Mr. Timothy M. Rumberger
The Bill of Particulars
50 McClellan Avenue
Amsterdam, NY 12010
The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the information presented in your correspondence.
Dear Mr. Rumberger:
I have received your letter of January 11 in which you sought assistance concerning a denial of access to records by the State Insurance Department.
Attached to your letter is a copy of your request, in which you wrote:
"...I seek any and all records pertaining to Alicare's selection as administrator of the state's Market Stablization Pool, including the request for proposals issued by the state, the bid proposals submitted by Alicare and other bidders, bid prices, the department's written evaluation and rankings of all proposals, the contract signed between Alicare and the Insurance Department, change orders and/or any other relevant documents. Additionally, I request any other records of any other contracts for service between Alicare and the Insurance Department."
You were initially informed that the responses to the requests for proposals "could not be released for reasons of confidentiality." You added that:
"The only document that the department did release was its initial request for proposals. Only after some prompting did it release the names of the three bidders and the dollar amount of their bids. The department's director of administration, Lloyd Franks, refused to allow access to the bids themselves, however, stating that the was contractually obligated to seek and obtain the bidders' prior approval, which he was in the process of doing."
In this regard, I offer the following comments.
First, from my perspective, an assertion or claim of confidentiality, unless it is based upon a statute, is likely meaningless. When confidentiality is conferred by a statute, an act of the State Legislature or Congress, records fall outside the scope of rights of access pursuant to §87(2)(a) of the Freedom of Information Law, which states that an agency may withhold records that "are specifically exempted from disclosure by state or federal statute". If there is no statute upon which an agency can rely to characterize records as "confidential" or "exempted from disclosure", the records are subject to whatever rights of access exist under the Freedom of Information Law [see Doolan v.BOCES, 48 NY 2d 341 (1979); Washington Post v. Insurance Department, 61 NY 2d 557 (1984); Gannett News Service, Inc. v. State Office of Alcoholism and Substance Abuse, 415 NYS 2d 780 (1979)]. Similarly, in a case in which a law enforcement agency permitted persons reporting incidents to indicate on a form their "preference" concerning the agency's disclosure of the incident to the news media, the Appellate Division found that, as a matter of law, the agency could not withhold the record based upon the "preference" of the person who reported the offense. Specifically, in Johnson Newspaper Corporation v. Call, Genesee County Sheriff, 115 AD 2d 335 (1985), it was found that:
"There is no question that the 'releasable copies' of reports of offenses prepared and maintained by the Genesee County Sheriff's office on the forms currently in use are governmental records under the provisions of the Freedom of Information Law (Public Officers Law art 6) subject, however, to the provisions establishing exemptions (see, Public Officers Law section 87). We reject the contrary contention of respondents and declare that disclosure of a 'releasable copy' of an offense report may not be denied, as a matter of law, pursuant to Public Officers Law section 87(2)(b) as constituting an 'unwarranted invasion of personal privacy' solely because the person reporting the offense initials a box on the form indicating his preference that 'the incident not be released to the media, except for police investigative purposes or following arrest'."
In short, I do not believe that an agency may, by means of a contract or promise, agree to keep records confidential. Insofar as a contract requiring or promise of confidentiality diminishes rights of access conferred by the Freedom of Information Law or other applicable law, I believe that it is void and unenforceable.
Second, as a general matter, the Freedom of Information Law is based upon a presumption of access. Stated differently, all records of an agency are available, except to the extent that records or portions thereof fall within one or more grounds for denial appearing in §87(2)(a) through (i) of the Law.
Potentially relevant is §87(2)(c), which enables agencies to withhold records to the extent that disclosure "would impair present or imminent contract awards or collective bargaining negotiations." From my perspective, the key word in the quoted provision is "impair", and the question under that provision involves how disclosure would impair the process of awarding contracts.
