[Federal Register: April 6, 2001 (Volume 66, Number 67)]
[Page 18235-18236]
>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 January 6, 2000, an arbitration 
panel rendered a decision in the matter of Alaska Division of 
Vocational Rehabilitation v. United States Department of Defense, 
Department of the Army (Docket No. R-S/97-2). 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, the Alaska Division of 
Vocational Rehabilitation.

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 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
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well as all other Department of Education documents published in the 
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the Internet at the following site: www.ed.gov/legislation/FedRegister
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    Note: The official version of this document is the document 
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SUPPLEMENTARY INFORMATION: Pursuant to the Randolph-Sheppard Act (20 
U.S.C. 107d-2(c)) (the Act), 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 violation by the United States 
Department of Defense, Department of the Army (Army), of the priority 
provisions of the Act by denying the Alaska Division of Vocational 
Rehabilitation, the State licensing agency (SLA), the opportunity to 
operate a dining facility at the Fort Richardson, Alaska, Army 
    A summary of the facts is as follows: On July 16, 1996, the SLA 
wrote to the Director of Contracting at Fort Richardson expressing its 
desire to enter into negotiations for the operation of a dining 
facility at the Army Installation.
    In late November 1996, the SLA learned that a food service contract 
had been awarded to another contract vendor in Anchorage, Alaska. 
Subsequently, the SLA appealed this decision and immediately contacted 
the Army contracting office. The Army contracting office advised the 
SLA that the Army indeed had awarded the contract to another vendor. 
Further, the Army declined to consider the SLA's appeal, advising the 
SLA that the time for appealing awards had passed.
    The SLA alleged that the dining facility contract at the Fort 
Richardson Installation meets the definition of satisfactory site under 
the Act and implementing regulations in 34 CFR 395.1(q). Further, the 
SLA alleged that the Army contracting office failed to negotiate in 
good faith.
    By this action, the SLA asserted that the Army denied it due 
process under the Act, and as a result the SLA was not awarded the 
dining facility contract under the terms of the Act. The SLA filed a 
request to convene an arbitration panel to hear this complaint. A 
Federal arbitration hearing on this matter was held on February 11 and 
12, 1998.
    Following the hearing, post-hearing briefs were submitted by the 
two panel members representing the SLA and the Army to the Panel Chair. 
However, after considerable time had elapsed the final award was not 
submitted by the Panel Chair to the Department of Education 
(Department). Accordingly, a new Panel Chair was selected in August 
1999. The parties determined that it was not necessary to hold another 
hearing on the matter. It was further agreed that the newly appointed 
Panel Chair would render an opinion based upon the proceedings and 
submissions that had already taken place, and input from the two panel 
members and a final opinion and award would be submitted to the 

Arbitration Panel Decision

    The central issue before the arbitration panel was whether the 
Army's alleged failure to negotiate with the SLA in good faith for a 
dining facility contract at the Fort Richardson Installation 
constituted a violation of the satisfactory site provisions provided by 
the Act (20 U.S.C. 107 et seq.) and the implementing regulations (34 
CFR part 395).
    The Army contended that military troop dining facility procurement 
with appropriated funds is not subject to the priority provisions of 
the Act. The

[[Page 18236]]

majority of the panel found that this contention was not consistent 
with the findings of the Department of Education, the memorandum issued 
by the General Counsel of the Department of Defense in November 1998, 
and the Comptroller General's opinion of June 1993, which stated that 
generally military dining facilities are cafeterias and are indeed 
included within the scope of and subject to the Act.
    Therefore, the majority of the panel ruled that the SLA was correct 
in asserting that procurements with appropriated funds are equally 
subject to the priority provisions of the Act as are procurements with 
non-appropriated funds. Similarly, the panel ruled that military dining 
facilities have been considered to come within the definition of 
cafeterias as defined in the Act and by administrative interpretation.
    However, the panel concluded that the Act's priority is not 
applicable if the contract is for discrete services rather that the 
overall ``operation'' of the dining facilities. The facts of the case 
supported the Army's decision to give the contract to the other vendor 
and not to the SLA. Specifically, the majority of the panel determined 
that, although the Army contracted out certain functions, it retained 
overall operation of the dining facility and operated it on an in house 
basis. Thus, the panel concluded that the factual setting of the Fort 
Richardson dining contract did not constitute the operation of a 
cafeteria, which would trigger the priority provisions of the Act. 
Moreover, the panel majority ruled that no vending occurred and no 
concessions were involved in the Fort Richardson dining contract. 
Consequently, the contract was not an entrepreneurial activity of the 
type contemplated by the Randolph-Sheppard 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 3, 2001.
Andrew J. Pepin,
Executive Administrator for Special Education and Rehabilitative 
[FR Doc. 01-8557 Filed 4-5-01; 8:45 am]