RANDOLPH-SHEPPARD LITIGATION: THE DO’S AND DON’TS OF
CHALLENGING A FEDERAL ENTITY
SUSAN ROCKWOOD GASHEL
November 29, 2012
TABLE OF CONTENTS:
I.
INTRODUCTION
II.
SOLICITATIONS – THE OPPORTUNITY FOR A VENDING
FACILITY – NEGOTIATION FOR CAFETERIAS IS THE BEST
OPTION
III.
REGULATIONS OTHER THAN THOSE PROMULGATED BY
THE DEPARTMENT OF EDUCATION
IV.
PERMITS – CONTRACTS
V.
WHEN TO FILE FOR ARBITRATION, APPEAL AN ADVERSE
ARBITRATION DECISION TO FEDERAL DISTRICT COURT,
FILE WITH THE GOVERNMENT ACCOUNTABILITY OFFICE,
OR THE UNITED STATES COURT OF CLAIMS
VI.
A.
ARBITRATION
B.
GAO AND THE COURT OF FEDERAL CLAIMS
C.
INTERVENTION IN GAO PROTEST BY AN
INCUMBENT
D.
INJUNCTIVE RELIEF IN FEDERAL COURT
E.
WHAT THE COURTS HAVE SAID ABOUT DAMAGES
WHENEVER ONE OR MORE VENDING FACILITIES ARE
FEASIBLE, VENDING FACILITIES SHALL BE LOCATED ON
ALL FEDERAL PROPERTY
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VII.
A.
WHEN IS HALF A LOAF BETTER THAN NONE?
B.
CIRCUMVENTING THE PRIORITY
CONCLUSION
APPENDIX
I.
SELECTED LEGISLATIVE HISTORY
II.
SELECTED RANDOLPH-SHEPPARD CASES
III.
SPECIFIC EXEMPTIONS FROM THE RANDOLPHSHEPPARD PRIORITY
IV.
SELECTED REGULATIONS OF FEDERAL AGENCIES
CONCERING RANDOLPH-SHEPPARD ACT
IV.
THE MILITARY’S “DINING POLICY”
ii
Randolph-Sheppard Litigation
The Do’s and Don’ts of Challenging a Federal Entity”
Susan Rockwood-Gashel, Esq.
November 29, 2012
I.
Introduction
I would like to start by saying how very appreciative I am of the
opportunity given by the National Association of Blind Merchants and
the National Council of State Agencies for the Blind to speak on the
issue of challenging a federal entity. This presentation is structured
to give you some tools that you can use to make your jobs easier,
and to unravel some of the knots that we all come across in seeking
to ensure that the job opportunities that Congress created for the
blind are implemented. So, if you are a state agency attorney or
employee, please feel free to interrupt me at any time if you have a
question about what is being discussed. Also, state deputies attorney
general and agency staff, please bring up those particular situation
that you want to discuss.
The first DO – is DO challenge the federal entity. DO it early; DO it
often. Work to establish a relationship with the key individuals, and
with the attorney representing the entity. Set yourself up to serve as
a resource for the federal agency. Prepare the language that the
federal agency needs to include in solicitations, contracts, and
permits. But don’t let that relationship form the basis for conceding
the rights of the vendors. It’s a hard balance to strike.
All are aware of the Enzi Committee Report’s statement that
“Although the program is specifically directed at a population with
very high unemployment numbers, only a relative handful are reaping
the benefits and receiving the support this program provides.” What
the report fails to take into account is that state agencies do not have
the resources to assert the priority. As you can see, both NABM and
NCSAB are here to support you in your efforts to assert the priority.
Your individual committees of blind vendors can also serve as a
terrific resource, particularly with respect to the site selection and
surveys of current and projected locations. We all know that
assertion of the priority is a task that takes a great deal of time and
effort on the part of the state licensing agency (SLA), the attorney
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assigned to the SLA, and the blind vendors – it’s easier though when
all work in concert.
So, let’s start at the beginning, with solicitations.
II.
Solicitations – The Opportunity for a Vending Facility –
Negotiation for Cafeterias is the Best Option
First, I wanted to jump ahead to direct negotiation as authorized by
34 C.F.R. § 395.33(d). Let the agency know that if the agreement is
negotiated the agency will avoid the possibility of an incumbent,
unsuccessful bidder filing a Government Accountability Office (GAO)
protest or a case with the Court of Federal Claims. Let them know
that the SLA is willing to work to help the agency receive the best
value, and that any stage of the procurement, the 395.33(d)
negotiation can be accomplished.