Section 87(2)(c) often applies in situations in which agencies seek bids or requests for proposals (RFP's). While I am not an expert on the subject, I believe that bids and the processes relating to bids and RFP's are different. As I understand the matter, prior to the purchase of goods or services, an agency might solicit bids. So long as the bids meet the requisite specifications, an agency must accept the low bid and enter into a contract with the submitter of the low bid. When an agency seeks proposals by means of RFP's, there is no obligation to accept the proposal reflective of the lowest cost; rather, the agency may engage in negotiations with the submitters regarding cost as well as the nature or design of goods or services, or the nature of the project in accordance with the goal sought to be accomplished. As such, the process of evaluating RFP's is generally more flexible and discretionary than the process of awarding a contract following the submission of bids.
When an agency solicits number of bids, but the deadline for their submission has not been reached, premature disclosure to another possible submitter might provide that person or firm with an unfair advantage vis a vis those who already submitted bids. Further, disclosure of the identities of bidders or the number of bidders might enable another potential bidder to tailor his bid in a manner that provides him with an unfair advantage in the bidding process. In such a situation, harm or "impairment" would likely be the result, and the records could justifiably be denied. However, when the deadline for submission of bids has been reached, all of the submitters are on an equal footing and, as suggested earlier, an agency is generally obliged to accept the lowest appropriate bid. In that situation, the bids would, in my opinion, be available.
In the case of RFP's, even though the deadline for submission of proposals might have passed, an agency may engage in negotiations or evaluations with the submitters resulting in alterations in proposals or costs. Whether disclosure at that juncture would "impair" the process of awarding a contract is, in my view, a question of fact. In some instances, disclosure might impair the process; in others, disclosure may have no harmful effect or might encourage firms to be more competitive, thereby resulting in benefit to the agency and the public generally. In this case, it appears that a contract has been awarded. If that is so, I do not believe that §87(2)(c) would serve as a basis for withholding.
Also of potential significance is §87(2)(d), which enables an agency to withhold records or portions thereof that:
"are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise."
In my opinion, the question under section 87(2)(d) involves the extent, if any, to which disclosure would "cause substantial injury to the competitive position" of firms responding to RFP's. If, for example, the records could be used to ascertain a unique business process or include significant and detailed financial information, it might be contended that certain aspects of the records might, if disclosed, cause substantial injury to its competitive position.
The concept and parameters of what might constitute a "trade secret" were discussed in Kewanee Oil Co. v. Bicron Corp., which was decided by the United States Supreme Court in 1973 (416 (U.S. 470). Central to the issue was a definition of "trade secret" upon which reliance is often based. Specifically, the Court cited the Restatement of Torts, section 757, comment b (1939), which states that:
"[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers" (id. at 474, 475).
In its review of the definition, the court stated that "[T]he subject of a trade secret must be secret, and must not be of public knowledge or of a general knowledge in the trade or business" (id.).
In my view, the nature of the records and the area of commerce in which a profit-making entity is involved would be the factors used to determine the extent to which disclosure of the records would "cause substantial injury to the competitive position" of the enterprise. Therefore, the proper assertion of §87(2)(d) would be dependent upon the facts and, again, the effect of disclosure upon the competitive position of the entity to which the records relate.
As you may be aware, related provisions of the Freedom of Information Law pertain to the protection of records that might be withheld under §87(2)(d). Those provisions, which appear in §89(5), prescribe a procedure that may be utilized by a commercial enterprise in certain circumstances and that must be carried out by an agency in those circumstances. Specifically, the cited provision states in part that:
"(1) A person acting pursuant to law or regulation who, subsequently to the effective date of this subdivision, submits any information to any state agency may, at the time of submission, request that the agency except such information from disclosure under paragraph (d) of subdivision two of section eighty-seven of this article. Where the request itself contains information which if disclosed would defeat the purpose for which the exception is sought, such information shall also be excepted from disclosure.
(2) The request for an exception shall be in writing and state the reasons why the information should be excepted from disclosure.
(3) Information submitted as provided in subparagraph one of this paragraph shall be excepted from disclosure and be maintained apart by the agency from all other records until fifteen days after the entitlement to such exception has been finally determined or such further time as ordered by a court of competent jurisdiction."
