By Bruce Jervis
Is Bid Information a Trade Secret?
Information regarding the pricing of labor and equipment is sensitive to a construction company. This information is used in formulating bids. One might assume the information is proprietary, protected by law as a trade secret. This is not necessarily true, however. A Utah court recently drew an interesting distinction.
A key employee of a construction company secretly became co-owner of a new company formed to compete for the same work. The individual concurrently participated in estimating and bidding a contract on behalf of both companies, enabling the new company to underbid his employer.
The court ruled that the pricing of labor and equipment was not a trade secret because it was not job specific and had no independent economic value. But bid preparation information, where specific quantity estimates were applied to the pricing information, was a trade secret. The bid price had independent economic value and could not be deduced, even by an experienced individual, using general knowledge or expertise.
Of course, any trade secret remains protected only if reasonable measures are taken to maintain confidentiality. The construction company in question limited the dissemination of bid preparation information and kept it in a locked office. While employees had not been asked to sign a confidentiality agreement, they had been instructed regarding the importance of confidentiality. This was sufficient. What measures do you take to protect bid preparation information? Your comments are welcomed.