Ensure that military dining/cafeteria solicitations contain language
making it clear that the solicitation is subject to the R-S Act. It is
permissible for a solicitation to be subject to both the Small Business
Set Aside Priority and the R-S Act. In re Intermark, B-290925 (GAO
2002). The R-S Act priority takes precedence over the small
business preference. Automated Communication Sys, Inc. v. U.S.,
49 Fed. Cl. 570 (2001).
Beware of solicitations that severely limit the competitive range, such
as to within 5% of the lowest bid in the cafeteria context. The reason
given for this limitation is given as “due to budget restrictions.” A
budget restriction must be understood to “affect the interests of the
United States.” Currently, an issue that is coming up is how to take
into account the R-S Act mandated “reasonable cost, with food of a
high quality comparable to that currently provided” determination to
be made by the Secretary of Education. 34 C.F.R. § 395.33(a).
DO check the FedBizOpps webpage for all Randolph-Sheppard
opportunities, https://www.fbo.gov. DO pay attention to news articles
about federal buildings under construction or renovation.
DON’T expect the federal agency to send you a certified letter of
when a vending facility or a cafeteria is going to be available, as
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required by 34 C.F.R. § 395.31(c). Perhaps someone could be
designated within the SLA to check the FedBizOpps web site from
time to time. As soon as a solicitation comes out, check to see if the
R-S Act applies. See the handout for situations where the priority
does not apply. But remember that a R-S Act vending facility can be
located on “any property.” So if there is, for example, Department of
Defense (DoD) property where there is no exchange, (1) the priority
may still apply, and (2) even if it doesn’t a R-S Act vending facility can
be located, so long as DoD’s terms don’t make it economically
infeasible. Don’t rely on the agency to get it right. It may be that the
contracting officer is unaware of the Act, or there may be other
reasons that the agency fails to send the certified letter.
DO send the certified letter indicating interest in establishing the
vending facility by the 30 day deadline in 34 C.F.R. § 395.31(c). DO
be aware that federal agencies have been known to send follow-up
letters of the “are you still interested?” variety. Then, when the SLA
does not respond (having already done so), the federal agency has
been known to claim that the SLA did not respond. So respond to
each and every certified letter indicating interest in establishing the
vending facility by the deadline.
DO follow up with requests as to when the SLA will “be offered the
opportunity to select the location and type of vending facility.” The
agency does not select the location, the SLA does. 34 C.F.R. §
395.33(c).
In the event that there is no language in the solicitation regarding the
R-S Act and you have already made up your mind that the Act
applies, there is a vendor needing employment, and the facility would
be reasonably profitable, the next step is to contact the attorney for
the federal agency. A polite letter explaining the Act and its
applicability, as suggested language, something along the line of,
“This Solicitation is subject to the Randolph-Sheppard Act, which
establishes a right of first refusal for a blind individual, licensed by the
State of _________, to operate the facility,” or for a cafeteria, the
language of 34 C.F.R. § 395.33(a), when “such operation can be
provided at a reasonable cost, with food of a high quality comparable
to that currently provided employees, whether by contract or
otherwise.”
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At this point the agency might go along and insert the language.
Don’t be surprised if they don’t, but point them to examples of
complicated facilities operated by blind licensees. If they still object,
let them know that the SLA has the option of filing for arbitration, or a
GAO bid protest.
There are cases where an SLA declines the opportunity and it then
goes to the non-blind enterprise. But that does not mean that the
opportunity is lost for all time. The agency most likely will enter into a
contract for a term of years, and then at the expiration of that term,
the agency should again offer it to the SLA. Keep in touch, calendar
the termination, and go after the contract, starting about a year before
the expiration date.
III.
Regulations Other Than Those Promulgated by the
Department of Education
DON’T assume that just because the Department of Defense (or
other federal agency) has promulgated a regulation limiting the blind
vending priority, that that regulation is entitled to deference. It is not.
It is well established that “only the DOE has been charged with
primary rule-making authority. To the extent that Congress has
delegated implementation of the RSA to DOE, then, deference shall
be given to that agency's implementing regulations.” Kentucky v.
United States, 62 Fed. Cl. 445, 454-55 (Fed. Cl. 2004) aff'd sub nom.
