SAN FRANCISCO — The American Small Business League lost an appeal on Jan. 6 in the U.S. Court of Appeals for the 9th Circuit in San Francisco in an attempt to show evidence of reduced subcontracting opportunities for small businesses in Pentagon contracts.
In the Freedom of Information Act Request case, according to a news release, the ASBL sought to have Sikorsky Aviation Corporations disclose its subcontracting plan that it submitted to the Pentagon's 27-year-old Comprehensive Subcontracting Plan Test Program. ASBL was contesting the transparency of the Pentagon’s contract procurement and wanted to prove that the CSPTP program has cheated small businesses out of more than $5 trillion.
In November 2014, the ASBL a won its original FOIA case against the Pentagon in federal district court. Judge William Alsup determined Sikorsky’s CSPTP information had no trade secret or proprietary or confidential financial information, and ruled that Sikorsky had to provide evidence of compliance with federal contract law.
Alsup also accused the Pentagon of covering up the information, and later accused the Pentagon and Sikorsky of trying to suppress evidence.
The appellate court overruled Alsup in favor of Sikorsky, even though it never saw the documents on which Alsup based his verdict.
“The 9th Circuit Court of Appeals made a huge mistake,” ASBL President Lloyd Chapman told the Northern California Record. “Judge Alsup had Sikorsky’s documents and decided nothing constitutes a trade secret or is proprietary, and even accused the Pentagon of fraud. How can the 9th Circuit Court overrule the district court if it has never seen the documents? It’s lunacy.”
“It is a serious setback for small businesses of getting a piece of the federal contracting pie,” Charles Tiefer, professor of contracting government at the University of Baltimore School of Law, told the Northern California Record. “This opinion will make it harder for small businesses to challenge the federal monopoly of federal contracts. It will make it only too easy for big defense contractors like Sikorsky to dodge their responsibilities to subcontractors with worthy small businesses.”
Tiefer, who was commissioner in 2008-2011 of the Commission on Wartime Contracting, has written a legal opinion corroborating the ASBL's case, in which he calls the CSPTP "seriously harmful" to small businesses.
“It is obvious that big defense contractors like to keep profit to themselves and allow little for other small businesses,” Tiefer said. “Every contractor has to have a subcontracting plan and contract with small businesses. For understanding government contracting, ASBL wanted disclosure of Sikorsky. Sikorsky is supposed to subcontract to small businesses the parts and skilled labor. It is part of the supply chain.”
Chapman said the case removes all transparency from the last 27 years of the Pentagon’s harmful federal-contract activities.
“The taxpayers don’t know how $5 trillion of their tax dollars have been spent for the last 27 years,” he said.
The ASBL is planning to appeal the case, according to the news release.
“The CSPTP program says you don’t need a plan for each contract—you can have a national plan,” Tiefer said. “I don’t believe there are numerical quota requirements, so you’re just citing a national plan. There is no way to check a contract. The ASBL wanted to see these plans and show they are window dressing, providing a curtain to contractors to monopolize or pick and choose the subcontractor that will give them the most profit.”