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Arbitration Panel Decision Under the Randolph-Sheppard Act

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Department of Education.


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


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.

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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 paragraph.

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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 Installation.

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 Department.

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 Start Printed Page 18236majority 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.

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Dated: April 3, 2001.

Andrew J. Pepin,

Executive Administrator for Special Education and Rehabilitative Services.

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[FR Doc. 01-8557 Filed 4-5-01; 8:45 am]