Kentucky, Educ. Cabinet, Dept. for the Blind v. United States, 424
F.3d 1222 (Fed. Cir. 2005); see also NISH v. Cohen, 247 F.3d 197,
202 (4th Cir. 2001), quoting Randolph–Sheppard Vendors of Am. v.
Weinberger, 795 F.2d 90, 111 (D.C.Cir.1986) (“The scope of the
statute and the regulations promulgated thereunder should, in the first
instance, be one for the agency charged with its administration.”)
DON’T take it for granted that an agency’s regulations or other written
procedures exempt its properties from the Act. For instance, the
Department of Defense’s instruction 1125.03, at
http://www.dtic.mil/whs/directives/corres/pdf/112503p.pdf, authorizes
a permit to be terminated by either party upon 60 days written notice
to the other party, in cases of (1) Inactivation of the installation or
activity, (2) Loss of use of a building or other facility housing the
vending facility, (3) Change in the DoD’s requirements for service,
4
and (4) Inability of the State licensing agency to continue to operate
the vending facility. This procedure is contrary to the DOE
regulations, which provides for a “permit to be issued for an indefinite
period of time subject to suspension or termination on the basis of
compliance with agreed upon terms.” 34 C.F.R. § 395.35(b). Hence,
if the SLA agrees to the DoD regulations, the SLA is foregoing an
important right, and that would be to determine whether or not, for
example, the DoD’s requirements for service have in fact changed.
The permit could be cancelled for just about any reason.
The DoD regulations also provide for the SLA to be responsible for
the “acts or omissions of the blind vendor, the vendor’s employees, or
agents.” The R-S Act and its implementing regulations do not put this
obligation on the SLA, and I would not agree to these additional
obligations.
IV.
Permits - Contracts
DO obtain a permit if a vending facility, and a contract if a cafeteria. If
there is both a cafeteria and a vending facility, I would recommend
obtaining one permit to cover both, unless the federal agency objects.
Then of course submit a contract for the cafeteria portion. The
reason is that a permit must be for an indefinite period of time, i.e., it
does not expire, except if the terms of the permit are violated. This
keeps the SLA from having to re-bid. Make sure the permit contains
the terms required at 34 C.F.R. § 395.35.
DO submit a permit, even when an agency is challenging the
applicability of the R-S Act to the property in question. Otherwise, a
court would have grounds to say that the agency’s failure to submit a
permit precludes damages. That was the case in U.S. v. Miss. Voc.
Rehab. for the Blind, 794 F.Supp. 1344, 1352, judgment entered 812
F.Supp. 85 (S.D. Miss. 1992), where the Court denied a motion for a
determination of damages for lost income opportunities because the
state had failed to make the permit application.
DON’T wait for the agency to ask for a permit. Send the permit and
then send reminders at regular intervals. The federal agency is
required to advise the SLA in writing if the permit is not approved, and
state the reasons. So, after a reasonable amount of time if a building
5
has been constructed and the federal agency is dragging its feet I
would consider taking the matter to arbitration.
V.
When to File for Arbitration, Appeal an Arbitration to
Federal District Court, File with the Government
Accountability Office, or the United States Court of Claims
DON’T MAKE THE MISTAKE OF THINKING THAT THE FEDERAL
AGENCY WILL COME TO ITS SENSES AND DO WHAT IS RIGHT.
I know this sounds somewhat cynical, but it has been my experience
that federal contracting officers can be somewhat inflexible. I think it
is partly because federal officials see barriers to success that they
perceive they would have if they lost their sight. According to the
National Eye Institute, Americans have consistently identified fear of
vision loss as second only to fear of cancer. So, to manage fear,
prejudice is manifested. The problem with prejudice, as stated by Dr.
Samuel Johnson, is “prejudice, not being founded on reason, cannot
be removed by argument.”
Yet, that is what your task is going to be, to remove prejudice by
argument and example - include members of your state blind licensee
committees in site visits and in negotiations with federal agencies.
DO, when you do go to court, make sure that you invite the blind
organizations to attend the hearings, to the extent that the particular
forum allows the public to attend. When you can, use an expert
witness, hire a blind person to testify, for example, as to successes of
the blind vending program, the correct interpretation of particular
provisions of the R-S Act, have a blind accountant testify as to losses
incurred as a result of an agency decision, etc. Appoint a blind
person to serve as arbitrator.
A.
Arbitration
DO file for arbitration when:
 there are problems with a solicitation
 an agency insists on permit terms that are not required by the
R-S Act and that the SLA believes are too onerous
6
 property is “outleased” and a vending facility in competition
with a blind licensee’s facility is being operated.
