Payne Enterprises, Inc. v. U.S., 87-5002

Citation837 F.2d 486
Decision Date19 January 1988
Docket NumberNo. 87-5002,87-5002
Parties, 56 USLW 2496, 34 Cont.Cas.Fed. (CCH) 75,423 PAYNE ENTERPRISES, INC., Appellant, v. UNITED STATES of America, et al.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeal from the United States District Court for the District of Columbia (D.C.Civil No. 86-1987).

Robert E. Lieblich, with whom William J. Spriggs and John Linarelli, Washington, D.C., were on the brief, for appellant.

Margaret A. Irving, Attorney-Advisor, Office of Information and Privacy, U.S. Dept. of Justice, with whom Joseph E. diGenova, U.S. Atty., and Royce C. Lamberth, R. Craig Lawrence and Michael J. Ryan, Asst. U.S. Attys., Washington, D.C., were on the brief, for appellees.

Before ROBINSON, EDWARDS and D.H. GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

Concurring statement filed by Circuit Judge D.H. GINSBURG.

HARRY T. EDWARDS, Circuit Judge:

This case raises issues of mootness, ripeness, and the appropriateness of equitable relief for the tardy release of bid abstracts by the Air Force in response to Freedom of Information Act ("FOIA") requests by Payne Enterprises, Inc. ("Payne"). Beginning in March 1985, officers at Air Force Logistics Command ("AFLC") bases refused to supply Payne with copies of bid abstracts when, in their judgment, competition for contracts was so limited that release of the abstracts might result in higher prices in the future. The base officers perfunctorily invoked FOIA Exemptions 4 and 5, 5 U.S.C. Sec. 552(b)(4), (5) (1982), in justifying their denials. Payne appealed these denials to the Secretary of the Air Force, who without exception ordered disclosure because neither FOIA exemption applied to the material Payne had requested. Nevertheless, AFLC officers continued to refuse Payne's FOIA requests for bid abstracts, thereby necessitating further--and invariably successful--administrative appeals. The delay occasioned by these appeals injured Payne's business by frustrating its clients' desire for the prompt delivery of information on contract bids.

In July 1986, Payne filed suit in the District Court, under 28 U.S.C. Sec. 1331 (federal question jurisdiction), 28 U.S.C. Sec. 1361 (mandamus), 28 U.S.C. Sec. 1651 (All Writs Act) and 5 U.S.C. Sec. 552 (FOIA), challenging the Air Force's practice of unjustified delay and seeking declaratory and injunctive relief to compel the defendants to release abstracts of negotiated acquisitions. 1 Payne's suit was dismissed, however, on the ground that it had received all of the material it had requested through the administrative appeals procedure specified by the FOIA. The District Court concluded that the Secretary of the Air Force's failure to compel AFLC bases to comply with the FOIA in ruling on Payne's initial requests did not warrant judicial intervention. After Payne filed a notice of appeal with this court, the officers at AFLC bases finally began to grant Payne's requests for bid abstracts even where there existed limited competition for contracts. None of Payne's requests have been denied since January 1987. In addition, the Air Force has conceded that Exemptions 4 and 5 do not apply to the material Payne desires, and an Air Force officer has promised release of the abstracts by AFLC bases in the future.

We hold that the claimed voluntary cessation of the Air Force practice of refusing to release bid abstracts (absent an appeal to the Secretary of the Air Force) does not render moot Payne's challenge to the Air Force's practice of unjustified delay. We also hold that Payne's challenge is ripe for adjudication. Because the Air Force has admitted that the information initially denied Payne does not fall within FOIA Exemptions 4 and 5, and because the repeated delays Payne suffered in securing that information pursuant to an Air Force practice constitute clear violations of the FOIA, we reverse the District Court's dismissal and remand with instructions to afford Payne declaratory relief and to consider the propriety of injunctive relief.

