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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.


The Department gives notice that on February 3, 2003, an arbitration panel rendered a decision in the matter of North Carolina Department of Human Resources, Division of Services for the Blind v. United States Postal Service (Docket No. R-S/98-8). This panel was convened by the U.S. Department of Education, under 20 U.S.C. 107d-1(b), after the Department received a complaint filed by the petitioner, North Carolina Department of Human Resources, Division of Services for the Blind.

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You may obtain a copy of the full text of the arbitration panel decision from Suzette E. Haynes, U.S. Department of Education, 400 Maryland Avenue, SW., room 5022, Potomac Center Plaza, Washington, DC 20202-2800. Telephone: (202) 245-7374. If you use a telecommunication device for the deaf (TDD), you may call the Federal Information Relay Services (FIRS) at 1-800-877-8339.

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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Under section 6(c) of 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 violation by the United States Postal Service (USPS) of the priority provisions of the Act (20 U.S.C. 107 et seq.) and the implementing regulations in 34 CFR part 395 in awarding a contract to a private vending company at the Greensboro Processing and Distribution Center (P&DC) in Greensboro, North Carolina.

A summary of the facts is as follows: Beginning in 1995, the North Carolina Department of Human Resources, Division of Services for the Blind, the State licensing agency (SLA), operated a cafeteria on the second floor of the P&DC and also various vending machines in a break area and swing room on the first floor of the building under a contract agreement with USPS. The cafeteria included a hot food line and was staffed by attendants. Later, the cafeteria operation became not as profitable as the SLA desired, and discussions took place between the SLA and USPS wherein the SLA proposed closing the attendant hot food cafeteria and replacing it with a facility comprised of vending machines.

In January 1998, USPS issued a request for proposal (RFP) for a vending machine facility at P&DC, the same type of facility that the SLA had previously discussed with USPS. The SLA received the RFP and proposed to USPS that a single blind licensee be allowed to operate all vending operations at the P&DC under a permit agreement rather than a contract.

After the SLA's proposal, USPS declined to enter into a permit agreement with the SLA, and the SLA elected not to submit a response to the RFP. USPS then awarded a contract for the operation of the new vending machine facility to a private vending company.

Thereafter, the SLA filed a complaint with the Secretary of Education requesting the convening of a Federal arbitration panel. In its complaint, the SLA alleged that USPS violated the priority provisions of the Act and implementing regulations in awarding the contract to a private vending company. The SLA further alleged that the Act specifically recognizes that the operation of vending machines are to be under a permit agreement, while the operation of a cafeteria is required to be under a contract.

As a result of this dispute, an arbitration panel was convened, and a hearing on this matter was held on June 6, 2000.

Arbitration Panel Decision

The issue heard by the panel was whether USPS had violated the Act (20 U.S.C. 107 et seq.) and the implementing regulations in 34 CFR part 395 in awarding a contract to a private vending company to operate the vending machine facility at P&DC.

After considering all of the evidence, the majority of the panel ruled that the P&DC vending facility was not a cafeteria as defined by the Act and implementing regulations. The panel stated that the regulations in § 395.1(d) define a cafeteria as a facility ``capable of providing a broad variety of prepared foods and beverages (including hot meals) primarily through the use of a line where the customer serves himself from displayed selections.'' On this basis, the panel ruled that USPS was required to approve the SLA's permit application for P&DC or indicate in writing to the Secretary of Education the reasons for refusing approval.

The panel also determined that the vending facility at P&DC operated by the private vending company and comprised of vending machines was being operated in direct competition with vending machines operated by the SLA. Moreover, because the private vending company's vending machines were readily accessible to most or all of the employees at P&DC, the panel ruled that the SLA was entitled to receive 100 percent of all vending machine income Start Printed Page 69594collected by the private vending company as provided by the regulations in 34 CFR 395.32(b).

Accordingly, the panel made the following award: (1) USPS should terminate at the earliest practicable date the contract with the private vending company, thus allowing for an SLA-licensed blind vendor to operate the vending machine facility at P&DC; (2) USPS should promptly approve an appropriate permit agreement with the SLA for the continued operation of the vending facility at P&DC; and (3) USPS should pay to the SLA all sums received from the private vending company for the operation of the vending machines at P&DC and all sums to be received until the termination of the contract with the private vending company.

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: November 24, 2004.

Troy R. Justesen,

Acting Deputy Assistant Secretary for Special Education and Rehabilitative Services.

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[FR Doc. E4-3378 Filed 11-29-04; 8:45 am]