[Federal Register Volume 59, Number 205 (Tuesday, October 25, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-26359] [[Page Unknown]] [Federal Register: October 25, 1994] ----------------------------------------------------------------------- DEPARTMENT OF EDUCATION 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 July 31, 1991, an arbitration panel rendered a decision in the matter of Minnesota Department of Jobs and Training, State Services for the Blind and Visually Handicapped v. Department of Veterans Affairs (Docket No. R-S/87-8). This panel was convened by the Secretary of Education pursuant to the Randolph- Sheppard Act (the Act), 20 U.S.C. 107d-1(b), upon receipt of a complaint filed by the Minnesota Department of Jobs and Training, State Services for the Blind and Visually Handicapped on January 15, 1987. The Randolph-Sheppard Act creates a priority for blind individuals to operate vending facilities on Federal property. Under section 107d- 1(b), the State licensing agency (SLA) may file a complaint with the Secretary if the SLA determines that an agency managing or controlling Federal property fails to comply with the Act or regulations implementing the Act. The Secretary then is required to convene an arbitration panel to resolve the dispute. FOR FURTHER INFORMATION CONTACT: A copy of the full text of the arbitration panel decision may be obtained from George F. Arsnow, U.S. Department of Education, 600 Independence Avenue, S.W., Room 3230, Switzer Building, Washington, D.C. 20202-2738. Telephone: (202) 205- 9317. Individuals who use a telecommunications device for the deaf (TDD) may call the TDD number at (202) 205-8298. SUPPLEMENTARY INFORMATION: Pursuant to the Randolph-Sheppard Act, 20 U.S.C. 107d-2(c), the Secretary publishes a synopsis of arbitration panel decisions affecting the administration of vending facilities on Federal property. Background The Minnesota Department of Jobs and Training, the SLA, filed an arbitration complaint under the Act stating that it had provided vending machine services at the St. Cloud Veterans Administration Hospital since 1977 pursuant to a contract with the Veterans Canteen Service (VCS) under which the SLA paid commissions to VCS. The contract expired in June 1986, and the SLA requested from VCS that it be given a priority to operate the vending machines under the Act. Subsequently, the SLA submitted to the Veterans Administration (now the Department of Veterans Affairs (DVA)) a non-competitive bid that did not include the payment of commissions to DVA by blind vendors. DVA denied the permit application on the grounds that the Act does not apply to DVA medical and domiciliary facilities served by the VCS, and, therefore, all potential contractors, including the SLA, had to comply with the DVA's competitive bidding procedures. On June 19, 1987, the U.S. Department of Education (ED), Rehabilitation Services Administration (RSA), convened an arbitration panel to hear this dispute. In conjunction with the filing of the arbitration complaint against DVA/VCS, the SLA obtained a Federal court injunction. On July 2, 1987, the court enjoined VCS from awarding a vending machine contract to anyone other than the SLA pending the completion of the arbitration panel's decision. In an Opinion and Order dated September 2, 1988, the arbitration panel convened by the Secretary (1) rejected DVA's claim that medical facilities served by VCS were exempt from the priority provisions of the Act, finding that the narrow exemption afforded VCS (and the military exchanges) from the income-sharing requirements of the statute did not incorporate a broader exemption from the priority provisions; and (2) found that both the Act and the VCS statute serve important public purposes and that the two statutes could be harmonized. The panel issued additional findings, conclusions, and orders as follows: the priority requirement of the Act is met when prior right or an opportunity exists for a licensed blind person to operate a vending facility. Normally this is accomplished through a permit application and approval process. However, in particular instances negotiated arrangements other than the standard permit application and approval process might be used that are mutually acceptable to all parties. While holding that VCS is not required to approve the SLA's permit application for vending machine services at the Medical Center, the arbitration panel maintained that VCS could not deny the SLA a priority for a licensed blind person to provide these services. The panel also held that the 17 percent commission rate on gross sales payable by the blind vendor, considering his income, was inequitable. Because of insufficient basis or guidelines in the record, the panel withheld prescribing any specific commission rate and ordered DVA to continue without interruption the existing arrangement under which the blind vendor provided vending machine services at the Medical Center. However, the panel ruled that commission