 ATTORNEY GENERAL OF TEXAS GREG ABBOTT | |
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April 29, 2004 Mr. James M. Frazier, III
OR2004-3533 Dear Mr. Frazier: You ask whether certain information is subject to required public disclosure under chapter 552 of the Government Code. Your request was assigned ID# 199357. The Texas Department of Criminal Justice (the "department") received two requests for information related to the department's November 7, 2003 award of correctional service contracts for State Jails, Correctional Centers, and the Lockhart Work Facility.(1) The requested information includes all bid proposals, clarifications, correspondence, best and final offers submitted or exchanged, and the department's written evaluations of bids. You claim that the requested information is excepted from disclosure under sections 552.104, 552.110, and 552.117 of the Government Code. Furthermore, as you contend that release of some of the requested information may implicate the proprietary interests of third party bidders, you state, and provide documentation showing, that you notified five third party bidders of the request and of their right to submit arguments to this office as to why the information should not be released.(2) See Gov't Code § 552.305(d); see also Open Records Decision No. 542 (1990) (determining that statutory predecessor to section 552.305 permits governmental body to rely on interested third party to raise and explain applicability of exception to disclosure under Public Information Act (the "Act") in certain circumstances). We have reviewed the submitted information. First, you contend that information generated by the department for use in evaluating and analyzing bid proposals, submitted as the department's Source Selection Plan and related documents and working papers, is excepted from disclosure under section 552.104 of the Government Code. Section 552.104 excepts from disclosure "information that, if released, would give advantage to a competitor or bidder." The purpose of section 552.104 is to protect a governmental body's interests in competitive situations, typically in the context of competitive bidding. See Open Records Decision No. 592 (1991). A governmental body seeking to withhold information from disclosure pursuant to section 552.104 must demonstrate some actual or specific harm in a particular competitive situation; a general allegation that a competitor will gain an unfair advantage will not suffice. See Open Records Decision No. 541 at 4 (1990). Section 552.104 generally does not except information relating to competitive bidding after a contract has been awarded and executed. See Open Records Decision No. 541 (1990). However, this office has determined that in some circumstances, section 552.104 may apply to information pertaining to an executed contract where the governmental body solicits bids for the same or similar goods or services on a recurring basis. See id at 5. In this case, you advise that the contracts at issue have been awarded and executed. You contend, however, that disclosure of the department's Source Selection Plan and related documents would harm the department's competitive interests pertaining to the bidding process used in awarding contracts for private operation of correctional facilities. You state that disclosure of this information would allow third party bidders to tailor their bids to specific evaluation criteria, undermining the quality of proposals and undermining competition among bidders. You further advise that the department solicits bids for operation of correctional facilities, including the same facilities at issue here, on a recurring basis. Thus, you contend that the bidding process for these types of contracts is ongoing, and you assert that disclosure of the department's Source Selection Plan and related documents will undercut the department's negotiating position with respect to future procurements for such contracts. Based on your representations and our review of the submitted information, we find that you have demonstrated in this instance that release of the Source Selection Plan and related documents would harm the interests of the department in a particular competitive situation. See Open Records Decision No. 592 (1991). We therefore determine that the department may withhold the submitted information pertaining to the department's Source Selection Plan pursuant to section 552.104 of the Government Code. We have marked the information that the department may withhold under section 552.104. We next address the public availability of the remaining information, consisting of the formal bid proposals submitted to the department and correspondence between bidders and the department. You indicate that release of this information may implicate the proprietary interests of the third party bidders, and you have notified the third parties accordingly. See Gov't Code § 552.305(d). We note that an interested third party is allowed ten business days after the date of its receipt of the governmental body's notice under section 552.305(d) to submit its reasons, if any, as to why requested information relating to that party should be withheld from disclosure. See Gov't Code § 552.305(d)(2)(B). As of the date of this letter, CCA, CSC, and Wackenhut have not submitted any comments to this office explaining how release of the requested information would affect their proprietary interests. Therefore, CCA, CSC, and Wackenhut have provided us with no basis to conclude that they have protected proprietary interests in any of the submitted information. See Gov't Code § 552.110(b) (to prevent