 The agency is not cooperating with respect to vending machine
income -- either income sharing, or placement of vending
machines.
DON’T wait until the award is made to address a faulty solicitation.
The general rule is the R-S Act is the sole mechanism for a SLA to
challenge a federal agency’s failure to comply with the Act and its
regulations. Nevertheless, an unsuccessful bidder other than an SLA
can file with the GAO, and prevent the award of the contract to the
SLA. In my opinion, there is a good argument that this represents a
windfall to the unsuccessful bidder, particularly when that bidder is an
non-blind incumbent. In effect, this is the equivalent of a temporary
injunction.
Personally, one of my pet peeves is the length of time it takes the
Department of Education to convene an arbitration panel. I would
urge that you press DOE for a hearing at the soonest practicable
time, taking into account the DOE arbitration procedures. Another
issue I have is the selection of the third member of the panel. The
DOE’s list of panel members is outdated, and I invite your
suggestions to have the list of panel members contain more
individuals with experience in Randolph-Sheppard matters. The
reason this is so important is because federal agencies, particularly
Department of Defense, will only agree to a member that either (1)
reflects DoD’s point of view, or (2) is on the list.
B.
GAO and Court of Federal Claims
DO file a complaint with the Government Accountability Office and
the Court of Federal Claims. I know this seems contrary to GAO
decisions.
The GAO has consistently dismissed protests based on reasoning
that the R-S Act is the only recourse to challenge federal agency
violations of the R-S Act. Md. State Dep’t of Ed, B-400583; B400583.2. See also Wa. State Dep’t of Services for the Blind, B293698.2, Ms. State Dep’t of Rehabilitation Servs., B-250783.8.
When filing the protest, I would recommend pointing out the string of
7
cases that deny injunctive relief to SLAs (see that section, particularly
the Colorado case stating that granting the injunction would amount
to a windfall for the incumbent blind vendor.) Yet, if you turn the
table, merely by filing a GAO protest, an incumbent non-blind
unsuccessful bidder gets the equivalent of an injunction, a stay while
the GAO conducts its review.
Agencies may not award a contract while a protest with the GAO is
pending. 31 USC § 3553(c). While disappointed bidders can file
protests and prevent the award of a contract, that is not the case
when the disappointed bidder is a state licensing agency (SLA) under
the R-S Act. See also Moore’s Cafeteria v. U.S., 314 Fed. Appx. 277
(Fed. Circ. 2008) where the protestor was not a state licensing
agency and did not face summary dismissal of its protest. The
protestor in Moore’s could have prevented the award of the contract.
The SLA cannot do so.
In 2002 the Court of Federal Claims stated that “a significant
deficiency or problem in a solicitation (e.g., the erroneous application
of a particular statute/regulation to the solicitation) requires a protest
take place either prior to the date for receipt of proposals or prior to
contract award.” North Carolina v. Jones, 53 Fed. Cl. 147, 165
(2002). Thus, if the competitive range or any other term of the
solicitation does not reflect the R-S Act priority, and you are
unsuccessful in getting the federal agency to change the solicitation,
the challenge should be made at that time.
So in order to preserve the right, even during the arbitration process, I
would file the GAO protest, on the authority of North Carolina v.
Jones.
These are the GAO rules: a protest based upon alleged improprieties
in a solicitation that are apparent prior to the closing time for receipt
of initial proposals must be filed before that time. 4 C.F.R. §
21.2(a)(1). A protest based on other than alleged improprieties in a
solicitation must be filed no later than 10 calendar days after the
protester knew, or should have known, of the basis for protest,
whichever is earlier. 4 C.F.R. § 21.2(a)(2).
8
C.
Intervention in GSA Protest Filed by an Incumbent
Sometimes good fortune smiles and the SLA prevails in a bid for a
cafeteria contract. Then bad fortune frowns, and the incumbent files
a GAO protest. DO seriously consider intervention. Your teaming
partner can help you make the decision. This will ensure that the
SLA can weigh in on the arguments that will be made by the
disappointed bidder: that the vendor is not actually operating the
cafeteria, that the SLA’s proposal is deficient in staffing requirements,
and that the federal agency’s evaluation of the bid was flawed, etc.
D.
