April 25, 2024 Article

Maine Government Contracting and Procurement Update: Public Access Under FOAA to Trade Secrets in Proposals and Bid Documents

Those doing business with state, county, and local government in Maine need to know their way around public records laws. What is the risk that sensitive or proprietary business information submitted in response to a government request for proposal (RFP) may become public after the bids are opened and the contract has been awarded? What steps may be taken to maintain the confidentiality of business information and trade secrets? What legal recourse does a bidder have to protect trade secrets contained within a bid? Maine court decisions provide answers and serve as cautionary tales.

What does Maine competitive bid law say about public access to the contents of proposals? Under Maine law, "Each bid, with the name of the bidder, must be entered on a record. Each record, with the successful bid indicated, must be open to public inspection after the letting of the contract."[1] The regulations also provide that once the contracting agency has issued a notification of award, all proposals become public record. "All proposals shall be sequestered…until notification of award by the contracting agency after which time they become public record."[2] Public access to information in proposals after an award has been made serves the dual purposes of allowing a disappointed bidder sufficient information to challenge the award of a bid to a competitor as well as transparency and accountability in government contracting.

Are trade secrets in a proposal submitted to a state agency confidential? In general, trade secrets are not public records in Maine, and Maine Courts will protect trade secrets contained in bids from public disclosure.  See, e.g., The Lewin Group, Inc. v. Dept. of Health and Human Services, No. BCDAP1401, 2014 WL 1270193, at *1 (Me.B.C.D. Mar. 13, 2014).A trade secret is: (1) information; (2) that derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (3) that is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

What do requests for proposals say about public access? In Maine, requests for proposals typically contain language making clear that following the announcement of an award decision all information in a proposal may be considered a public record. In The Lewin Group, the Court quoted the following RFP language:

"Following announcement of an award decision, all submissions in response to this RFP will be considered public records available for public inspection pursuant to the State of Maine Freedom of Access Act[ ]. In the event a request is made to produce any proposal, the Department will notify the bidder that the Department will produce the proposal unless the bidder takes steps it deems necessary to prohibit production. The Department will not undertake to determine whether any proposal or part of any proposal is confidential or otherwise protected from disclosure."

In some instances bidders have submitted questions to the agency during the bid access about trade secrets or public access to the contents of their bids. Agencies have provided additional guidance, including their procedure for responding to requests for records or how they intend to address bidder claims that certain bid information qualifies as a trade secret.

Is failure to designate records submitted to an agency a waiver of the right to object to public disclosure? Sometimes, the answer is yes. In Blue Sky West, the Law Court determined that the failure to clearly label records as proprietary and confidential forfeited the protection available under 36 M.R.S. § 706 (exempting from public access information collected by a property tax assessor and clearly labeled as proprietary). By contrast, more general trade secret protection is “not predicated on a clear confidentiality label[.]” Id.  Per The Lewin Group: "[W]hile it would have been prudent for Lewin to indicate in some manner all the documents it contended were proprietary, the designation is not absolutely necessary." The Court concluded that "[d]esignating some documents, but not all documents, is not a waiver" of the bidder's right to assert trade secret protection for those documents not previously labeled as confidential.

What is the procedure for review in a reverse-FOIA action in Maine? In Blue Sky West, LLC v. Maine Revenue Services, 2019 ME 137, 215 A.3d 812, the Law Court acknowledged that the FOAA provides a process for judicial review of a denial of a FOAA request, but provides no explicit procedure for judicial review of a decision to grant one. A lawsuit seeking to prevent access to public records is sometimes referred to as a reverse-FOAA appeal.

The denial of a request for public records—for example, a request for a competitor’s bid— is subject to challenge by a statutory action in Superior Court pursuant to 1 M.R.S. § 409.  But what is the standard and procedure for review of an action to prevent an agency from disclosing a record?

The Law Court answered that question in Blue Sky West. Judicial review of a state agency's decision to grant a FOAA request—for example, an agency’s determination that a competitor’s bid should be made public regardless of trade secret claims to confidentiality—is governed not by the FOAA but rather by 5 M.R.S. § 11001(1) and M.R. Civ. P. 80C. Id. ¶ 19; see also Thurlow v. City of South Portland, No. CV-21-0216, 2022 WL 17403421, at *3 (Me.Super. June 24, 2022). Put simply, an agency’s decision to permit inspection and copying of bid documents must be challenged by a Superior Court appeal in accordance with the Maine Administrative Procedure Act and court rules governing appeal of government action. This sets up a potential for asymmetric review—differing review standards—depending on whether a party is challenging denial of access to records or whether a party is instead challenging an agency decision to grant access to public records.  

Deadlines apply; an appeal may be required by a state agency on an expedited basis if the agency has set a deadline by which it intends to release records. Otherwise, the appeal deadline is generally 30 days after notice pursuant to 5 M.R.S. § 11002(3), but exceptions apply.

The take-away is that a business concerned about confidentiality should make its best case to the agency in support of its trade secret claim. The claim should be asserted surgically such that only information that qualifies as a bona fide trade secret is claimed as such. Once an agency agrees that records are trade secrets, the burden of stopping the agency from publicly releasing them falls on the person claiming trade secret protection.  And that means a lawsuit in Superior Court.

For further information, please contact Sigmund D. Schutz at Preti Flaherty's Portland, Maine office at 207-791-3000.

[1]5 M.R.S. § 1825-B(6).
[2] 18-554 C.M.R. Ch. 110 § 2(A)(v).