How Can I Protect My Information in an RFP from a FOIA Request? Between a Rock and a Hard Place

There is nothing worse than being stuck between “a rock and hard place.”  Yet, time and again, contractors who want to do business with the City of Chicago, the State of Illinois or any of the other more than 6,000 units of local government in Illinois, find themselves in the untenable position of both wanting to provide as much information as possible in response to a Request for Proposal (RFP) or Request for Information (RFI) to secure a government contract, yet withhold as much confidential information as possible to protect their trade secrets or business practices.

One of the most common questions 1818 gets regarding RFP’s is “What information in an RFP can be obtained through a Freedom of Information Act (FOIA) request, and how much can I keep confidential?”  In this article, we are going to answer that question, focusing on the tension between the need to protect confidential information contained in an RFP and the likelihood of public disclosure under FOIA. 

Hopefully, this article can give you a little insight into what you can do to protect your confidential information contained in an RFP that becomes the subject of a FOIA request.  Of course, if you have more questions about your own specific circumstances, we welcome you to contact us at 1818 Legal.  We are registered lobbyists who put our government experience to work for businesses and individuals in Illinois.  Call (312) 584-5444 today or fill out our online contact form. 

FOIA Basics, and the Trade Secret Exemption

As a threshold matter, it is helpful to understand the reason why there is an inherent tension between FOIA and the protection of trade secrets. 

The Freedom of Information Act (FOIA) is based on the principle that government should be transparent.  In an effort to make that transparency real, governments allow most any documents in their possession to be available to the public.  Indeed, the Illinois version of FOIA provides that

All records in the custody or possession of a public body are presumed to be open to inspection or copying.

5 ILCS 140/1.2 (emphasis added).

In other words, a government’s default posture is to allow all documents, such as information in submitted in response to and RFP to be publicly available. 

The government’s laudable goal of transparency to the public runs directly counter to a business’s interest in keeping its trade secret information away from the public eye, and most importantly, away from the prying eyes of competitors.  Indeed, a whole body of trade secret law has emerged over the centuries to allow businesses to remain competitive by securing ownership over their own ideas, formulas, and processes that give the business its competitive advantage.  Certainly, the way in which a construction company prices its bids is as valuable to that company as the recipe to Diet Coke is to the Coca-Cola company.

FOIA laws, accordingly, do make an exception for trade secrets.  The Illinois FOIA law exempts the following from disclosure:

Trade secrets and commercial or financial information obtained from a person or business where the trade secrets or commercial or financial information are furnished under a claim that they are proprietary, privileged or confidential, and that disclosure of the trade secrets or commercial or financial information would cause competitive harm to the person or business, and only insofar as the claim directly applies to the records requested.

                        Section 7(1)(g) of Illinois’ FOIA.

The test for whether something is exempt from disclosure, then, is that the document must contain:

1. A trade secret, commercial, or financial information,
2. That was obtained from a person or business where the trade secrets or commercial or financial information are furnished under a claim that they are either proprietary, privileged, or confidential; and
3. That disclosure of the trade secrets or commercial or financial information would cause competitive harm to the person or business.

As you can see, the second part of the test is the most important for businesses.  Simply put, businesses must be vigilant in making sure they make a claim that information in the RFP is “proprietary, privileged, and confidential” as frequently, and as early, as possible. 

Remember, when someone makes a FOIA request, a business is, to a large degree, at the mercy of the government agency receiving the FOIA request.  Thus, you want clearly state to that government agency that issued the RFP that you want the agency to protect certain sections of your RFP response.

The FOIA vs. RFP Issue in Real Time:  Patriot Homes, Inc. v. Forest River Housing, Inc.

The well-known case of Patriot Homes serves as a great example of the struggle a business can have in trying to protect information contained in an RFP response. In that case, Forest River Housing, with a desire to enter the modular home market, hired four management-level employees from a modular home company called Patriot Homes. 

Forest River then created a new modular home company called Sterling Homes to compete with Patriot Homes.  Significantly, when those four employees left Patriot Homes, they stole Patriot’s trade secrets for the benefit of the newly formed Sterling Homes.

The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.