'Open buying power'

On the federal level, government spending on contracts has grown 89 percent since 2000, totaling more than $415 billion in the 2006 budget year. These companies are responsible for duties of obvious public interest, such as training Iraqi police, interrogating prisoners at Abu Ghraib and providing ambulance service to victims of Hurricane Katrina.

The information about contractors available without using the federal FOIA is limited, said Scott Amey, general counsel of the Project on Government Oversight, which has done extensive reporting on government contracting. In certain instances, Amey said, you can see the government’s solicitations or requests for proposals, and a summary of the contract is sometimes available.

That may sound like a lot, Amey said, but he noted many of the contracts are awarded without solicitations. Many of the summaries are “very bare bones.” And the public price tag usually does not include the individual pricing information or orders needed to accurately judge whether taxpayers are getting their money’s worth.

Take so-called indefinite delivery-indefinite quantity contracts. These contracts are set up so the government can retain a certain amount of flexibility. For instance, an agency that knows it will need to lease cars but not knowing how many might sign a contract for up to $1 million with a company to provide cars for the government to lease. But the specific orders and prices are often kept secret — making it impossible to judge the contract without knowing if the hypothetical $1 million paid for 100 cars or 100,000.

“It just gives the government open buying power, but what we haven’t seen is a lot of transparency on individual orders,” Amey said.

FOIA requests can be filed for that information, which Amey said is “now starting to trickle in.”

“But for the most part, it is very difficult to find out information about the individual task or delivery orders,” he said.

In the courts, contractors have also had success keeping much of the most basic record of a privatized relationship — the contract itself — largely off-limits to the public through the trade secrets exemption of FOIA.

Defense contractors have successfully sued under the exemption to prevent the release of pricing information.

For instance, McDonnell Douglas signed a contract with the Air Force in 1998 to maintain and repair aircraft. When the Air Force told the company it was going to release some of the pricing information in response to a competitor’s FOIA request, McDonnell Douglas sued.

The contract included a base year and eight option years. McDonnell Douglas protested that releasing the pricing information in its option-year contracts could hurt it if the contract was rebid because competitors could use the information to offer the Air Force a lower price. Though the Air Force maintained that it was unlikely the contracts would be rebid, in 2004, the majority of a three-judge panel from the federal appeals court in Washington, D.C., agreed with the company that the pricing information was a trade secret.

McDonnell Douglas also successfully petitioned to prohibit the release of prices for certain line items composed mostly of the materials and services of outside vendors. The court agreed with the company that releasing the information “would enable its competitors to derive the percentage...by which McDonnell Douglas marks up the bids it receives from subcontractors.”

The idea that a markup charged to the government — an overcharge paid in public funds — would be protected drew a skeptical response from the dissenting judge, U.S. Circuit Judge Merrick Garland.

“This counter-intuitive result should cause us to think hard about whether it makes sense to regard prices actually paid by the government as trade secrets,” Garland wrote.

However, Garland noted that since the government had not challenged whether prices charged to the government could be secret under FOIA’s trade secrets exemption and the Trade Secrets Act, the court did not decide that issue.

The argument that pricing that is actually in the contract can be considered a trade secret seems like “kind of a stretch” to Harry Hammitt, publisher of the freedom of information newsletter Access Reports.

“The question still really exists: If you have a contract that is public, is information within a contract proprietary?” Hammitt said. “That doesn’t really make a whole hell of a lot of sense to me, but the business community has done fairly well on this point.”

Hammitt said the Washington court’s rulings in this regard are particularly significant because much of the FOIA litigation takes place in the nation’s capital. Indeed, last year a federal trial judge in Washington, D.C., relied on the 2004 decision in saying the Air Force could not release pricing information for another contractor.