June 12, 1996

In re: ElderServe, Inc./ Kentuckiana Regional Planning and Development Agency


This matter comes to the Attorney General on appeal from the partial denial of an open records request submitted by ElderServe, Inc., to the Kentuckiana Regional Planning and Development Agency (KIPDA). On February 26, 1996, Ms. Harriette Friedlander, ElderServe's executive director, requested copies “of the 1996-1999 contract proposals, including the unit price calculation worksheets, the provider staffing matrix and the documents included in the sealed bid packages . . .” for Title 111-B proposals, West Louisville Community Ministries and South Louisville Community Ministries, and for HomeCare Services proposals, Interim HomeCare - Cluster 2, Jefferson County, and Seven Counties Services - Cluster 2, Jefferson County.

On February 29, 1996, Jack L. Scriber, KIPDA's executive director, responded to Ms. Friedlander's request. Although Mr. Scriber furnished Ms. Friedlander with copies of the proposals, and a summary of all bid prices, which were announced at the bid opening, he denied her request for documents included in the sealed bid packages, explaining that these documents were being reviewed by KIPDA staff, and were therefore considered working papers. KIPDA subsequently denied ElderServe's oral request for the same documents. In a letter dated April 2, 1996, Mr. Scriber invoked KRS 61.878(1)(c)1., advising Ms. Friedlander:

The documents provided KIPDA in the sealed bid packages as an element of the above-named procurement are records required by this agency to be disclosed to it, which were confidentially disclosed and are generally recognized as confidential or proprietary which if open disclosed would permit an unfair commercial advantage to competitors of the organization that disclosed the record.

ElderServe challenges this denial.

In her letter of appeal, Ms. Friedlander argues that Mr. Scriber's response was legally deficient. She maintains that Mr. Scriber failed to comply with the procedural requirements for agency response set forth at KRS 61.880(1) by omitting citation to any exemption authorizing nondisclosure in his February 29 response, and by improperly citing KRS 61.878(1)(c),1. to support nondisclosure in his April 2 response. The latter response, she notes, was also untimely. With respect to KIPDA's invocation of KRS 61.878(1)(c)1., Ms. Friedlander argues that Mr. Scriber has not explained its application to the records withheld. “KIPDA,” she asserts, “has provided no support or explanation for its conclusory statement that disclosure of the records would provide an unfair commercial advantage to competitors of the entity that disclosed the records.” Moreover, she observes, KIPDA has offered no proof that the contents of the sealed bid packages are generally recognized as confidential or proprietary. For these reasons, she urges this office to issue a decision declaring that KIPDA's partial denial of her request constitutes a violation of the Open Records Act.

In a follow-up letter to the Attorney General, dated May 17, 1996, Mr. Scriber elaborated on KIPDA's position. He explained:

The material which has not been made available was marked “confidential proprietary information” by those who submitted it. That material was required by KIPDA to be disclosed to it as a basis of determining the adequacy of the bid.

ElderServe knows that unit price calculations and the staffing matrix are the essentials generally recognized confidential proprietary data [sic] of the business in which they and their competitors are engaged.

Citing earlier open records decision of this office, Mr. Scriber concluded that the disputed records are “confidential in nature, disclosed and marked confidential, proprietary in content, partaking of the value of a trade secret . . . [and] would, if disclosed, provided unfair business advantages.”

The issue in this appeal is whether KIPDA properly relied on KRS 61.878(1)(c)1. in partially denying ElderServe's open records request. For the reasons set forth below, we conclude that KIPDA did not meet its statutory burden of proof in denying ElderServe access to the disputed records under the cited exemption. Additionally, we find that KIPDA's responses were procedurally deficient.

KRS 61.878(1)(c)1. excludes from disclosure:

[R]ecords confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records[.]

Although this exemption has not generally been construed to exclude bid proposals, once those bids are open and a vendor selected, this office has recognized that bid proposals which contain secret commercial valuable plans and formulas may qualify for exclusion under KRS 61.878(1)(c)1.

For example, in OAG 83-256 we recognized that a proposal submitted in response to an RFP for an automated certification and issuance system for the food stamp program administered by CHR contained material in which the entity submitting the proposal had a proprietary interest within the meaning of KRS 61.878(1)(c), formerly codified as KRS 61.878(1)(b). At page 6 of that opinion, we noted:

The technical proposal describes in particular the various items of equipment which will be used in performing the services, discloses the personnel which will be relied upon and includes biographic information of individuals in the employ of the company, contains charts, maps, diagrams -- all of which has been especially designed and organized for the purpose of carrying out the objectives of the Department of Social Insurance in accordance with the RFP. . . .