Injunctive Relief in Federal Court
An incumbent blind enterprise was recently denied a preliminary
injunction by a Colorado court to prevent a cafeteria contract from
being awarded to a non-blind enterprise, stating that “there must be a
virtual certainty of irreparable harm” and that economic losses do not
constitute irreparable harm. Colo. v. U.S., 813 F.Supp.2d 1230 (D.C.
2011). The court stated that “a contrary finding would result in a
windfall to any incumbent R-SA contractor who bids unsuccessfully
on a contract's renewal.” What about the windfall to the non-blind
incumbent who obtains the equivalent of a preliminary injunction by
filing a protest with GAO?
I will briefly discuss the irreparable harm that must be established to
obtain a preliminary injunction. Peter Nolan and Andy Freeman will
discuss injunctive relief in more detail, later on today. In Hudson v.
Boxer, 632 F.Supp 1569 (D. Colo. 1986), the “loss of substantial
income, attorneys fees, court costs, loss of the opportunity to conduct
an administrative review, and loss of meaningful judicial review” was
found to be irreparable. See also Holt v. Continental Group, 708 F.2d
87, 90 (2nd Cir. 1983), for the holding that where extraordinary
circumstances are found, loss of employment can establish
irreparable injury. According to Sampson v. Murray, 415 U.S. 61, 90
(1974), the reason that irreparable harm is often not found in the
employment context, is that “adequate compensatory or other relief
will be available at a later date.” As I will point out, it is very difficult to
get damages awards enforced in R-S Act litigation. It’s at least worth
a try to file for injunctive relief.
9
E.
What the Courts Have Said About Damages
As to the issue of damages, to be paid to blind vendors by SLAs, we
are guided by Premo v. Martin, 119 F.3d 764 (9th Cir. 1997). There,
the blind vendor was awarded damages by the arbitration panel, and
Ninth Circuit ruled that damages and attorneys fees are permissible
in Randolph-Sheppard cases. Nonetheless, the same Ninth Circuit,
in Sauer v. U.S. Dept. of Educ., 668 F.3d 644, 652 (9th Cir. 2012),
recently ruled that:
the plain language of the statute weighs against interpreting the
Act as imposing a duty on state licensing agencies to sue
federal agencies, and holding them liable for damages if they
fail to do so.
Sauer v. U.S. Dept. of Educ., 668 F.3d 644, 652 (9th Cir. 2012)
As I read these two cases, Premo is still good law. However, the
agency’s failure to sue to enforce the damage award did not obligate
the agency to pay the damages in Sauer.
The reason I bring these cases up is that they could have the effect of
weakening SLA enforcement of the blind vending laws at the federal
level. If you can convince a federal agency that the state will have to
pay damages if the federal agency doesn’t apply the priority, it does
help to get the federal agency’s cooperation.
Blind licensees have increasingly encountered difficulty in obtaining
the enforcement of damage awards in R-S Act cases. See Tenn.
Dep’t of Human Serv. v. United States, 979 F.2d 1162 (6th Cir. 1992);
(state immune from enforcement of damages awarded to blind
licensees); Wisc. Dep’t of Workforce Dev., Div. of Vocational Rehab.
v. United States, 667 F. Supp. 2d 1007, 1015 (W.D. Wis. 2009)
(concluding that state “Randolph-Sheppard arbitration panels cannot
subject the states to damage awards”).
In New Hampshire v. Ramsey, 366 F.3d 764, 769 (1st Cir. 2004), a
case involving vending machines at roadside rest areas, the First
Circuit concluded that 23 U.S.C. § 111 “does not clearly evidence an
10
intent to subject states to … damages” and vacated a $900,000
damage award to blind licensees. The Court explained:
[g]iven Congress's silence in the STA Act itself and the
disagreement about damages under the R-S grievance
procedures, we cannot, as a matter of statutory
construction of the STA Act, find an intent to subject
states to damages awards under the STA Act.
Peter Nolan and Andy Freeman will address the issues and
challenges faced by SLAs in enforcing other types of remedies
ordered by arbitration panels.
VI.
Whenever One or More Vending Facilities are Feasible,
Vending Facilities Shall be Located on all Federal Property
DON’T agree that a non-blind operated vending facility is permissible
on non-exempt federal property where there are less than 100
employees or a building contains less than 15,000 square feet. See
31 C.F.R. § 395.31. When we analyze the parts of 395.30 and
395.31, the obligation of every federal agency to ensure that one or
more vending facilities are located wherever feasible is evident:
34 C.F.R.
§
395.30(a)
Each Federal agency “shall take all steps necessary to
assure that, wherever feasible, in light of appropriate
space and potential patronage, one or more vending
facilities for operation by blind licensees shall be
located on all Federal property.” Exception: when a
facility would adversely affect the interest of the United
States.
