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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 November 5, 1999, an arbitration panel rendered a decision in the matter of California Department of Rehabilitation v. General Services Administration (Docket No. R-S/97-11). 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 California Department of 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 General Services Administration (GSA) in the termination of the permit of the California Department of Rehabilitation, the State licensing agency (SLA), to operate a cafeteria at the Internal Revenue Service (IRS) facility, in Fresno, California. A summary of the facts is as follows: The SLA and GSA entered into an agreement to establish a cafeteria at the IRS Building, 5045 E. Butler Avenue, Fresno, California on November 1, 1995. The facility had been operated by a private vendor under contract to GSA.

Although the vending facility was a cafeteria, the SLA and GSA proposed a permit rather than a contract. GSA proposed that the permit be issued for a limited term of approximately 1 year, subject to renewal or cancellation at the end of that period. While the SLA declined to enter into a limited agreement, the permit that was eventually issued between the SLA and GSA was for an “indefinite period of time subject to suspension or termination on the basis of non-compliance by either party.”

The operation of the IRS cafeteria began on December 18, 1995. On September 25, 1996, an inspection of the cafeteria was conducted by the Food and Drug Administration (FDA). The FDA inspector noted numerous unsanitary conditions such as improper food preparation and storage, pest infestation, and employees eating and drinking beverages outside the break area. The violations noted by the FDA inspector were brought to the attention of the cafeteria facility manager. On March 5, 1997, an FDA inspector conducted another inspection at the IRS cafeteria. Again, the FDA inspector observed several violations similar to those noted in the September 25, 1996, inspection. Additional violations were found such as rodent droppings, improper cleaning of the conveyor belt, lack of soap and paper towels at the handwashing sink, and improper cleaning of the floor in the dishwashing area. These violations were pointed out to the cafeteria manager, who allegedly did not dispute any of the FDA inspector's observations. Subsequently, the cafeteria was closed.

The SLA alleged that the closure of the IRS cafeteria violated the Act and the terms of the permit. Additionally, the SLA alleged that GSA violated an agreement to give the SLA revenues from the operation of a portable coffee cart in the cafeteria area.

The SLA filed a request to convene an arbitration panel to hear this complaint. A Federal arbitration hearing on this matter was held on December 15-18, 1998. A second hearing was convened on March 1-5, 1999 to conclude testimony.

Arbitration Panel Decision

The majority of the panel, after considering all of the evidence, concluded that the parties jointly agreed to a permit agreement rather than a cafeteria contract for the vending facility at the IRS building. The panel further found that, while IRS personnel were interested in having a food court at the facility, the SLA furnished the vendor with equipment that essentially provided for multiple serving stations and a broader variety of food similar to the food court concept sought by IRS officials. Thus, the panel ruled that there was no convincing evidence to support the SLA's allegation that GSA caused the termination of the vendor's permit under the pretext of putting in a food court by a private vendor.

Based upon the evidence presented, the majority of the panel further concluded that, throughout the vendor's tenure at the IRS, there were numerous inspections of the cafeteria. Most notable of the inspections were those conducted by FDA on September 25, 1996, and March 4, 1997, which identified numerous sanitation, food preparation, and storage violations. Those inspections resulted in the cafeteria closing.

The panel ruled that the unsanitary conditions created serious health risks to thousands of customers of the cafeteria at the IRS building. Therefore, it was reasonable and proper for GSA to remove the vendor because of the extreme unsanitary conditions. Furthermore, the panel ruled that the SLA's allegation concerning the vendor's removal lacking due process was without merit.

Finally, the majority of the panel ruled that the weight of the evidence indicated that GSA owed some accounting and commissions to the SLA for the coffee cart operation. The panel ordered the parties to jointly determine the formula for the amount owed by GSA to the SLA.

One panel member concurred.

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: May 11, 2001.

Andrew J. Pepin,

Executive Administrator for Special Education and Rehabilitative Services.

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[FR Doc. 01-12402 Filed 5-16-01; 8:45 am]