disclosure of commercial or financial information, party must show by specific factual or evidentiary material, not conclusory or generalized allegations, that it actually faces competition and that substantial competitive injury would likely result from disclosure); Open Records Decision Nos. 639 at 4 (1996), 552 at 5 (1990) (party must establish prima facie case that information is trade secret), 542 at 3 (1990). We note, however, that CiviGenics and MTC have each submitted comments contending that information in their proposals is excepted from disclosure under section 552.110 of the Government Code. Section 552.110 of the Government Code protects: (1) trade secrets, and (2) commercial or financial information the disclosure of which would cause substantial competitive harm to the person from whom the information was obtained. See Gov't Code § 552.110(a), (b). Section 552.110(a) protects the property interests of private parties by excepting from disclosure trade secrets obtained from a person and privileged or confidential by statute or judicial decision. See Gov't Code § 552.110(a). A "trade secret" may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives [one] 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. It differs from other secret information in a business in that it is not simply information as to single or ephemeral events in the conduct of the business, as for example the amount or other terms of a secret bid for a contract or the salary of certain employees. . . . A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as for example, a machine or formula for the production of an article. It may, however, relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers, or a method of bookkeeping or other office management. Restatement of Torts § 757 cmt. b (1939); see also Hyde Corp. v. Huffines, 314 S.W.2d 763, 776 (Tex. 1958); Open Records Decision Nos. 255 (1980), 232 (1979), 217 (1978). There are six factors to be assessed in determining whether information qualifies as a trade secret: (1) the extent to which the information is known outside of [the company's] business; (2) the extent to which it is known by employees and others involved in [the company's] business; (3) the extent of measures taken by [the company] to guard the secrecy of the information; (4) the value of the information to [the company] and to [its] competitors; (5) the amount of effort or money expended by [the company] in developing this information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Restatement of Torts § 757 cmt. b (1939); see also Open Records Decision No. 232 (1979). This office must accept a claim that information subject to the Act is excepted as a trade secret if a prima facie case for exemption is made and no argument is submitted that rebuts the claim as a matter of law. Open Records Decision No. 552 (1990). However, we cannot conclude that section 552.110(a) is applicable unless it has been shown that the information meets the definition of a trade secret and the necessary factors have been demonstrated to establish a trade secret claim. Open Records Decision No. 402 (1983). Section 552.110(b) protects "[c]ommercial or financial information for which it is demonstrated based on specific factual evidence that disclosure would cause substantial competitive harm to the person from whom the information was obtained[.]" Gov't Code § 552.110(b). This exception to disclosure requires a specific factual or evidentiary showing, not conclusory or generalized allegations, that substantial competitive injury would likely result from release of the information at issue. Gov't Code § 552.110(b); see also National Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C. Cir. 1974); Open Records Decision No. 661 (1999). Upon review of the submitted information and the arguments submitted by CiviGenics and MTC, we find that both CiviGenics and MTC have made a prima facie case that portions of their respective proposals are protected as trade secrets. Moreover, we have received no arguments that would rebut these claims as a matter of law. Thus, we have marked the portions of the information at issue in the proposal of CiviGenics that the department must withhold pursuant to section 552.110(a). We have also marked the information in the proposal of MTC that the department must withhold pursuant to section 552.110(a) of the Government Code. We further determine that CiviGenics and MTC have established by specific factual evidence that release of additional portions of the information in their respective proposals would result in substantial competitive harm to the companies. Thus, we have marked the information in the proposals of CiviGenics and MTC that the department must withhold pursuant to section 552.110(b) of the Government Code. However, with respect to the remaining information in the proposals of CiviGenics and MTC and the portion of the submitted correspondence that pertains to the companies, we find that CiviGenics and MTC have not established that any of the information is protected as trade secrets. Furthermore, we find that the companies have not provided specific factual evidence demonstrating that release of the remaining information would result in substantial competitive harm. Accordingly, we determine that the remainder of the proposals of CiviGenics and MTC and the remaining submitted information pertaining to CiviGenics and MTC is not excepted from disclosure under section 552.110 of the Government Code. See Open Records Decision Nos. 661 (1999) (for information to be withheld under commercial or financial information prong of section 552.110, business