[Federal Register: May 3, 2000 (Volume 65, Number 86)]
[Page 25710-25711]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



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

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

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[[Page 25711]]

Access at: http://www.access.gpo.gov/nara/index.html

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.


    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
    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.

    Dated: April 28, 2000.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 00-11015 Filed 5-2-00; 8:45 am]