Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
This matter having been presented to the Office of the Attorney General in an open records appeal, and the Attorney General being sufficiently advised, we find that despite a demonstrable public interest in the Commonwealth's efforts to address the gap in the Medicaid budget through its managed care initiative, that interest must yield to "the need for governmental confidentiality" 1 in the procurement process aimed at "insur[ing] the integrity of, and promot[ing] public confidence in, that process, and reducing the likelihood of a successful protest. " 10-ORD-139, p. 4. We therefore affirm the Finance and Administration Cabinet's denial of R. M. Loghry's request for records identifying "all responders" to six Requests for Information issued by the Cabinet to better understand "how other states are dealing with increased rolls during the national recession." 2 Because no records responsive to Mr. Loghry's remaining requests for "timelines and procedures" existed at the time of his requests, we assign no error to the Cabinet for these denials.
In nearly identical responses to each of Mr. Loghry's March 20, 2011, requests, the Cabinet explained that the RFIs "were issued to gather information to aid in the drafting of Requests for Proposals to be issued at a later date," and that they were "currently being examined by Commonwealth staff. " It was the Cabinet's position that "all related documents are preliminary in nature and therefore exempt from disclosure under the Open Records Act pursuant to KRS 61.878(1)(i) and (j)."
Dissatisfied with these denials, Mr. Loghry initiated an open records appeal in which he challenged the Cabinet's assertion that a "listing" of responders was "in draft status at this time" or that it "require[d] staff analysis." He also challenged that Cabinet's assertion that no procedures or timelines existed, observing:
The procedure requested is generic in nature and simply provides the steps from start to finish to protect the integrity of the process in the event any challenge might ensue for whatever reason. Procurement organizations have such procedures.
Noting that he had not "asked for drafts, notes, correspondence, recommendations, memoranda, or anything contained in responses obtained by the Cabinet," he expressed disbelief that "a new procedure is developed and approved for each new procurement release." He expressed the same skepticism about the Cabinet's inability to produce a timeline and procedure for the RFP process, again noting that he did not "ask for drafts, notes, correspondence, recommendations, memoranda, or anything contained in responses obtained by the Cabinet."
In supplemental correspondence directed to this office, the Finance and Administration Cabinet provided the following background information:
The issuance of the subject RFIs on January 5, 2011 began the process for the Commonwealth to establish a contract for providing and managing the health care services for members enrolled in Medicaid. The RFIs sought to obtain information to assist FAC and Cabinet for Health and Family Services (CHFS) staff in drafting an RFP to seek proposals from qualified managed care organizations (MCOs) who could provide these services. The RFIs closed on February 7, 2011 and several responses from interested parties were received. After careful review and consideration of the information received, an RFP was drafted and subsequently issued on April 7, 2011. It is currently due to close May 25, 2011.
The Cabinet rebutted Mr. Loghry's claim that the responders' identities and contact information were not part of their responses to the RFI, explaining that the responses, "and all information contained therein, are documents obtained as part of a procurement process that is currently open."
Focusing on the need for confidentiality in the procurement process, the Cabinet advised that KRS 45A.085 and 200 KAR 5:307:
govern competitively negotiated procurements. Both mandate confidentiality in the bidding process until an award has been made. After bids are received, agencies may enter into written or oral discussions with responsible offerors, but these discussions shall not disclose any information from proposals submitted by competing offerors. KRS 45A.085(7). Furthermore, "proposals shall not be subject to public inspection until negotiations between the purchasing agency and all offerors have been concluded and a contract awarded . . ." 200 KAR 5:307, Section 4. An agency is only required to make records associated with the competitive negotiation process otherwise precluded from inspection available for public examination at the conclusion of the procurement process. 08-ORD-144.
While the list of respondents requested by Mr. Loghry is technically for those interested parties who responded to the RFIs and not the RFP, the two processes are intertwined into one procurement process designed to obtain a contract for managed health care services. The statute and regulation cited above acknowledge the need for such confidentiality. Therefore, any documents created or received in furtherance of that goal which do not evidence final agency action are preliminary, pursuant to KRS 61.878(1)(i) & (j). Preserving the integrity of the procurement process and maintaining the ability to effectively manage it is essential. Releasing the list of respondents to the RFIs could provide a competitive advantage to a potential respondent to the RFP. Having knowledge of other MCOs which have an interest in responding to the RFP currently open would enable an MCO to gauge its competition. The ability to gauge competition could give a potential respondent an advantage in pricing its proposal. Most importantly to the Commonwealth, this price could be inflated if the MCO believes that other interested vendors may not be able to meet the requirements of the RFP.
