A&A: Water agency contractors’ calculations “trade secret”?

Q: A county water agency has hired a consultant for a major capital project and has released the feasibility study done by the consultant but has not responded for a request to review the consulting contract itself. This isn’t academic: the agency asserts that the consultants’ excel spread sheet originals containing the actual cell-by-cell math calculations are proprietary to the consultant and the water agency itself isn’t privy to the calculations.

Here’s the dilemma: first, this means that the agency head has stood before the county board of supervisors endorsing a study and associated utility rates to end users without having had anyone in his agency replicate the spread sheets and verify the numbers; second it means no rate payer is privy to the math so that interested rate payers may not confirm that that methods used are accurate; and just as usefully no rate payers or voters who will be on the hook for a billion in new bonds will be able to run sensitivity analysis to assess potential alternatives to the proposed program and expenditures. This seems especially inappropriate in times of public revenue shortfalls in California. Are there precedents to shed light on this unhappy practice by the water agency?

A: It seems that you should be able to file a formal Public Records Act request in order to demand a copy of the employment contract between the county water agency and the consultant. Pursuant to Government Code § 6254.8, the employment contracts of public employees are expressly a matter of public record. I can’t think of a reason of why this provision would not also apply to contractors hired by an agency.

However, as best I can tell, there is no way to force a vendor to release the proprietary formulas or methodology they used to reach the prices agreed upon in the contract. So, the contract is a public record, but only to the extent of what lies within the four corners of the document. The code does not guarantee the public access to the “scratch-work” or calculations used to finalize the contract.

Further, Gov’t Code § 6254(k) creates a specific exemption for the records that are protected by state or federal laws, including the evidence code. California Evidence Code § 1060 allows parties not to disclose trade secrets so long as it doesn’t “conceal fraud or otherwise work injustice.”

This may allow the contractor to refuse to disclose the methodology for how it reached its final numbers as long as they can demonstrate that doing so would not perpetrate injustice or conceal fraud. So, trade secrets are normally exempt from disclosure, but without more precise insight about what information they’re protecting, it’s not possible to run through the analysis courts have established to determine if their methodology/formulas actually garner “trade secret” protection under the law.

Whether their calculations are an actual trade secret or just proprietary information is unclear, but there are examples where even proprietary information can be withheld (e.g., the Tax Code prevents local tax agencies from releasing proprietary information they acquire about companies during audits or other collections).

One way you might be able to obtain the information you’re looking for is through the Brown Act. As you may know, the Brown Act is the law that regulates the conduct of the governing bodies of all local public agencies. The Brown Act is intended to provide public access to local government meetings and serves to facilitate participation in all phases of local government decision-making.

One of the requirements of the law is that the public be given access to copies of any “agenda, background materials, and any other writings related to matters for public discussion.” Gov’t Code § 54957.5.

So, if the water agency circulated any type of written information at a meeting of the County Board of Supervisors, you are entitled to a copy of that. You also may obtain records if the water agency presented information to the Board of Supervisors in a closed session.

The public has the right to hear oral reports of certain actions taken in closed session at an open session held afterwards. Gov’t Code § 54957.1(a).

Additionally, upon the submission of a written request, the public has the right to receive copies of any contracts, settlement agreements or other documents finally approved or adopted in the closed session. Gov’t Code § 54957.1(b).

Holme Roberts & Owen LLP is general counsel for the First Amendment Coalition and responds to FAC hotline inquiries. In responding to these inquiries, we can give general information regarding open government and speech issues but cannot provide specific legal advice or representation.

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