Arbitration Panel Decision Under the Randolph-Sheppard Act

AGENCY:

Department of Education.

ACTION:

Notice of arbitration panel decision under the Randolph-Sheppard Act.

SUMMARY:

Notice is hereby given that on November 17, 1998, an arbitration panel rendered a decision in the matter of Hawaii Division of Vocational Rehabilitation, Department of Human Services v. U.S. Department of Defense, Department of the Army (Docket No. R-S/97-18). This panel was convened by the U.S. Department of Education pursuant to 20 U.S.C. 107d-1(b) upon receipt of a complaint filed by petitioner, Hawaii Division of Vocational Rehabilitation, Department of Human Services.

FOR FURTHER INFORMATION:

A copy of the full text of the arbitration panel decision may be obtained from George F. Arsnow, U.S. Department of Education, 400 Maryland Avenue, SW., room 3230, Mary E. Switzer Building, Washington DC 20202-2738. Telephone: (202) 205-9317. If you use a telecommunications device for the deaf (TDD), you may call the TDD number at (202) 205-8298.

Individuals with disabilities may obtain this document in an alternate format (e.g., Braille, large print, audiotape, or computer diskette) on request to the contact person listed in the preceding paragraph.

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Note:

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SUPPLEMENTARY INFORMATION:

Pursuant to the Randolph-Sheppard Act (the Act), (20 U.S.C. 107d-2(c)), the Secretary publishes in the Federal Register a synopsis of each arbitration panel decision affecting the administration of vending facilities on Federal and other property.

Background

This dispute concerns the alleged failure of the U.S. Department of Defense, Department of the Army (Army), to award a priority under the Act to the Hawaii Division of Vocational Rehabilitation, Department of Human Services, the State licensing agency (SLA), for a contract to operate a cafeteria at Schofield Barracks, Wahiawa, Oahu, Hawaii.

A summary of the facts is as follows: On October 29, 1996, the SLA requested a meeting with the Army's Contracting Officer (CO) and Army staff to discuss the possibility of direct negotiations under the Act regarding the operation of a cafeteria facility at the Schofield Barracks in Wahiawa, Oahu, Hawaii.

Subsequently, on November 6, 1996, a meeting was held between the SLA and the Army's CO. At the meeting, the CO mentioned that the previous cafeteria contract had been solicited pursuant to the Small Business Administration Section 8(a) set-aside program. In a May 6, 1997 letter from the Army, the SLA was informed that the Army would continue to rely upon a memorandum from the Office of the Assistant Secretary, Research Development and Acquisition, dated April 15, 1997. This memorandum stated that, because the Act did not apply to appropriated-fund contracts, military mess hall contracts would be awarded based upon general procurement principles, including preferences under the Section 8(a) set-side program. On May 6, 1997, the Army solicited proposals under these general procurement principles, thereby not awarding a priority under the Act to the SLA. By letter dated August 21, 1997, the SLA filed with the Secretary of Education a request for arbitration of this dispute. A Federal arbitration hearing on this matter was held on July 9 and 10, 1998.

Arbitration Panel Decision

The central issue before the arbitration panel was whether the Randolph-Sheppard Act, 20 U.S.C. 107d-3(e), is applicable to appropriated-fund contracts covering military dining facilities, which are basically used by military personnel. If so, is the Army then required to permit the SLA an opportunity to bid on a contract covering military dining facilities in Hawaii on an unrestricted basis under the priority provisions of the Act?

The majority of the panel ruled that, as defined in the regulations of the Department of Education and Department of Defense, all of the facilities covered under the agreement provide cafeteria services, which include a broad variety of prepared foods and beverages. These foods are dispensed primarily through the use of a serving line where the customer serves or selects food items for himself or herself from displayed selections.

In this case, the military dining facilities covered under the Hawaii contract used contractor personnel to provide full food service, including food preparation, serving, and cleanup services. The use of the facilities was limited to authorized military personnel. On the other hand, Randolph-Sheppard vending facilities, whether a stand, automatic food dispensing machine, or cafeteria, are open for use by the general public. However, they are used most frequently by the employees working at the facility and are not supported by appropriated funds, but rather by payments for goods and services.

Further, the majority of the panel noted that the Federal Government's procurement process for goods and services to be paid for by appropriated funds is subject to procurement laws and regulations. These laws and regulations seek to standardize procedures for awarding contracts, thereby assuring quality in meeting specifications and economy of price. Exceptions are permitted by Congress for certain groups, such as those who qualify under the Small Business Administration or those who employ severely handicapped or blind individuals under the Javits-Wagner-O'Day Act.

The 1974 amendments to the Act expanded the opportunities for blind persons to operate vending facilities, including vending machines and cafeterias on Federal property, and required Federal agencies to provide locations for vending facilities to be operated by blind licensees.

The panel ruled that if Congress had intended the Act to apply to appropriated-fund contracts, it would have included very specific language authorizing those contracts because such a reading would substantially change the administration of Federal procurement law. Because that language is not included, the best reading of the statute is that it was not intended. Thus, while not entitled to assert a priority under the Act in bidding on an appropriated-fund contract for dining facilities, the SLA would not be precluded from applying for a preference under the Javits-Wagner-O'Day Act.

One panel member dissented.

The views and opinions expressed by the panel do not necessarily represent the views and opinions of the U.S. Department of Education.