The Cabinet acknowledged that it issues few RFIs in advance of RFPs, but urged this office not to penalize the Commonwealth for pursuing this course of action by requiring disclosure of information that would "compromise its ability to conduct fair and competitive procurement" and "discourage vendors from responding to future RFIs." With reference to Mr. Loghry's requests for timelines and procedures, the Cabinet reiterated that there were, at the time of his requests, no responsive records. In closing, the Cabinet suggested that he review the timeline and procedure for the RFP issued after his original requests were denied at the Cabinet's eProcurement website. Having done so, the Cabinet fulfilled its statutory obligations.
In 10-ORD-139, the Attorney General determined that a city's reliance on KRS 61.878(1)(i) and (j) 3 to support nondisclosure of proposals submitted in response to an RFP was misplaced because it failed to strictly adhere to the requirements for competitive negotiations found at KRS 45A.370 and 20 KAR 5:307. The record presented to this office on appeal demonstrated that the city failed to maintain the confidentiality of the proposals after they were opened in a manner that was "more consistent with competitive sealed bidding than competitive negotiations. " 10-ORD-139, p. 3. At page 3 of that decision we observed:
It is widely recognized that in the world of procurement perception is critical. Strict compliance with the statutory and regulatory requirements governing the procurement process insures the integrity of, and promotes public confidence in, that process, reducing the likelihood of a successful protest. In the context of competitive negotiations, this translates into a series of measures aimed at protecting the contents of proposals from disclosure both before and after they have been opened. Because the proposals must be held in confidence until a contract is awarded, the proposals are closely guarded. Individuals charged with evaluating the proposals, and individuals from whom imput is sought, are required to execute confidentiality agreements prohibiting discussion of the content of the proposals. At the state level, additional security measures are established in Finance Administration Policy. 200 KAR 5:307 Section 4 thus provides:
We concluded that the city's "casual approach to competitive negotiations did not insure the confidentiality of the proposal or promote confidence in the integrity of the process," id. at page 4, and held that the city improperly relied on KRS 61.878(1)(i) and (j) in denying the open records request.
The facts presented in this appeal stand in stark contrast to the facts presented in 10-ORD-139. Here, extraordinary measures were taken to insure the confidentiality of documentation submitted in response to the RFI in a manner consistent with KRS 45A.370 and 200 KAR 5:307. That documentation cannot be segregated from the proposals later submitted in response to the RFP, but is, as the Cabinet asserts, "intertwined into one procurement process designed to obtain a contract for managed health care services." Disclosure of documentation identifying the responders raises the specter of collusion among responders and severely impairs the Commonwealth's negotiating position and leverage relative to the responders. To insure the integrity of the process, and avoid subsequent protests, the public's interest in the responders' identities must yield to the Commonwealth's "need for governmental confidentiality" 4 to insure that the contract ultimately awarded is most advantageous to the Commonwealth. 200 KAR 5:307 Section 4. Until such time as negotiations are concluded and a contract is awarded, the Finance and Administration Cabinet may properly rely on KRS 61.878(1)(i) and (j) to deny Mr. Loghry's requests and similar requests. 5
As for Mr. Loghry's remaining requests, the Cabinet denied the existence of responsive records at the time of those requests. We assess the propriety of the agency's denial on the date the denial was issued and not in light of subsequent events. 06-ORD-260. No records responsive to Mr. Loghry's request for timelines and procedures relative to the RFI and RFP existed on the date of his requests and the Cabinet's denials. In so advising Mr. Loghry, the Cabinet discharged its statutory duty.
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:
R. M. LoghryE. Jeffrey Mosley
Footnotes
Footnotes
1 Beckham v. Board of Education of Jefferson County, 873 S.W.2d 575, 578 (Ky. 1994). In Beckham, the Court recognized that from the statutory exclusions found in the Open Records Act, "we must conclude that with respect to certain records, the General Assembly has determined that the public's right to know is subservient to statutory rights of personal privacy and the need for governmental confidentiality. A cursory examination of KRS 61.878 reveals an extensive list of matters excluded from public access, and this also suggests an absence of legislative intent to create unrestricted access to records."
2 http://governingpeople.com/jefferysmith/18852/kentucky-reaches-out-help…
3 KRS 61.878(1)(i) and (j) authorize nondisclosure of:
(i) Preliminary drafts, notes, correspondence with private individuals other than correspondence which is intended to give notice of final action of a public agency.
(j) Preliminary recommendations, and preliminary memoranda in which opinions are expressed or policies formulated or recommended.
As the Cabinet correctly observes, these exemptions are generally construed to permit public agencies to withhold predecisional documentation until final action has been taken on the matter to which the documentation relates.
4 Beckham at 578.
5 In his appeal, Mr. Loghry intimates that the Cabinet could fulfill his request without compromising its negotiating posture by releasing a "listing" of the responders' names. The Cabinet has no obligation to create such a "listing" if one does not already exist, and could not do so, even if it wished to, in light of the strict code of confidentiality under which it operates pursuant to statute and regulation.