancisco that it would no longer defendDOD-Sikorsky's efforts to withhold the information. 

Jonathan W. Cuneo,partner at Washington, DCbased Cuneo Gilbert & LaDuca, LLP, and ASBL'sattorney, explained:   "Plaintiff's discovery that the tradesecrets defense is seemingly   unsupportable raises the question asto whether the defendants acted in good faith.  I believe somebody is lying.Apparently, either the government knew all along that trade secrets were not atrisk or the government was misled by Sikorsky.  Why was this costly,lengthy litigation even necessary?"

"The most significant revelation in this case is that we'veexposed the fact the Pentagon and its prime contractors have shortchanged smallbusinesses and small businesses owned by women, minorities and service disabledveterans out of hundreds of billions in subcontracts," said ASBL PresidentLloyd Chapman

The Sikorsky plan was filed with DOD under the controversialComprehensive Subcontracting Plan Test Program (CSPTP), which is supposed tobuild new opportunities for small businesses.

"The Pentagon issued a report in November of 2015 thatacknowledged the CSPTP had actually cut contracts to small businesses by over50 percent. The data we have uncovered in this case indicates subcontracts tosmall businesses have been slashed by as much as 90 percent," Mr. Chapmansaid.

University of BaltimoreLaw Professor and government contracting expert CharlesTiefer is not surprised.  Professor Tiefer, a formerSolicitor and Deputy General Counsel of the U.S. House of Representatives whoalso served as Commissioner on the congressionally mandated IndependentCommission on Wartime Contracting, has called CSP a "sham."

Professor Tiefer, who examined the Sikorsky plan, focused on thecompany's socio-economic subcategories within the target small businesscommunity:  "Sikorsky admitted lowering many of its goals forwomen-owned, veterans-owned and similar subcontractor categories.  Forexample, it admitted its veterans-owned goal 'is lower' and fellbelow even 1 percent, down to 0.9 percent, a pittance."

With its principal office in Washington,DC, Cuneo Gilbert& LaDuca, LLP represents clients in a range of civil justice andlegislative matters including civil and human rights, antitrust, consumerprotection, product liability and securities and intellectual property.

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Small Business Activist Wins Interim Victory Against Pentagon, Sikorsky


Small Business Activist Wins Interim Victory Against Pentagon, Sikorsky

By Charles Clark
Government Executive
November 16, 2017

For four years, the small but vocalAmerican Small Business League has argued that large federal contractorsmislead agencies and the public by overstating their use of small businesses assubcontractors to meet statutory goals.

In U.S. District Court in San Franciscolast Friday, attorneys for the advocacy group led by Lloyd Chapman and based inPetaluma, Calif., successfully pried out the previously non-public names ofsuppliers and other subcontractors used by Sikorsky Aircraft Corp.

The helicopter maker had joined with theDefense and Justice departments in seeking to withhold such information asproprietary when submitted to the Pentagon under its 27-year-old ComprehensiveSubcontracting Plan Test Program, designed to measure corporate potentialfor increasing small business opportunities in subcontracting.

Small business booster Chapman has longchallenged the Pentagon's program as nonproductive and oriented mostly towardobfuscating the degree to which large contractors win defense business intendedfor smaller ones.

After Chapman filed a FOIA request for thenames of Sikorsky's subcontractors, the company and the government resisted,winning a round in court last January. They argued that the FOIA requestinfringed on rights to withhold proprietary information. "Disclosure wouldprovide competitors with information that they could use to improve their ownsystems and capabilities to Sikorsky's detriment," it said in a brief toprotect its 2012 submission to the Pentagon.

The withheld information comprised"personal identifying information of Sikorsky employees, including their names,phone numbers and email addresses, which was not disclosed to protect the individuals'privacy; information regarding Sikorsky's training program, which isproprietary because Sikorsky's approach to training distinguishes it from itscompetitors and likely is a relevant factor in evaluating the strength ofSikorsky's bid proposals . . . [and] the dollar amounts of actual subcontractsawarded within the fiscal year, which is proprietary because it revealsSikorsky's purchasing strategies and methodologies and subcontractingforecasts."

After several rounds of negotiationswith District Judge William Alsup, Justice lawyers released versions of thedocument, each with fewer redactions than the last, before releasing the mostrevealing version yet on Nov. 10.

After examining the documents, Chapmantold Government Executive this week he found them "indecipherable,"though just getting the new document made him feel he'd "struck gold. There aresome interesting anomalies. For some companies we find no information, some haveonly one employee, and some are currently subsidies of Fortune 500 companies,"he said. "It's a very peculiar list."

In response, his lawyers will berequesting the names of all of Sikorsky's suppliers and contractors. And in thenear future," Chapman added, he will be requesting the names of all thesuppliers and subcontractors in Pentagon programs. "The significance is thatcontractors that participate in the Comprehensive Subcontracting Plan TestProgram cannot withhold the names of subcontractors. It shows the Pentagon wasright when it said that small business contracts have plummeted as result ofthe program."

A Sikorsky spokesman, Paul Jackson, toldGovernment Executive, "We continue to maintain that the Sikorsky SmallBusiness Plan contains proprietary and confidential information, and we willcontinue to oppose any further release of the information in question."  

A Defense spokesman said he could notcomment on pending litigation.