I. BACKGROUND

Payne sells information and advice about Government contracts to prospective contractors. Payne obtains much of that information through FOIA requests. From 1970 through March 1985, Payne regularly requested from AFLC bases, and routinely received, copies of bid abstracts listing the offerors' names and aggregate offer prices for negotiated contracts once those contracts had been awarded. Starting in March 1985, officers at several AFLC bases refused to supply Payne with copies of bid abstracts prepared in connection with contracts for which there was limited competition. 2 These refusals were apparently prompted by an AFLC policy letter that reads in part:

When the release of the negotiated contract abstracts will reveal to the successful offeror that there is (a) no other offeror, or (b) only one other offeror with a large price disparity between the two offerors, we believe that the successful offeror, knowing the extent of the limited competition, would naturally be compelled to, and most likely would, increase the prices in future acquisition [sic] for the same item, thereby prejudicing the Government's interest.

Letter from Steven Thompson to Major General Charles McDonald (June 20, 1986), reprinted in Appendix ("App.") 21 (quoting AFLC policy letter). In denying Payne's requests for bid abstracts when the foregoing conditions were met, the AFLC officers relied on FOIA Exemptions 4 and 5 3 as legal rationales, although they never stated precisely why they thought these exemptions were applicable. 4

Payne appealed the denials to the Secretary of the Air Force. Without exception, the Secretary's Office released the bid abstracts Payne had requested. It appears that the Secretary concluded that release of the information would not necessarily result in higher prices for the Government, because unsuccessful bidders would have an incentive to lower their bids when competing for later contracts and because the Air Force could refuse to grant large price increases in negotiated contracts that could not be justified by corresponding increases in contractors' costs. 5 Whether for this reason alone or for other reasons as well, the Secretary determined that Exemptions 4 and 5 did not apply to the information Payne was seeking. Indeed, the Secretary's Office expressed some irritation over the "excessive" number of FOIA appeals attributable to the stubborn refusal of AFLC officers to release bid abstracts. 6 Advice to the officers from the Secretary's staff made it clear that the officers' position was wholly unjustified:

The most recent denials within AFLC contain broad general conclusions that release would be harmful to the deliberative process within the Air Force and would be inimical to the competitive interests of the Government. However, in considering each appeal, we have found it quite difficult to envision how the release of the requested NCAs [negotiated contract abstracts], or other NCAs in similar circumstances, would be demonstrably adverse to the interests of either the Government or the submitter(s). We have also been unable to devise any theory under which an NCA could be found to be a deliberative document....

....

In view of the above, I ask that you revise your guidance to bring it in line with our actions on the recent cases. Considerable time and effort spent on NCA appeals by both your people and those of us here in the Pentagon could be eliminated by your releasing this information. 7

The AFLC officers, however, did not mend their ways immediately. They continued to withhold the bid abstracts Payne requested when they deemed competition for a contract sufficiently limited, forcing Payne to make repeated appeals to the Secretary to obtain the information to which Payne was entitled. Such appeals were frustrating, costly, and detrimental to Payne's business, because its clients, most of whom themselves tendered bids on Government contracts, understandably wanted a prompt report on the latest round of bidding so that they might advance profitable yet successful offers.

On July 18, 1986, Payne brought suit for declaratory and injunctive relief in the District Court. On November 17, 1986, the District Court granted the Government's motion to dismiss. See Payne Enterprises, Inc. v. United States, Civ. No. 86-1987 (D.D.C. Nov. 17, 1986), reprinted in App. 26-30. Although the District Court found that it was empowered to provide equitable relief, it considered itself bound to deny such relief because Payne had obtained the information it had requested through the Air Force's administrative appeals procedure. The District Court noted that "[i]t is possible ... that circumstances might exist where the Secretary's failure to compel a subordinate's compliance with the letter and spirit of the FOIA, would constitute such an abuse that judicial intervention might be warranted." App. 30. But the court concluded, without explanation, that such circumstances were not present here.

On December 15, 1986, Payne filed a notice of appeal with this court. Shortly thereafter, AFLC bases began honoring Payne's requests for bid abstracts even when there had been limited competition for a particular contract. No requests have been denied since January 1987. In an affidavit submitted with the Government's brief, Deborah McLaughlin, an Air Force attorney, states that, as a result of a letter sent by Brigadier General Norman Thorpe to the AFLC bases on April 22, 1987, "all abstracts are being released at the request level by the A[F]LC from which they are requested." Affidavit of Deborah McLaughlin, Brief for Appellees, Addendum at 4. Major McLaughlin further promises that "the negotiated contract abstracts ... will not be denied in the future based solely on a limited competition situation...." Id. at 4-5.

On July 30, 1987, this court denied...

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