The language quoted above includes a series of conditions that must exist before §89(5) can be found to apply.
Information submitted to a state agency must be accomplished by a person "acting pursuant to law or regulation." Another condition that must be met when an exception from disclosure is sought is that the exception must be required "at the time of submission" to an agency. A third condition is that a request for an exception "shall be in writing", including "the reasons why the information should be excepted from disclosure." In my opinion, unless each of the conditions described in §89(5)(a) can be met, the procedural protection accorded by that provision and the remainder of §89(5) would be inapplicable.
I point out that even if §89(5) does not apply, I know of no provision that would preclude agency officials from consulting with or seeking the views of persons or entities that submitted records to an agency in an effort to determine the extent to which records might properly be withheld under §87(2)(d). It is noted that seeking the procedural protection accorded by §89(5) is optional; a person or entity that submits records to state agencies may, at the time of submission of those records, seek to except the records or portions thereof from disclosure. There is no requirement, however, that a person or entity must do so. Moreover, even if no such claim is made when records are submitted, an agency in receipt of the records could, in my opinion, withhold records, when appropriate, pursuant to §87(2)(d). Often the staff of an agency may have insufficient technical expertise concerning an industry or process, for example, to determine the effects of disclosing records, and consultation with the submitters of records may be proper to attempt to determine the effect of disclosure. Nevertheless, in the instant situation, insofar as §89(5) does not apply, I believe that it would be inappropriate to solicit the views of the firms who submitted the records in a manner that extends the time for rendering a determination following an appeal, should you choose to make an appeal, so as to conflict with §89(4)(a) of the Freedom of Information Law. That provision enables a person denied access to records to appeal a denial and requires that an agency determine the appeal within ten business days of receipt of the appeal. When §89(5) is applicable and the submitter of records believes that records should be withheld, the agency is prohibited from disclosing the records until fifteen days after its final determination, or perhaps not at all, if a proceeding to preclude disclosure is initiated by the submitter of the records [see §89(5)(d)]. However, if §89(5) does not apply, I do not believe that an agency can be compelled to withhold records, notwithstanding the claims that may be made by the submitters of the records.
Lastly, you also requested the Department's "written evaluation and rankings of the proposals." Relevant with regard to those records is §87(2)(g). That provision enables an agency to withhold records that:
"are inter-agency or intra-agency materials which are not:
i. statistical or factual tabulations or data;
ii. instructions to staff that affect the public;
iii. final agency policy or determinations; or
iv. external audits, including but not limited to audits performed by the comptroller and the federal government..."
It is noted that the language quoted above contains what in effect is a double negative. While inter-agency or intra-agency materials may be withheld, portions of such materials consisting of statistical or factual information, instructions to staff that affect the public, final agency policy or determinations or external audits must be made available, unless a different ground for denial could appropriately be asserted. Concurrently, those portions of inter-agency or intra-agency materials that are reflective of opinion, advice, recommendation and the like could in my view be withheld.
In a judicial decision dealing with the same kinds of records, after finding that disclosure would not cause substantial injury to a particular firm's competitive position (which may or may not be so in this instance), the decision indicates that:
"The contract award was based on an evaluation of criteria and ratings made by the committee members. Backup factual and statistical data to a final determination of an agency is not exempt from disclosure (see also, Church of Scientology v State of New York, 54 AD2d 446, 448-449, affd 43 NY2d 754). The individual members of the DOH committee were required to rate the response to the criteria of the RFP and accord it a numerical value. The rating given each category reflects the voting which determined the contract award (see, supra). Although the rating sheets are subject to disclosure, however, the subjective comments, opinions and recommendations written in by committee members are not required to be disclosed and may be redacted" [Professional Standard Review Council of America, Inc. v. NYS Department of Health, 193 AD 2d 937, 939-940 (1993)].
I hope that I have been of some assistance.
Robert J. Freeman
cc: John Calagna, Public Information Officer
Paul Altruda, Assistant Deputy Superintendent and Counsel