A Justice spokesman told GovernmentExecutive that the negotiated release of a less-redacted version of thedocument "does not resolve this matter as to those portions not released, norwill it answer the many unanswered questions as to what sort of investigationwas conducted in the first instance by the defendants, and why this litigationwas necessary." He declined to comment on whether the content of the documentsconstitutes evidence in the dispute over whether large corporationsmisrepresent their use of small business subcontractors.

Chapman's team, however, remainsoptimistic about continuing the case with a jury trial. "Some of theinformation we seek had actually been posted on government websites and issuedin pressreleases by Sikorsky," said one of Chapman's attorneys, JonathanCuneo, a partner of the Washington, D.C.-based Cuneo Gilbert & LaDuca LLP."The defendants hid behind a spurious trade secrets claim for four years.Ironically, this case involves information with no national securitysensitivity about a single source, non-competitive Defense Departmentcontract."  

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Sikorsky Complains Over DOD Document Release In FOIA Suit


Sikorsky Complains Over DOD Document Release In FOIA Suit

By Daniel Wilson
Law 360
November 14, 2017

Law360, Nashville (November 14, 2017, 7:15 PM EST) --Sikorsky Aircraft Corp. told a California federal court Monday that the U.S.Department of Defense was mistaken to release previously redactedinformation from a company subcontracting plan under the Freedom of InformationAct, saying a FOIA exemption should have applied but that it would not sue tostop the release.
Despite the company's objections, the DOD on Nov. 10 released to the AmericanSmall Business League a new copy of Sikorsky's 2013 comprehensivesubcontracting plan as part of the FOIA suit filed by ASBL, with "significantlyfewer" redactions than a previously released version of the plan, the companysaid in a notice to the court.

While it has decided against filing a so-called reverse FOIA action to blockrelease of the information, Sikorsky said it believes that the newly releasedinformation should have remained exempt from disclosure under FOIA Exemption 4,which covers trade secrets, arguing the government had gone against the NinthCircuit's interpretation of that exemption.
That new information includes, for example, the names of small businesscontractors the company uses to comply with a government small businesssubcontracting test program, details of confidential projects that make use ofthose subcontractors, and what Sikorsky does to set and meet its small businesssubcontracting goals, Sikorsky claimed.

"The disclosure of such information is likely to give Sikorsky's competitors asignificant competitive advantage over Sikorsky," it said.

For example, competitors could use it to identify and poach Sikorsky's provenbase of small business suppliers and glean information from what the companychooses to make against what it chooses to buy, according to the company.

Any justifications for the release of the new information based on publiclyavailable information are also incorrect, as although some subcontractors havebeen publicly revealed as Sikorsky suppliers, their specific roles in meetingits subcontracting goals and the company's methods for recruiting them had notbeen, Sikorsky argued.

ASBL President Lloyd Chapman told Law360 on Tuesday that he continues to believethe requested documents should be released to ASBL completely unredacted and that he will push for a trial if need be,arguing data on Sikorsky's suppliers is available from government databases andother public sources — including Sikorsky's own press releases — and is not atrade secret. He also claimed that the company may be acting disingenuously inredacting certain purported personal information from the plan documents.

Noting he had yet to fully analyze the newly unredactedinformation released to ASBL, Chapman said that an initial review of thatinformation "seemed to indicate" that some of the firms Sikorsky has claimedare small business suppliers may in fact be larger businesses, which he arguedmay be indicative of a larger issue.

"If the Pentagon allowed Sikorsky to report rewards to large multi-nationals assmall business awards and there was no oversight on that ... It would be myassumption that the Pentagon is allowing all of the major contractors whoparticipate in this program to do the same thing," he said.

The DOD does not typically comment on pending litigation.

ASBL filed its suit in 2014 after a related FOIA request was effectivelyrejected by the DOD. It has claimed the Sikorsky subcontracting plan willreveal whether small businesses are receiving DOD subcontracts from largedefense contractors, as required by law, or not.

Specifically, the group believes that the DOD's Comprehensive Subcontract PlanTest Program, created in 1989 as a test program for DOD prime contractors to usegeneral, companywide subcontracting plans instead of the more specificper-contract plans required by other agencies, has been used to "cheat smallbusiness out of hundreds of billions in subcontracts." Sikorsky, now owned by Lockheed Martin Corp.,is a major manufacturer of military helicopters.

A district court in November 2014 ordered theDOD and Sikorsky to cough up the company's subcontractingplan, unredacted, before the Ninth Circuit in Januaryreversed that decision, saying FOIA exemptions 4 and6, which covers personal privacy, applied to certain redacted information inthe plan.

Once back before the district court, the DOD on Oct. 12 said it intended torelease some previously redacted information to ASBL, a move the group hasclaimed stems from discovery in the suit running counter to Sikorsky's claimsabout needing to protect its trade secrets.

A further hearing in the case is set for Wednesday.

ASBL is represented by Robert E. Belshaw of Belshaw Law, and Jonathan W. Cuneo,Charles Tiefer and Matthew E. Miller of Cuneo Gilbert & LaDuca LLP.

The DOD is represented by Brian J. Stretch, Sara Winslow, Ellen London andKimberley Friday of the U.S. Attorney'sOffice for the Northern District of California.

Sikorsky is represented by Rex. S. Heinke and JessicaW. Weisel of AkinGump Strauss Hauer & Feld LLP.

The case is American Small Business League v. U.S. Department of Defense, casenumber 3:14-cv-02166, in the U.S. District Court for the NorthernDistrict of California.

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