34 C.F.R.
§
395.30(b)
The Secretary of Education determines when a facility
would adversely affect United States interests.
34 C.F.R.
395.31(a)
After January 2, 1975, Federal agencies must not occupy
any building unless such building includes a satisfactory
site for the operation of a vending facility.
11
34 C.F.R.
§
395.31(b)
After January 2, 1975, Federal agencies constructing or
renovating a building shall determine that it includes a
satisfactory site or sites for a blind vending facility.
34 C.F.R.
§
395.31(c)
The determination that a building contains a satisfactory
site is made in consultation with the SLA. The SLA must
be given written notice, by certified mail, of the agency’s
intention to acquire or otherwise occupy the building.
34 C.F.R.
§
395.31(d)
When the SLA determines (after written notice) that the
number of persons using the Federal property is
insufficient, 34 C.F.R. 395.31(a) and (b) do not apply.
Likewise, 34 C.F.R. § 395.31(a) and (b) do not apply
when there are less than 100 Federal employees or less
than 15,000 square feet for Federal government
purposes.
Argue that:
 The 100 employees and 15,000 square foot provisions only
apply to the 34 C.F.R. § 395.31(a) and (b) requirements
regarding construction and remodeling and the notice required
to be provided to an SLA.
 The only purpose of any guidelines and regulations having to
do with site selection is “to simplify the difficulties which may
arise in the review of building and acquisition plans.” Sen. Rep.
93-937 at 19.
 The United States Court of Appeals for the District of Columbia,
in interpreting the regulations concerning “consideration of
space and potential patronage,” stated: “[w]e think the
regulations merely detail the factors that will be considered in
determining whether the establishment of a vending facility is
feasible.” Randolph-Sheppard Vendors of America, Inc. v.
Harris, 628 F.2d 1364, 1367 (D.C. Cir. 1980).
 Where a vending facility is feasible, the priority is to be
afforded to the SLA under the RSA. In other words, once a
federal agency (or its lessee) decides to establish a vending
facility on federal property, the RSA priority requires that the
vending facility be operated by a licensed blind vendor, unless
the SLA declines the priority.
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 It is the regulation that wherever feasible, one or more
vending facilities are to be located on all Federal property,
taking into account potential patronage, that mandates the
establishment of vending facilities on all federal property. See
also 20 U.S.C. § 107(b).
Keep in mind there are only two limitations on vending facility
placement: (1) feasibility; and (2) where the Secretary of Education
finds that a facility would adversely affect the United States. 20
U.S.C. § 107(b). The law requires that “[a] determination that
according priority to the SLA would be adverse to the interest of the
United States must be fully documented and sent to the Secretary of
Education for review.” Southfork Systems, Inc. v. U.S., 141 F.3d
1124, 1128 (Fed. Cir. 1998).
A.
When is Half a Loaf Better than None?
Example: Profitable R-S Act vending facility on National Park
property, operated as a concession contract with 5 year renewable
concession contracts, terminable at will by National Parks. Because
the R-S Act does not apply when a “single responsible
concessionaire” operates all franchises, is it better to accede to the
National Parks’ “requirement” that the vendor pay utilities, or take the
chance that the National Parks will end the concession contract and
go with a single responsible concessionaire other than the SLA.
I am sure that many of you have examples of this conundrum. I
would urge that you take these types of agreements to your vendors’
committee before you enter into them, as that will help to insulate the
SLA from having to defend against a grievance, based on the
committee’s agreement with the SLA’s decision.
B.
Circumventing the Priority
A lot of times the federal agency will say that it cannot be required to
use its budget to provide a satisfactory site. But that is not the case –
the Congress, the elected representatives of the people decided that
a portion of federal buildings are to be set aside for a blind vending
facility to be operated by the blind. One way around this is to get an
13
enforceable agreement between the SLA and the federal agency for
a permit to begin in the upcoming fiscal year or two.
Another tactic is for the agency to put out a request for proposals that
would require that the successful bidder construct the satisfactory site
in exchange for a 20 year contract. That violates the priority as well –
the agency is supposed to provide the satisfactory site. If this comes
up then the SLA should file a protest with the GAO before the date for
submission of bids.