It is our opinion that the RFP supplies sufficient information about the Food Stamp Program to satisfy the needs of the public in a general fashion. As we have already stated, the RFP is open to public inspection.

See also, OAG 83-302 (adopting the reasoning of OAG 83-256).

Similarly, in OAG 88-1 we held that a bid proposal submitted in response to an RFP issued by the Finance and Administration Cabinet, Division of Purchases, contained secret commercially valuable plans and formulas which if openly disclosed would permit an unfair advantage to competitors of the entity submitting the proposal, including consolidated financial statements, project narratives, summary experience charts, work plans, and pricing schedules.

In 92-ORD-1134, we identified the distinguishing feature which led to the results in these decisions:

Unlike the typical advertisement for bids in which the agency states firm specifications to be met by the contractor, in an RFP the agency states its objectives and requests that the bidders propose a plan, which includes the method and equipment to be used, and that the bidders demonstrate that they have the personnel and capability to accomplish the objective. Although KRS 45A.080(4) makes all bidding documents open to public inspection, we have expressed the view that the legislature did not contemplate RFP bids in enacting this statute, only bids on advertised specification. OAG 83-256, at p. 4. Thus, as a rule of general application, the RFP stating the objectives to be accomplished and the resulting contract, including end bid prices as distinguished from “costing and pricing strategy,” OAG 89-44, at p. 3, are public records which must be made available for inspection, but the underlying proposal may be exempt if it falls within the parameters of KRS 61.878(1)(c)1.

92-ORD-1134, p. 5-6. In the latter decision, we held that the City of Paducah properly relied on KRS 61.878(1)(c)1. in withholding a proposal for an 800 MHZ Trunked Radio Communication System which contained specific detail relative to items of equipment to be used in implementing the system, as well as site selection, charts, maps, and diagrams designed by the entity submitting the proposal for the purpose of carrying out the city's objectives. The city amply demonstrated that the system might serve as a prototype for similar systems elsewhere, and that the entity submitting the proposal therefore had a proprietary interest in that proposal such that disclosure would provide its competitors with an unfair commercial advantage.

Conversely, and as noted, this office has traditionally taken the view that once open, bids and proposals on advertised specifications are subject to public inspection. See, e.g., OAG 80-327; OAG 84-284; OAG 89-31; 93-ORD-5. Thus, in OAG 85-119, we observed:

This Office has on several occasions through the years dealt with bidding and the bidding process relative to the Open Records Act. We said, for example, in OAG 84-284, copy enclosed, that the bid invitation, correspondence pertaining to the bids and the bids themselves are public records subject to the Open Records Act. The bids themselves and records which identify the bid or bidder individually would not be open to public inspection, however, until the bids were publicly opened. See also KRS 45A.080(4) relative to the public inspection of bids received under the competitive sealed bidding process.

OAG 85-119, p. 2.

Resolution of this appeal turns on whether the disputed bid documents can be analogized to the bids at issue in OAG 83-256, OAG 83-302, OAG 88-1, 92-ORD-1134, or are more closely akin to bids on advertised specifications. As always, the burden of proof rests with the public agency which invoked KRS 61.878(1)(c)1. to authorize nondisclosure of those documents. It is the opinion of this office that KIPDA did not meet its burden of proof relative to invocation of KRS 61.878(1)(c)1., and that the bids having been opened, and vendors selected, it must release the documents included in the sealed bid packages in their entirety.

In order to qualify for exemption under KRS 61.878(1)(c)1., public records must be: 1) confidentially disclosed to an agency or required by an agency to be disclosed to it; 2) generally recognized as confidential or proprietary; and 3) of such a character that disclosure would permit an unfair commercial advantage to competitors of the entity that disclosed them. In two recent opinions, the Kentucky Supreme Court analyzed this provision in considerable depth, concluding that the public agencies which had invoked the exemption had met their burden of proof. In Marina Management Services, Inc. v. Cabinet for Tourism, Ky., 906 S.W.2d 318 (1995), the court held that records containing financial information of privately owned marina operators were exempt from disclosure. The court reasoned that disclosure would provide an unfair advantage to competitors by allowing them to ascertain the economic status of the marina operators. At page 319 of that opinion, the court observed:

The records submitted to the Parks Department include information on asset values, notes payable, rental amounts on houseboats, related party transactions, profit margins, net earnings, and capital income. These are records of privately owned marina operators, disclosure of which would unfairly advantage competing operators. The most obvious disadvantage may be the ability to ascertain the economic status of the entities without the hurdles systematically associated with acquisition of such information about privately owned organizations. Further, the facts on the record indicate that the audit statements were disclosed confidentially to Tourism and the Auditors Office. On these facts alone, the exemption clearly applies.