must show by specific factual evidence that substantial competitive injury would result from release of particular information at issue), 319 (1982) (information relating to organization and personnel not ordinarily excepted from disclosure under statutory predecessor). Finally, we note that the information pertaining to MTC contains insurance policy numbers that are subject to section 552.136 of the Government Code. Section 552.136 provides in relevant part: (a) In this section, "access device" means a card, plate, code, account number, personal identification number, electronic serial number, mobile identification number, or other telecommunications service, equipment, or instrument identifier or means of account access that alone or in conjunction with another access device may be used to: (1) obtain money, goods, services, or another thing of value; or (2) initiate a transfer of funds other than a transfer originated solely by paper instrument. (b) Notwithstanding any other provision of this chapter, a credit card, debit card, charge card, or access device number that is collected, assembled, or maintained by or for a governmental body is confidential. Gov't Code § 552.136. The insurance policy numbers in the proposal of MTC consist of account number information. The department must withhold the insurance policy numbers in the proposal of MTC pursuant to section 552.136 of the Government Code. In summary, the department may withhold the submitted information relating to the department's Source Selection Plan pursuant to section 552.104 of the Government Code. We have marked the information in the proposals of CiviGenics and MTC that must be withheld under section 552.110(a) and section 552.110(b) of the Government Code. Insurance policy numbers in the proposal of MTC must be withheld under section 552.136 of the Government Code. The remainder of the submitted information must be released to the requestor. This letter ruling is limited to the particular records at issue in this request and limited to the facts as presented to us; therefore, this ruling must not be relied upon as a previous determination regarding any other records or any other circumstances. This ruling triggers important deadlines regarding the rights and responsibilities of the governmental body and of the requestor. For example, governmental bodies are prohibited from asking the attorney general to reconsider this ruling. Gov't Code § 552.301(f). If the governmental body wants to challenge this ruling, the governmental body must appeal by filing suit in Travis County within 30 calendar days. Id. § 552.324(b). In order to get the full benefit of such an appeal, the governmental body must file suit within 10 calendar days. Id. § 552.353(b)(3), (c). If the governmental body does not appeal this ruling and the governmental body does not comply with it, then both the requestor and the attorney general have the right to file suit against the governmental body to enforce this ruling. Id. § 552.321(a). If this ruling requires the governmental body to release all or part of the requested information, the governmental body is responsible for taking the next step. Based on the statute, the attorney general expects that, within 10 calendar days of this ruling, the governmental body will do one of the following three things: 1) release the public records; 2) notify the requestor of the exact day, time, and place that copies of the records will be provided or that the records can be inspected; or 3) notify the requestor of the governmental body's intent to challenge this letter ruling in court. If the governmental body fails to do one of these three things within 10 calendar days of this ruling, then the requestor should report that failure to the attorney general's Open Government Hotline, toll free, at (877) 673-6839. The requestor may also file a complaint with the district or county attorney. Id. § 552.3215(e). If this ruling requires or permits the governmental body to withhold all or some of the requested information, the requestor can appeal that decision by suing the governmental body. Id. § 552.321(a); Texas Dep't of Pub. Safety v. Gilbreath, 842 S.W.2d 408, 411 (Tex. App.--Austin 1992, no writ). Please remember that under the Act the release of information triggers certain procedures for costs and charges to the requestor. If records are released in compliance with this ruling, be sure that all charges for the information are at or below the legal amounts. Questions or complaints about over-charging must be directed to Hadassah Schloss at the Texas Building and Procurement Commission at (512) 475-2497. If the governmental body, the requestor, or any other person has questions or comments about this ruling, they may contact our office. We note that a third party may challenge this ruling by filing suit seeking to withhold information from a requestor. Gov't Code § 552.325. Although there is no statutory deadline for contacting us, the attorney general prefers to receive any comments within 10 calendar days of the date of this ruling. Sincerely, David R. Saldivar
c: Ms. Chelli R. Jones
Mr. Zachary George
Mr. Roy Ross
Mr. Ron Russell
Mr. James F. Slattery
Mr. Wayne H. Calabrese
Footnotes 1. This ruling concerns the request dated February 2, 2004, by Ms. Chelli Jones, and the request dated March 17, 2004, by Mr. Zachary George. 2. The department notified CiviGenics, Corrections Corporation of America ("CCA"), Correctional Services Corporation ("CSC"), Management & Training Corporation ("MTC"), and Wackenhut Corrections Corporation ("Wackenhut) of the present request pursuant to section 552.305. |