Can Suppliers Force the Government to Protect Their Company Secrets?

Feb 11, 2019
Bidsync Industry Blog

As public sector entities, some say that government agencies are obligated to disclose every last detail about how they spend public money – including details about the bids they receive for each purchase. (Whether pencils, patrol cars or infrastructure for public utilities.) This is the only way to maintain full transparency and accountability, they argue. How else would we know if a contract was awarded fairly? If it was really the best value? Those would be difficult conclusions for the public via the final contract award disclosure on its own.

Then you have those who expect government agencies to be judicious in their bidding and contract award disclosures. These are typically suppliers who are, rightfully, concerned about sensitive pricing structures or proprietary information falling into competitors’ laps. They understand that some information about the final award – such as the selected supplier/contractor, total contract value and term – is subject to public release as part of a bid abstract. However, they want information shared in sealed bids to remain sealed and commercial secrets to be shuttered from public viewing.

Now, you may be scratching your head (slightly confused) if you already assumed that…

  1. Federal, state and local government agencies are absolutely obligated to disclose procurement-related documents as a public entity, including submitted bids and contracts – and that regulatory frameworks are in place to support this mandate; and/or
  2. The federal, state and local laws that are used to broadly regulate public information disclosures specifically cover over contracting-related information, offering guidance on what information (i.e. national security secrets) can be redacted before fulfilling a Freedom of Information Act-type (FOIA) release.

But those assumptions aren’t exactly correct. Just consider Texas, which is now the only state in the country where contractors can decide to keep their contracts secret by claiming – with little, if any, proof – that allowing their release would place them at a potential competitive disadvantage.  This, despite the Texas Public Information Act’s existing explicit protection of trade secrets,” according to this recent article in the Concho Valley Homepage.

There is a renewed push to advance amendments to Texas' Sunshine Laws that would restore Texans’ access to final government contracts with private companies; shed light once again on public funds given to non-profits to perform government functions, and provide access to deliberations of public business conducted in private electronic accounts (already classified as a public record) to prevent corruption.”

And this is just one example of the discrepancy that exists in the rules and regulations governing bid and contract disclosure requirements in the public sector. Graying the lines even more is the fact that some laws and regulations outlining government contracting disclosure mandates have proven to be subjective. 

So, when our BidSync team is asked any of the following questions…

Our broad answer is that it really does depend on each state’s laws or local governance. (Federal FOIA and acquisition disclosure mandates are a whole other beast.) 

In some states, it is standard practice to provide full solicitation responses and contract pricing and terms via public records. In these instances, proprietary information or sensitive supplier financial information is also held confidential either as standard practice or upon request. 

Having said that, there are some states and local jurisdictions that take the opposite approach. They will hold the entire offer as confidential. Those who want to see the bid or contract information must request it and explain the basis or need for the request. (Texas isn’t the only one. They are just the only state with the widely-enforced law to support this approach.) 

As far as trade secrets go, don’t assume that they are protected, even under federal laws. As explained in this Lexology Trading Secrets blog post:

“A government contractor learned the hard way that bid documents containing trade secrets are not protected from disclosure in Massachusetts. On September 21, 2018, a Massachusetts U.S. District Court judge ruled that the Defend Trade Secrets Act (DTSA) doesn’t bar requests under the public records law for bid proposals containing a contractor’s trade secrets.”

The takeaway? If you are bidding on government contracts and concerned that any sensitive information you share could become public knowledge, it is best to verify the agency’s typical disclosure practices and their intended disclosure actions for this particular solicitation and contract award. (Remember, disclosure rules will vary.) You may also consider seeking legal counsel prior to submitting a bid if it contains secrets you’re not comfortable sharing with the world.