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Government contracts should not be trade secrets

The CIA has secrets, and we tend to accept that, but what about your state health insurance exchange? Not only does it have secrets, it has “trade secrets.”

It may come as a surprise to you that the government has trade secrets. These are secrets the state of Connecticut can’t reveal, allegedly, because it would cost the government more if it did.

Wrestle with this concept for a second — or take a minute. If the government tells you what it’s doing, it will be more expensive or bring in less government revenue. Does that make sense?

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Connecticut has a generally strong Freedom of Information Act. It gives the public, not just journalists, access to many government documents. There are exceptions, and many protect people who deal with the government from having the government reveal their information. 

That’s how the trade secret exemption started. In order to get companies to hand over sensitive financial information and confidential aspects of business models or methods (when applying for state grants and the like), the state created an exemption to protect trade secrets belonging to companies from disclosure after the state found out about them.

But that wasn’t good enough. Along the way, government lawyers saw this provision as a convenient way to protect government trade secrets. 

It almost sounds like an oxymoron, government trade secrets, but they’re very real, according to Connecticut’s Supreme Court, which has ruled in favor of secrecy for some of the University of Connecticut’s tangential information.

Although government trade secrets can exist — malarkey, I say, but that’s an issue for another day — government officials often claim they exist when they really don’t. I’ve challenged this classification twice, notching a win and a loss. Not bad for a non-lawyer.

The first time, I lost. The Department of Economic and Community Development claimed that the calculations they use to incentivize — ahem, bribe — companies to move or stay here are trade secrets. My best impression of their absurd argument is this: If we share what the economic models say, companies will use that information to negotiate for better deals or other states would simply steal companies out from under our noses. 

Recently, I got my first win. Access Health CT, Connecticut’s health insurance exchange, posts many vendor contracts online, which is good. The exchange’s lawyers also like to draw on the contracts with black markers so the public can’t read them. This is called redaction, which is bad, from my point of view.

As fun as black markers can be, government lawyers can’t redact willy-nilly. They need to, upon request, justify each and every squiggle. 

Some time ago, I noticed that the exchange hired a company, Amtex, to create a mobile app to sell you insurance on your phone, but the exchange redacted the amount it agreed to pay Amtex.

Really? Secret payments to vendors? 

The exchange gave me a document explaining the redactions and I ultimately challenged two at the Freedom of Information Commission. Recently, the exchange gave me a less-redacted copy of the contract with Amtex.

First, the commission didn’t take long to give me access to the names of the employees working on the project. (Hi, Rina Singh, Sanju Kumar and Amrit Sahay.) Names of vendor employees are not trade secrets. I’m glad we cleared that one up.

Second, the commission gave me access to how much the exchange paid Amtex for the mobile app. The commission even gave the exchange’s lawyers a second chance to find evidence in support of their rather bizarre claim, yet they still failed to show how this information was a secret.

One of the most important legal tests for a trade secret is how much you treat it like a secret. Trade secrets belong in vaults (like the recipe for Coke), not on invoices.

All that fuss to hide the fact that the exchange spent $750,000 on this mobile app. Now it would be interesting to know how many people bought insurance using this app, but the exchange did not respond to my request for comment. 

The Android app has been downloaded 10,000 times, according to the Google Play Store, and it has 101 reviews with an average rating of 3.2. The exchange had hopes of reselling the app to other exchanges around the country. Its lawyers argued that if the other exchanges knew what it paid, they wouldn’t want to pay so much to buy the app.

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But there is a higher need here. Secret government payments are a bad idea. 

The U.S. District Court in D.C. has said “disclosure of prices charged the government is a cost of doing business with the government.” The Exchange must pay an even higher price, the cost of doing business as government.

 

Zachary Janowski writes for the Yankee Institute, Connecticut’s free-market think tank. Reach him at zach@yankeeinstitute.org.