Thus, the Parks Department adduced sufficient proof to support invocation of the exemption.

Similarly, in Hoy v. Kentucky Industrial Revitalization Authority, Ky., 906 S.W.2d 766 (1995), the court found:

The financial information required to be submitted by GE in its application to KIRA detailed the company's business and revitalization project. Under administrative regulations adopted by KIRA, such information included a financial history of the corporation, projected cost of the project, the specific amount and timing of capital investment, copies of financial statements and a detailed description of the company's productivity, efficiency and financial stability. . . . It does not take a degree in finance to recognize that such information concerning the inner workings of a corporation is “generally recognized as confidential or proprietary” and falls within the wording of KRS 61.878(1)(c)(2).

Again, the public agency from which access to confidentially disclosed records of a private corporation was sought established that those records were generally recognized as confidential or proprietary. [1]

These cases, along with the cited open records decisions, confirm that the burden of proving that the records withheld qualify for exclusion under KRS 61.878(1)(c) rests with the public agency. In the instant appeal, KIPDA has done little more than recite the language of the exception, without explaining how it applies to the disputed records. KIPDA asserts that “ElderServe knows that unit price calculations and the staffing matrix are the essentials generally recognized confidential proprietary data of the business [sic]. . . .” This may or may not be true. This office simply does not have an adequate explanation for such an assertion. Without going into an exhaustive and highly technical explanation, and thus defeating the purpose for which the exception was invoked, we believe that KIPDA could have offered a brief description of the competitive harm the private entities might suffer as a result of disclosure, and some proof, beyond a bare assertion, that the disputed records are generally recognized as confidential or proprietary. If, for example, KIPDA had made the case that the “staffing matrix” developed by a bidder was of such a unique and original character that a competitor might misappropriate it for its own use, thus depriving the bidder of its proprietary interest in the “staffing matrix,” it would, at least arguably, meet its burden of proof. With respect to unit price calculations, KIPDA was similarly obligated to offer proof of confidentiality and potential competitive injury. As we have so often stated, a bare allegation, without a supporting explanation, is not sufficient under the Open Records Act. See e.g., 95-ORD-107. Accordingly, we find that KIPDA improperly withheld unit price calculation worksheets, provider staffing matrix, and other documents included in the sealed bid packages for the social services projects identified in ElderServe's request.

Turning to the procedural issues in this open records appeal, we direct KIPDA's attention to KRS 61.880(1). That statute provides:

Each public agency, upon any request for records made under KRS 61.870 to 61.884, shall determine within three (3) days, excepting Saturdays, Sundays, and legal holidays, after the receipt of any such request whether to comply with the request and shall notify in writing the person making the request, within the three (3) day period, of its decision. An agency response denying, in whole or in part, inspection of any record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld. The response shall be issued by the official custodian or under his authority, and it shall constitute final agency action.

To the extent that KIPDA failed to cite a specific exception authorizing nondisclosure in its original response, and failed to briefly explain how the exception cited applies to the records withheld in its second response, it violated the procedural requirements of the Open Records Act. We urge KIPDA to review KRS 61.880(1) to insure that future responses conform to the Act. If the requested records are in active use, in storage, or not otherwise immediately available, KIPDA should refer to KRS 61.872(5) to determine its obligations under the Act.

A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.






Distributed to:

Jack L. Scriber

Executive Director

Kentuckiana Regional Planning and

Development Agency

11520 Commonwealth Drive

Louisville KY 40299

Harriette Friedlander

Executive Director

ElderServe, Inc.

411 East Muhammad Ali Boulevard

Louisville KY 40202


[1] In Hoy, the court interpreted KRS 61.878(1)(c)2. That exemption does not require a showing that the entity disclosing confidential records to an agency will be commercially disadvantaged by further disclosure. Like the other exceptions to public inspection, however, the burden of proof relative to its invocation rests with the agency. The agency must prove that the records were confidentially disclosed, and are generally recognized as confidential or proprietary.