The Importance of Ensuring Government Contractor Transparency

sw15-cohen-60x80By Donald Cohen
Executive Director
In the Public Interest

This week, nonprofits, civic groups, and media organizations are observing Sunshine Week, a national initiative to promote dialogue about the importance of open government and celebrate the freedom of information in our democracy. While much discussion is focused squarely on the need for transparency when government spends public funds, equally important is the need for transparency when government contractors spend public funds. All tax dollars are equal and so should be the transparency of how those dollars are spent, whether directly by a public agency or by a contractor on that agency’s behalf.

Transparency of public spending strengthens democracy, promotes fiscal responsibility, checks corruption, and bolsters public confidence. Sunshine laws enshrine transparency into the fabric of government by guaranteeing citizens access to information on public spending decisions.

However, when government contractors assume control of public services and provide public goods, they are able to circumvent sunshine laws and shield important public information from disclosure. Contractors can refuse to release records that should otherwise be available by claiming that transparency could hurt their bottom lines. Many times, contractors claim that the public information is a “trade secret” or “proprietary” and legally protected from public review.

In the Public Interest has compiled a brief highlighting instances from across the country where government contractors closed their books to the public, and what state and local governments can do to solve this problem, titled “Closing the Books: How Government Contractors Hide Public Records.”

The report features examples like the case of charter school operator National Heritage Academies Inc. (NHA). When the New York State Comptroller audited NHA’s Brooklyn Excelsior School in 2012, auditors could not determine “the extent to which the $10 million of annual public funding benefited students.” According to the audit, NHA staff refused to provide details on how the school spent $1.6 million, claiming that “the expenditures were private and proprietary.”

In Connecticut, the local public radio station, WNPR, submitted a public records request to uncover the billing rate for the state’s health care exchange call center operator, Maximus Inc. In response, WNPR received a heavily-redacted version of the contract with details of Maximus’ costs blackened-out. Maximus claimed that releasing the contract’s pricing information could reveal proprietary trade secrets. After WNPR filed a complaint with the Freedom of Information Commission, Connecticut finally released the unredacted version of the contract.

In Florida, Safety Research and Strategies Incorporated (SRS), a consumer safety research firm, requested documents and communications about the Department of Transportation’s (DOT) contract with Trinity Industries which manufactures highway guardrails. SRS requested the information to assess guardrail safety after transportation officials began linking design changes in the guardrails to fatal car accidents. In response to the information request, the Florida DOT provided 13 files and explained that Trinity was reviewing more than 1,000 emails to redact confidential information before releasing them. According to the FDOT, Trinity had obtained a protective order that prevented the FDOT from releasing “trade secret” records about the faulty guardrails.

It is critical that decision makers take seriously the importance of protecting the public’s right to information about how their tax dollars are spent. Our leaders can ensure the public maintains rightful access to information on contracted services by passing strong sunshine laws, extending them to explicitly require that government contractors follow the same disclosure rules as government entities, closing loopholes and eliminating exemptions that allow companies to withhold public records, and including strong disclosure requirements in contracts.

Transparency of government services benefits all of us, whether those services are provided directly by the government or by a contractor. By taking a hard look at government contracts and strengthening sunshine laws, lawmakers can ensure that citizens have access to the information we deserve about the programs we pay for.

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