Sikorsky Complains Over DOD Document Release In FOIA Suit

By Daniel Wilson

Law360, Nashville (November 14, 2017, 7:15 PM EST) — Sikorsky Aircraft Corp. told a California federal court Monday that the U.S. Department of Defense was mistaken to release previously redacted information from a company subcontracting plan under the Freedom of Information Act, saying a FOIA exemption should have applied but that it would not sue to stop the release.
Despite the company’s objections, the DOD on Nov. 10 released to the American Small Business League a new copy of Sikorsky’s 2013 comprehensive subcontracting plan as part of the FOIA suit filed by ASBL, with “significantly fewer” redactions than a previously released version of the plan, the company said in a notice to the court.

While it has decided against filing a so-called reverse FOIA action to block release of the information, Sikorsky said it believes that the newly released information should have remained exempt from disclosure under FOIA Exemption 4, which covers trade secrets, arguing the government had gone against the Ninth Circuit’s interpretation of that exemption.

That new information includes, for example, the names of small business contractors the company uses to comply with a government small business subcontracting test program, details of confidential projects that make use of those subcontractors, and what Sikorsky does to set and meet its small business subcontracting goals, Sikorsky claimed.

“The disclosure of such information is likely to give Sikorsky’s competitors a significant competitive advantage over Sikorsky,” it said.

For example, competitors could use it to identify and poach Sikorsky’s proven base of small business suppliers and glean information from what the company chooses to make against what it chooses to buy, according to the company.

Any justifications for the release of the new information based on publicly available information are also incorrect, as although some subcontractors have been publicly revealed as Sikorsky suppliers, their specific roles in meeting its subcontracting goals and the company’s methods for recruiting them had not been, Sikorsky argued.

ASBL President Lloyd Chapman told Law360 on Tuesday that he continues to believe the requested documents should be released to ASBL completely unredacted and that he will push for a trial if need be, arguing data on Sikorsky’s suppliers is available from government databases and other public sources — including Sikorsky’s own press releases — and is not a trade secret. He also claimed that the company may be acting disingenuously in redacting certain purported personal information from the plan documents.

Noting he had yet to fully analyze the newly unredacted information released to ASBL, Chapman said that an initial review of that information “seemed to indicate” that some of the firms Sikorsky has claimed are small business suppliers may in fact be larger businesses, which he argued may be indicative of a larger issue.

“If the Pentagon allowed Sikorsky to report rewards to large multi-nationals as small business awards and there was no oversight on that … It would be my assumption that the Pentagon is allowing all of the major contractors who participate in this program to do the same thing,” he said.

The DOD does not typically comment on pending litigation.

ASBL filed its suit in 2014 after a related FOIA request was effectively rejected by the DOD. It has claimed the Sikorsky subcontracting plan will reveal whether small businesses are receiving DOD subcontracts from large defense contractors, as required by law, or not.

Specifically, the group believes that the DOD’s Comprehensive Subcontract Plan Test Program, created in 1989 as a test program for DOD prime contractors to use general, companywide subcontracting plans instead of the more specific per-contract plans required by other agencies, has been used to “cheat small business out of hundreds of billions in subcontracts.” Sikorsky, now owned by Lockheed Martin Corp., is a major manufacturer of military helicopters.

A district court in November 2014 ordered the DOD and Sikorsky to cough up the company’s subcontracting plan, unredacted, before the Ninth Circuit in January reversed that decision, saying FOIA exemptions 4 and 6, which covers personal privacy, applied to certain redacted information in the plan.

Once back before the district court, the DOD on Oct. 12 said it intended to release some previously redacted information to ASBL, a move the group has claimed stems from discovery in the suit running counter to Sikorsky’s claims about needing to protect its trade secrets.

A further hearing in the case is set for Wednesday.

ASBL is represented by Robert E. Belshaw of Belshaw Law, and Jonathan W. Cuneo, Charles Tiefer and Matthew E. Miller of Cuneo Gilbert & LaDuca LLP.

The DOD is represented by Brian J. Stretch, Sara Winslow, Ellen London and Kimberley Friday of the U.S. Attorney’s Office for the Northern District of California.

