Protecting Confidential Information Submitted in Procurements to Colorado State Agencies

• Jurisdiction: Colorado,United States
• Citation: Vol. 34 No. 1 Pg. 67
• Pages: 67
• Publication year: 2005

34 Colo.Law. 67 Colorado Bar Journal 2005.

2005, January, Pg. 67. Protecting Confidential Information Submitted in Procurements to Colorado State Agencies

---

67

Vol. 34, No. 1, Pg. 67

The Colorado Lawyer
January 2005
Vol. 34, No. 1 [Page 67]

Specialty Law Columns
Business Law Newsletter
Protecting Confidential Information Submitted in Procurements to Colorado State Agencies
by Steven M. Masiello, Jennette C. Roberts

This column is sponsored by the CBA Business Law Section to apprise members of current information concerning substantive law. It focuses on business law topics for the Colorado practitioner, including, but not limited to, issues surrounding antitrust, bankruptcy, business entities commercial law, corporate counsel, financial institutions franchising, nonprofit entities, securities law, and small business entities

Column Editors:

David P. Steigerwald of Sparks Willson Borges Brandt & Johnson, P.C., Colorado Springs - (719) 475-0097, dpsteig@sparkswillson.com; Troy Keller, senior attorney at Qwest, (303) 992-6167, troy.keller@qwest.com

About The Authors:

This month's article was written by Steven M. Masiello, an attorney with McKenna Long & Aldridge LLP - (303) 634-4355, smasiello@mckennalong.com; and Jennette C. Roberts, an attorney with the same firm - (303) 634-4340, jroberts@mckennalong.com.

Businesses bidding on procurement contracts with Colorado state agencies ordinarily submit confidential information in their proposals. To prevent improper disclosure of confidential information during or after the procurement process, contractors must take prompt and decisive action.

Agencies of the state of Colorado ("State") procure millions of dollars in goods and services every year. Many of these State procurements involve high-value, complex, and sophisticated supplies and services. For example, these might include computer software or networking systems, homeland defense technologies, construction and environmental remediation services, and telecommunication systems.

In such procurements, the State solicits proposals from contractors in the commercial marketplace for the purpose of awarding a contract to the bidder that represents the best value to the State. To demonstrate their superiority over competitors, contractors that wish to successfully compete in a State procurement ordinarily are compelled to provide proposals containing sensitive information relating to their organization's cost structure and technical capabilities (hereafter, "confidential information"). Such confidential information often is subject to disclosure to the public.

This article provides an overview of confidentiality and disclosure requirements in State procurement procedures. As discussed in this article, to protect their confidential information, contractors in State procurements must thoroughly understand the pertinent Colorado law relevant to the disclosure of public records. Additionally, the article addresses action contractors may take when confronted with a preemptive "releasability" determination under the State's procedure finding that certain confidential information is subject to disclosure.

Colorado Procurement And Disclosure

After contractors submit proposals to the State, any confidential information submitted along with their proposals is subject to public disclosure under the Colorado Open Records Act ("CORA").1 Specifically, under CORA, all proposal information in the State's possession and control is subject to public disclosure, unless it meets certain limited criteria for exemption. (The primary exemption relevant to contractor proposal submissions is discussed in the next section.) Moreover, under Colorado procurement law and regulation, upon request, the State must disclose the contents of proposals of all of its bidders immediately after the contract is awarded in a State procurement, to the extent such disclosure is not prohibited.2

To administer its duties under Colorado law, the State has adopted a procurement procedure that preemptively determines, while the contract award decision is still pending, the contents of its contractors' proposals it deems subject to disclosure. As discussed later in this article, this "preemptive strike" procedure raises several legal and practical issues for contractors submitting proposals to the State that contain confidential information.

Preventing Disclosure of Confidential Information

Under CORA, contractors are entitled to protect confidential information submitted with their proposals to the extent that such information constitutes trade secrets or confidential commercial or financial information exempt from disclosure ("Confidentiality Exemption").3 Similar to the disclosure exemption provided under the federal Freedom of Information Act ("FOIA"),4 the Confidentiality Exemption provides that the public disclosure of trade secrets or confidential commercial or financial information is prohibited. The Confidentiality Exemption expressly provides, in pertinent part, that the State custodian must "deny the right of inspection of . . . [t]rade secrets, privileged information, and confidential commercial, financial, geological, or geophysical data furnished by or obtained from any person."5

Definition of Trade Secrets

The term "trade secrets" included in the language of the Confidentiality Exemption is defined under Colorado law. The Colorado Uniform Trade Secrets Act ("CUTSA"), which serves to protect trade secrets against unauthorized disclosure or misappropriation, defines "trade secrets," in pertinent part, as:

. . . the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a "trade secret" the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.6

Accordingly, the Colorado Court of Appeals has held that certain information contained in contractors' proposals may constitute protected trade secrets if it is: (1) valuable to such contractors; and (2) carefully safeguarded from unrestricted disclosure.7 Similarly, manuals that describe contractors' products or services may comprise protected trade secret information when the manual provides "a valuable advantage over other competitors."8 By virtue of the Confidentiality Exemption's protection of trade secrets, therefore, contractor proposals and other information submitted to the State in a procurement may be protected...