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FOIA update puts pressure on contractors to protect trade secrets

The new update to the Freedom of Information Act signed into law earlier this month mandates a presumption of openness, and adds new appeal rights for citizens whose requests are denied.

That’s welcome news to reporters and other frequent FOIA requesters, but it means government contractors may have to work harder to protect critical trade secrets and proprietary information from the public eye.

Jon Burd, a partner at the law firm Wiley Rein, said there’s an inherent tension when it comes to FOIA and the role contractors play.

3-day work week for DC area feds due to inauguration.

“On one hand, you you’ve got FOIA’s public policy interest of promoting an open and a transparent government—the “for the people by the people” concept—the FOIA improvement act of 2016 really goes right to the heart of that, codifying this presumption of openness,” he said in an interview on the Federal Drive with Tom Temin. “But on the other hand, you’ve got government contractors, and the fact that when the government enters the market as a buyer, it’s got to respect this equally strong public policy behind respecting the corporate trade secrets and the proprietary information that the contractors provide the government in the capacity as the government participating in the marketplace.”

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FOIA requires the government to notify a contractor of a FOIA request.  Contractors then have a chance to look at the information being requested and try to protect what they feel necessary with exemptions that keep it from being released. Under the update, FIOA officers are now required  to determine whether invoking one exemption could protect some other harm.

“It certainly increases the burden on contractors to fight their own fight,” said Burd. “The contractors are going to have to carry more of the water—if you will—in helping to to explain and articulate what exemption does apply, why it applies and more importantly why there’s going to be a potentially significant competitive harm unless the government exempts specific information from release.”

The update creates an interesting situation in the Department of Justice, which forces them to advocate for disclosure while defending federal agencies from FOIA lawsuits at the same time.

Burd said he’s not sure yet how DOJ will put this requirement into place and implement it,  but it does signal the shift towards DOJ becoming an impartial third party for some future FOIA cases with exemptions under review, and may act as “an adult in the room” in cases where the department thinks an agency took a broad or aggressive position on an exemption.

According to Burd, there are steps contractors can take to make sure their trade secrets and proprietary information is protected from a FOIA request such as marking information they consider critical off the bat in written items like proposals or contract deliverables.

He said “That often times is the first marker to folks within the agency that they’ve got contractor information and they need to be careful in how they handle if and how they disclose that information.”

Some types of information are already protected under the original Freedom of Information Act, like bidder proposal information, but Burd said its important for contractors to leverage FOIA exemptions and other statutory restrictions that might apply to their information request, and “figure out what other statutory restrictions on disclosure and dissemination may apply in the front end before they even submit information to the government.”

Some members of the FOIA community are skeptical that any change will come of the update, since Congress hasn’t allocated any funds to implement it.

Burd said appropriations won’t be an issue at the first levels of determination since they’ve been in place for quite some time. But he does say funds might may come into play when DOJ has to implement its new layer of administrative review. All together, that depends on the overall volume of FOIA request appeals.

“If it turns out that this appeals process is going to overwhelm agencies, then it may take some time for the processes agencies are actually able to implement to catch up to the new procedures that the statutes mandates and that may take time and money, ” he said.

Until the update goes into effect, Burd said there’s know way to get a sense of what its scope and magnitude is going to be.