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How Much Freedom Is Too Much?

The Reagan Administration thinks that the Freedom of Information Act is harmful to business and national security. But some small companies say it helps them compete.
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Some years ago there was a company with a patented product that the government wanted to buy. So the company produced it and the government bought it and no one ever bothered to write specifications for the product. There was, after all, only one source.

Even when the patent expired, nothing changed -- not even when a potential competitor showed up.

"No, thanks," the government told the newcomer. "We'll just keep buying from our old friend. Their stuff works."

But the competitor insisted, and finally the government agreed to test his product to see if it matched what they were already buying. "Sorry," the government said after the test, "yours is not equivalent to what we've been buying."

But the competitor insisted again: "Let me see the test results on my own and on the old product."

"Sorry," said the government. "We don't give out test results."

So the competitor filed a request under the Freedom of Information Act, and the government had to hand over the test results.

The government had been right. The test showed that the competitor's product wasn't equivalent; it was better.

Since this is a true story and isn't over yet, we don't know the outcome. But the competitor may at least win the chance to bid against the entrenched supplier and the government may, despite its own reluctance, save the taxpayers some money and get a better product to boot.

If, however, the Freedom of Information Act had already been revised the way the Reagan Administration and some business lobbyists are trying to revise it, the story would have ended with the government's "No, thanks." The test results would not have been released, and the former patent holder would have kept its cozy monopoly. So much for efficiency in government and marketplace competition.

Then there's Radionics Inc. in Webster, N.Y. Much of its sales come from manufacturing and selling to the government spare parts for communications equipment originally manufactured by other companies. When the original manufacturer is also the sole source of spare parts, says Radionics president Alfred Ozminkowski, "they get a little greedy and they mark prices up sky-high." That means that Radionics can often come in with a lower price and get the spare parts contract -- if it can get the design data it needs to prepare its bid.

The design data Radionics needs belongs to the government. The government paid for it and is supposed to make it available. But try to get it. "They won't send you the drawings unless you have a need for them," says Ozminkowski," and the only way you have a need for them is to bid. If the agency doesn't want to let you bid, then you don't have a need. It is," he says, "a vicious circle."

So Radionics used the Freedom of Information Act to get the data it needs to compete.

But if the Regan Administration and the lobbyists prevail with their proposed revision of the act, it won't yield that kind of design data to Radionics or to any other potential competitor anymore. "Reform is going to put a lot of small companies as a big disadvantage," says Ozminkowski.

These aren't the kinds of stories Congress has been hearing about FOIA reform. Sen. Orrin Hatch's (R-Utah) Judiciary Subcommittee on the Constitution last year listened to a string of lawyers representing major corporations. Nothing a company tells the government, they complained, is safe from the prying eyes of competitors who use the FOIA to get for free proprietary information developed at great cost by someone else. It's a case of business using government files to spy on other business.

The solution the lawyers prefer is a flat ban on disclosure of any information that could so much as "impair the business interest" of the firm that supplied it. By that citerion, it's doubtful that any potential competitor would have been able to see the results of tests comparing his product to the product the government currently is buying.

And the Pentagon has complained to Hatch's subcommintee of the expense it incurs in filling FOIA requests and of the potential danger that valuable military design data might find its way to unfriendly foreign powers through the FOIA. The reform it prefers is a discretionary ban on the release of any data that requires a license for export, even if it isn't going to be exported. Since almost everything the military buys requires a license for export, under that reform Radionics wouldn't be under-bidding the Pentagon's favorite sole-source suppliers anymore.

There are legitimate problems with the FOIA. Sometimes, for example, civil servants find its safeguards too easy to ignore. Procter & Gamble complained to Hatch's subcommittee that it had correctly followed all the rules in submitting trade secret information to the Food and Drug Administration in order to get approval to market a product. The FDA released the information anyway. "The competition got our technology," said P&G counsel James T. O'Reilly, "and we got a nice letter of apology from the FDA."

Some tightening up of the FOIA is almost surely needed, but so is a bit of restraint by those doing the tightening.

The act was passed to unlock the door to government-held information. If the FDA or any other agency leaves the door wide open and unguarded, then it's not doing its job properly. But you don't solve that problem or any of the others raised by corporate attorneys by nailing the door shut. To do so would only lock in uncompetitive, inefficient, business-as-usual deals between big government and its friends in industry. Their record for honesty and fair dealing with the public's money is not so clean that continued public scrutiny is no longer necessary.

Last updated: Jun 1, 1982




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