Earlier this month, a federal appeals court issued a rulingthat dealt a blow to the causes of open government and contracting transparency.In the long run, it could also harm contracting competition and the economicviability of America's small businesses.

On January 6, the USCourt of Appeals for the 9th Circuit ruled that the Department of Defense(DoD) does not have to disclose the small business subcontracting plan of oneof its largest suppliers, Sikorsky Aircraft Corporation. In 2013, the AmericanSmall Business League (ASBL), as part of its long-running campaign to documenthow federalsmall business contracts get diverted to not-so-small businesses, submitteda Freedom of Information Act (FOIA) request for Sikorsky's most recent plan.The document identifies all subcontract amounts Sikorsky awarded to smallbusinesses on its DoD contracts during fiscal year 2013.

Sikorsky and several other large defense contractors reportthis data as part of the ComprehensiveSubcontracting Plan Test Program, an initiative DoD launched in 1990 toincrease contracting opportunities for small firms. The public has largely beenkept in the dark about the program. ASBL and other small business advocatescontend that it hasnot lived up to its promise: according to ASBLpresident Lloyd Chapman, the program has "cheated American small businessesout of well over a trillion dollars in subcontracts."

In 2014, the USDistrict Court in San Francisco ordered DoD to release Sikorsky'ssubcontracting plan. The 9th Circuit reversed the lower court, ruling that someof the data—the names of Sikorsky's subcontractors, the type and dollar amountof the goods and services subcontracted by Sikorsky, details about thecompany's subcontracting process and organizational structure—falls under FOIAExemption 4, which shields trade secrets and commercial or financialinformation that is privileged or confidential. The appeals court ruled thatother data in the document—the signatures of government officials and the namesand work contact information of Sikorsky employees—is off-limits under FOIAExemption 6, which covers personally identifiable information.

The ASBL, which has a long and relativelysuccessful FOIA litigation track record, plans to appeal the case to theSupreme Court. The issue on appeal is whether DoD met its burden of proof byproviding reasonably specific evidence that disclosure will, in regard toExemption 4, "cause substantial harm to the competitive position" of Sikorskyand, in regard to Exemption 6, "constitute a clearly unwarranted invasion ofpersonal privacy." Two factors weighing in ASBL's favor: 1) the trade secretdata in the document will eventually become too old and outdated to harmSikorsky if it is released, and 2) the contact information for several Sikorskyemployees named in the document can be found online.

The diversion of small business contracts to large companiescontinues to be a seriousmanagement and performance challenge for agencies, as well as a recurringissue of concern on Capitol Hill. The Pentagon's subcontracting plan program,in particular, has comeunder heightened scrutiny in Congress. Even DoD has publiclydisparaged the program, admitting there is no evidence it has helped smallbusinesses, and even that it "has led to an erosion of [DoD's] small businessindustrial base."

But Congress refuses to outright kill the program. Mostrecently, a provision in the 2017National Defense Authorization Act (section 826) extended the programthrough 2027.

For the full article, click here: http://www.pogo.org/blog/2017/01/court-blocks-access-small-business-contracting-secrecy.html