Sikorsky is represented by Rex. S. Heinke and Jessica W. Weisel of Akin Gump Strauss Hauer & Feld LLP.

The case is American Small Business League v. U.S. Department of Defense, case number 3:14-cv-02166, in the U.S. District Court for the Northern District of California.

Small Business Activist Wins Interim Victory Against Pentagon, Sikorsky

By Charles S. Clark, Government Executive, 11/16/2017

For four years, the small but vocal American Small Business League has argued that large federal contractors mislead agencies and the public by overstating their use of small businesses as subcontractors to meet statutory goals.

In U.S. District Court in San Francisco last Friday, attorneys for the advocacy group led by Lloyd Chapman and based in Petaluma, Calif., successfully pried out the previously non-public names of suppliers and other subcontractors used by Sikorsky Aircraft Corp.

The helicopter maker had joined with the Defense and Justice departments in seeking to withhold such information as proprietary when submitted to the Pentagon under its 27-year-old Comprehensive Subcontracting Plan Test Program, designed to measure corporate potential for increasing small business opportunities in subcontracting.

Small business booster Chapman has long challenged the Pentagon’s program as nonproductive and oriented mostly toward obfuscating the degree to which large contractors win defense business intended for smaller ones.

After Chapman filed a FOIA request for the names of Sikorsky’s subcontractors, the company and the government resisted, winning a round in court last January. They argued that the FOIA request infringed on rights to withhold proprietary information. “Disclosure would provide competitors with information that they could use to improve their own systems and capabilities to Sikorsky’s detriment,” it said in a brief to protect its 2012 submission to the Pentagon.

The withheld information comprised “personal identifying information of Sikorsky employees, including their names, phone numbers and email addresses, which was not disclosed to protect the individuals’ privacy; information regarding Sikorsky’s training program, which is proprietary because Sikorsky’s approach to training distinguishes it from its competitors and likely is a relevant factor in evaluating the strength of Sikorsky’s bid proposals . . . [and] the dollar amounts of actual subcontracts awarded within the fiscal year, which is proprietary because it reveals Sikorsky’s purchasing strategies and methodologies and subcontracting forecasts.”

After several rounds of negotiations with District Judge William Alsup, Justice lawyers released versions of the document, each with fewer redactions than the last, before releasing the most revealing version yet on Nov. 10.

After examining the documents, Chapman told Government Executive this week he found them “indecipherable,” though just getting the new document made him feel he’d “struck gold. There are some interesting anomalies. For some companies we find no information, some have only one employee, and some are currently subsidies of Fortune 500 companies,” he said. “It’s a very peculiar list.”

In response, his lawyers will be requesting the names of all of Sikorsky’s suppliers and contractors. And in the near future,” Chapman added, he will be requesting the names of all the suppliers and subcontractors in Pentagon programs. “The significance is that contractors that participate in the Comprehensive Subcontracting Plan Test Program cannot withhold the names of subcontractors. It shows the Pentagon was right when it said that small business contracts have plummeted as result of the program.”

A Sikorsky spokesman, Paul Jackson, told Government Executive, “We continue to maintain that the Sikorsky Small Business Plan contains proprietary and confidential information, and we will continue to oppose any further release of the information in question.”

A Defense spokesman said he could not comment on pending litigation.

A Justice spokesman told Government Executive that the negotiated release of a less-redacted version of the document “does not resolve this matter as to those portions not released, nor will it answer the many unanswered questions as to what sort of investigation was conducted in the first instance by the defendants, and why this litigation was necessary.” He declined to comment on whether the content of the documents constitutes evidence in the dispute over whether large corporations misrepresent their use of small business subcontractors.

Chapman’s team, however, remains optimistic about continuing the case with a jury trial. “Some of the information we seek had actually been posted on government websites and issued in press releases by Sikorsky,” said one of Chapman’s attorneys, Jonathan Cuneo, a partner of the Washington, D.C.-based Cuneo Gilbert & LaDuca LLP. “The defendants hid behind a spurious trade secrets claim for four years. Ironically, this case involves information with no national security sensitivity about a single source, non-competitive Defense Department contract.”