State Secrets and Military Procurement

The State Secrets Privilege has been receiving an enormous amount of attention lately, mainly in connection with the Obama administration’s invocation of the privilege in the Jeppesen case. This invocation, which recalled similar invocations on the part of the Bush administration, incurred a substantial amount of criticism from civil libertarians and critics of Bush administration detention policies. Obama has also invoked State Secrets Privilege to protect the warrantless wiretap program from scrutiny. While the administration has made positive noises about narrowing its use of the privilege, actions have yet to match rhetoric.

As it happens, Professor Davida Isaacs and myself have a paper coming out in the Summer 2009 Berkeley Technology Law Journal on the use of the State Secrets Privilege in litigation on military procurement. Long story short, a small firm named Crater developed a coupler that could conceivably be used to help tap undersea cables. Lucent Technologies developed an interest in the coupler and played around with it for a bit until it decided that the device was, indeed, appropriate for a contract with the Navy. Lucent then, essentially, told Crater to go pound sand. Litigation resulted, and in discovery Crater attempted to gain access to documentation regarding the use of the device. The Navy claimed State Secrets Privilege in order to avoid disclosing such documentation. This eviscerated Crater’s case. The basic story is available in a Wired article by Kevin Poulsen from 2005. We go into the case in some additional depth, suggest that there are some troubling constitutional issues regarding the assertion of the privilege in such cases, and argue that widespread use of the privilege could have a significant negative effect on military innovation and procurement. On the former point, where the information involved constitutes “trade secrets”, the effective quashing of litigation through invocation of the privilege arguably amounts to an unconstitutional taking. On the latter, blunt use of State Secrets Privilege endangers the patent and intellectual property rights of companies interested in doing business with the military, and in particular of small companies that can’t depend for either on their connections with the Pentagon or on an expectation of repeat business for protection. This is particularly problematic given the stated interest of the Pentagon in pursuing non-traditional defense contractors for innovative technologies.

The upshot is that the negative effects to using State Secrets Privilege as a “blunt instrument” go beyond the obvious dangers to civil liberties. A lack of transparency, and the consequent arbitrary and capricious use of power, endangers many aspects of the government’s relationship with the public, including its interactions with contractors. Legislation intended to rein in government’s use of the privilege (through encouragement of independent judicial consideration of government claims) has been proposed, but we argue that, particularly in the arena of military innovation, this legislation does not go far enough.

The article is available through SSRN. For those without SSRN privileges, try this link.