Pentagon May Be Forced to Release Aircraft Manufacturer's Contract Data

A little-known unit at the Defense Department may have to release data considered proprietary by a major contractor under a Nov. 23 district court ruling favoring a small business advocacy group.

The Petaluma, Calif.-based American Small Business League on Wednesday announced its legal victory.  A northern California district judge agreed that the Pentagon should honor the league’s request under the Freedom of Information Act for data Sikorsky submitted to the Comprehensive Subcontracting Plan Test Program.

That program since 1990 has authorized negotiation, administration and reporting of subcontracting plans on a plant, division or company-wide basis to “determine whether comprehensive subcontracting plans will result in increased subcontracting opportunities for small business while reducing the administrative burden on contractors,” according to the Pentagon website.

The league has long challenged the program as a nonproductive, secretive way of steering toward large corporations defense subcontracts for which small businesses are most eligible. "Think of the lunacy of removing all transparency and penalties for small business subcontracting programs for the Pentagon's largest prime contractors and test it for 25 years to see if it increases subcontracting opportunities for small businesses,” League President Lloyd Chapman said. “It's an unparalleled example of fraud and corruption at the Pentagon. We expect Judge [William] Alsup's ruling to lead to the eventual release of data on all firms participating in the [program] that will prove the Pentagon has cheated American small businesses out of well over a trillion dollars in subcontracts."

A Pentagon spokeswoman declined comment to Government Executive, citing pending litigation.

The Defense Department responded initially to the 2013 suit seeking the data by asking for more time, citing “unusual circumstances which impact our ability to quickly process your request.” Those included “the need to search for and collect records from several offices geographically separated from this office and… the need to consult with one or more agencies or DoD computers having a substantial interest in either the determination or the subject matter of these records,” it said, according to the ruling. After giving the judge the data in both redacted and unredacted forms, the department then asked for a summary decision rejecting release as harmful to Sikorsky’s competitiveness.

A director of supply management for Sikorsky, a manufacturer of helicopters and other aircraft, had argued that releasing the data unredacted would provide “a potential competitor with information that will allow a competitor to better understand how Sikorsky has done business in the past, how it structures its proposals, and how it was able to win certain government contracts.” The unredacted data would also unveil such proprietary information as names and contact information for company officials, contract dollar amounts, the company’s small business goals and methodology for allocating spending, she said.

The judge rejected those arguments, saying the company had failed to document how disclosure is “likely to cause substantial competitive injury.” He ordered compliance by Dec. 3, pending appeal.

A Sikorsky spokesman on Monday told Government Executive the company is assessing its legal options. “Disclosure of this information could provide competitors with insights into our specific business strategies and internal initiatives created to implement those strategies successfully,” spokesman Paul Jackson said. “Protection of this information is important to continuation of developing and utilizing the capabilities of our small suppliers.” He added that “Sikorsky has a long history of supporting small businesses, which comprise a significant portion of our total supply chain under both U.S. government and commercial contracts.”

The league’s legal counsel, meanwhile, plans to use the November ruling as “the basis for efforts to ensure the subcontracting information that has been submitted by all of the participants of the Comprehensive Subcontracting Plan Test Program will be made publicly available.”