I recently came across a Missouri case that I think can be useful with
respect to challenges regarding the payment of vending machine
income: Hahn v. Austin, 293 F. Supp 37 (D.C. Mo. 1968), in which
an employee group was found to not be entitled to $ 20,000
(annually) of vending machine income in a building transferred by the
Army to the General Services Administration because “[e]mployee
groups are nowhere mentioned in the Act,” they suffer “no legal
wrong” and are not “adversely affected or aggrieved” within the
meaning of the RSA.
VIII. Conclusion
Again, I want to express my appreciation to the sponsors and the
attendees of this conference. It is very encouraging to see so many
people working hard to implement the R-S Act and to grow the
numbers and incomes of blind vendors.
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APPENDIX
I.
Selected Legislative History
The legislative history of the Act makes it clear that the amendments
were meant to enlarge the opportunities of blind vendors:
[c]learly, both vending machines and minority business
enterprises have been introduced on Federal property to
the detriment of the Randolph-Sheppard program, and in
violation of the spirit of the law, if not its letter. The
Committee wishes to state as its firm intention that the
law, as now written, and as projected under S. 2851,
is directed toward the establishment and protection
of blind vending operations.
SR 93-937 at 15.
to the extent that a minority business enterprise or nonblind operated vending machines competes with or
otherwise economically injures a blind vendor, every
effort must be made to eliminate such competition or
injury.
SR 93-937 at 15.
Congress’s purpose in expanding the RSA’s reach from
Federal buildings to Federal property was to enlarge
economic opportunities for the blind.
SR 93-937 at 6.
A
II.
Selected Randolph-Sheppard cases
Automated Communication Sys, Inc. v. U.S., 49 Fed. Cl. 570 (2001)
Colo. v. U.S., 813 F.Supp.2d 1230 (D. Colo. 2011)
Hahn v. Austin, 293 F. Supp 37 (D. Mo. 1968)
Holt v. Continental Group, 708 F.2d 87, 90 (2nd Cir. 1983)
Hudson v. Boxer, 632 F.Supp. 1569 (D. Colo. 1986)
In re Intermark, B-290925 (GAO 2002).
Kentucky v. United States, 62 Fed. Cl. 445, 454-55 (Fed. Cl. 2004)
aff'd sub nom. Kentucky, Educ. Cabinet, Dept. for the Blind v. United
States, 424 F.3d 1222 (Fed. Cir. 2005)
Md. State Dep’t of Ed, B-400583; B-400583.2
Ms. State Dep’t of Rehabilitation Servs., B-250783.8
Moore’s Cafeteria v. U.S., 314 Fed. Appx. 277 (Fed. Circ. 2008)
New Hampshire v. Ramsey, 366 F.3d 1, 29 (1st Cir. 2004).
NISH v. Cohen, 247 F.3d 197, 202 (4th Cir. 2001)
North Carolina v. Jones, 53 Fed. Cl. 147, 165 (2002).
Premo v. Martin, 119 F.3d 764 (9th Cir. 1997)
Randolph-Sheppard Vendors of America, Inc. v. Harris, 628 F.2d
1364, 1367 (D.C. Cir. 1980).
Randolph–Sheppard Vendors of Am. v. Weinberger, 795 F.2d 90,
111 (D.C.Cir.1986)
Sampson v. Murray, 415 U.S. 61, 90 (1974)
B
Sauer v. U.S. Dept. of Educ., 668 F.3d 644, 652 (9th Cir. 2012)
Southfork Systems, Inc. v. U.S., 141 F.3d 1124, 1128 (Fed. Cir.
1998)
Tenn. Dep’t of Human Serv. v. United States, 979 F.2d 1162 (6th Cir.
1992)
U.S. v. Miss. Voc. Rehab. for the Blind, 794 F.Supp. 1344, 1352,
judgment entered 812 F.Supp. 85 (S.D. Miss. 1992)
Wa. State Dep’t of Services for the Blind, B-293698.2
Wisc. Dep’t of Workforce Dev., Div. of Vocational Rehab. v. United
States, 667 F. Supp. 2d 1007, 1015 (W.D. Wis. 2009)
C
III.
Specific Exemptions from the Randolph-Sheppard Priority
 Commissaries, Exchanges, and Morale, Welfare & Recreation
Programs – not specifically exempted, but authorized by 10
U.S.C. § 2481 et. seq.
