Small Business Activist Wins Interim Victory Against Pentagon, Sikorsky

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."