 National Park Service and National Aeronautics and Space
Administration (NASA) are exempted when “all
accommodations, facilities, or services in such areas are
operated by a single responsible concessioner.” 34 C.F.R. §
395.30(c). R-S Act vending facilities are located on National
Park property at Hoover Dam and Pearl Harbor.
 Vending Machine Income exempted by 34 C.F.R. § 395.32(i):
o income from vending machines within operated retail
sales outlets under the control of post exchange or ships'
stores systems authorized under title 10 U.S.C.
According to two cases, this exemption applies to all
vending machines operated by exchanges, and not those
just within the retail sales outlets. State of Okl. ex rel.
Dept. of Human Services v. Weinberger, 582 F. Supp.
293 (W.D. Okla. 1982) aff'd, 741 F.2d 290 (10th Cir.
1983); Texas State Comm'n for the Blind v. United States,
796 F.2d 400 (Fed. Cir. 1986).
o income from vending machines operated by the Veterans
Canteen Service;
o income from vending machines not in direct competition
with a blind vending facility at individual locations,
installations, or facilities on Federal property the total of
which at such individual locations, installations, or
facilities does not exceed $3,000 annually.
D
IV.
Selected Regulations of Federal Agencies Concerning the
Randolph-Sheppard Act
Department of Commerce and Foreign Trade – 15 C.F.R. §§ 5.1
through 5.8
Note: 5.2(b) “operate vending stands without any charge for
space or necessary utilities on properties owned and
occupied by the Department or on which the Department
controls maintenance, operation, and protection.
Federal Highway Administration – Department of Transportation – 23
C.F.R. § 752.5 & 752.11
Note: 752.5(c) “the State shall give priority to vending
machines which are operated through the State licensing
agency designated pursuant to section 2(a)(5) of the
Randolph- Sheppard Act, U.S.C. 107(a)(5).
Note: 752.11 (f) Federal-aid funds may not be used for
assemblage, printing, or distribution of information
materials; for temporary or portable information facilities;
or for installation, operation, or maintenance of vending
machines.
Money and Finance Treasury – 31 C.F.R. § 11.2
National Defense - 32 C.F.R. §§ 260 through 260.7
Note: 260.1(c) “Does NOT apply to full food services, mess
attendant services, or services supporting the operation of
a military dining facility.”
Note: The definition of cafeteria at 260.3. Cafeteria. A food
dispensing 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 or herself from displayed selections. A
cafeteria may be fully automatic, or some limited waiter or
E
waitress service may be available and pro- vided within a
cafeteria and table or booth seating facilities are always
pro- vided. The DoD Component food dispensing facilities
that conduct cafeteria-type operations during part of their
normal operating day and full table-service operations
during the remainder of their normal operating day are not
‘‘cafeterias’’ if they engage primarily in full table service
operations.
The language in italics is NOT contained in the definition
of cafeteria at 34 C.F.R. § 395.1
Note: 260.5(3) authorizes DoD to suspend or terminate a permit
to operate a vending facility after consulting where
circumstances warrant. Contrast this with 34 C.F.R. §
395.35(b) requiring that permits be “for an indefinite
period of time subject to suspension or termination on the
basis of compliance with agreed upon terms.”
Public Lands – Interior 43 C.F.R. § 13.1 through 13.6
Note: 13.2(b) “The head of the Interior bureau or office may
deny an application if he determines that the issuance of
a permit would unduly inconvenience the bureau or office
or adversely affect the interests of the United States.”
F
V.
The Military’s “Dining Policy”
Section 856, entitled "Contracting with Employers of
Persons with Disabilities," repeals subsections (a) and (b) of
section 853 of the Ronald W. Reagan National Defense
Authorization Act for Fiscal Year 2005 (Public Law 108-375), and
addresses the applicability of the JWOD Act and R-SA to the
operation of military dining facility contracts and military dining
facility support services as of the date of enactment (October 17,
2006). The law states --(1) The R-SA does not apply to full food services, mess
attendant services, or services supporting the
operation of a military dining facility that, as of the date
of the enactment of this Act, were services on the
procurement list established under section 2 of the
JWOD Act.
(2) The JWOD Act does not apply at the prime contract
level to any contract entered into by the DoD as of the
date of the enactment of this Act with a State licensing
agency under the R-SA for the operation of a military
dining facility.
(3) The JWOD Act shall apply to any subcontract entered
into by a DoD contractor for full food services, mess
attendant services, and other services supporting the
operation of a military dining facility.
G