payments were to be suspended until the SLA and the DVA could reach a new agreement or, in the absence of an agreement, until the panel issued a final award. The panel retained jurisdiction during a mandated six-month negotiation period. On February 10, 1989, DVA requested the panel to reconsider its decision, arguing that arbitration panels have no authority to issue binding rules and orders against Federal agencies and that contracting decisions made by the VCS Administrator are committed by law to that Administrator's sole discretion and are judicially unreviewable. On November 30, 1989, the panel issued an Interim Opinion and Directive. In this opinion, the panel rejected DVA's challenge to its authority to issue orders. The panel concluded that its powers under the Act were not limited to mere declaratory findings. The panel further ordered the parties to continue negotiations and to report back within 45 days if there were any unresolved issues at that time. The parties were specifically directed to present to the panel a joint submission of issues, if any, that remained unresolved. On January 24, 1990, the parties joined in a letter report to the panel stating they had not reached a contract or agreement and that other issues still remained unresolved. On February 12, 1990, the SLA and DVA sent to the panel a joint statement listing the unresolved issues. By letter dated June 19, 1990, RSA authorized the panel to reconvene and decide the issues jointly agreed upon by the parties, with any modifications deemed appropriate by the panel. Arbitration Panel Decision After reviewing the evidence and arguments at the original hearings in 1988, DVA's Petition for Reconsideration in 1989, and the evidence and arguments submitted at the reconvened hearing in 1990, the panel issued a final Decision and Order dated July 31, 1991. The panel reaffirmed the findings contained in its original Opinion and Order that the priority requirement of the Act is met when a prior right or an opportunity exists for a licensed blind person to operate a vending facility. In view of the longstanding and recognized practice of DVA in contracting out vending machine services and receiving commissions pursuant to authority granted to the VCS Administrator to enter into agreements with outside suppliers for canteen services, the panel found that these contract arrangements have carried out the mission of VCS in an effective, high-quality, and self-sustaining manner. Accordingly, the panel concluded that the SLA, in providing vending service under a contract or agreement with VCS, should pay a commission to VCS. Upon concluding that a 17 percent commission rate on gross sales generated at the St. Cloud Medical Center was in fact fair and equitable, the panel ordered the SLA to pay a commission to the VCS of 17 percent effective as of the date of the issuance of the Decision and Order. The panel found that the SLA need not pay commissions to the VCS from the effective date of the panel's order dated September 2, 1988, suspending payment of commissions, to the effective date of this current Decision and Order. In addition, the panel (1) held that the SLA in providing services under contract or agreement with VCS need not pay for costs of storage and utilities; (2) concluded that, under the terms of the contract to be negotiated and executed between the parties, VCS should have no right to install and operate its own vending machines at the Veterans Administration Medical Center in St. Cloud; (3) directed the parties to proceed to implement by contractual arrangement the elements tentatively agreed upon for providing vending services at the St. Cloud Medical Center as indicated in the parties' joint progress report on July 24, 1990; (4) ordered that the contract be entered into between the SLA and VCS for a term of five years subject to renegotiation; (5) ordered that disputes that may arise in negotiating the contract between the SLA and VCS be resolved in accordance with the procedures under the Randolph-Sheppard Act until there is further clarification or delineation as to the proper forum for resolving the particular dispute; and (6) ordered the parties to enter into an agreement for the continued operation of vending machines by a blind person at the Medical Center in St. Cloud consistent with the Decision and Order. One panel member concurred in part and dissented in part, concluding that (1) the VCS may not require the SLA or its assigned blind vendor to pay a commission as a condition for the right to operate vending machines at the VA Medical Center in St. Cloud; and (2) the blind vendor's assignment to a facility under the Act being for an indefinite period, the vendor's license to operate the facility may not expire except for cause. The decision of the arbitration panel was appealed to the United States District Court for the District of Minnesota by the State of Minnesota, Department of Jobs and Training, State Services for the Blind and Visually Handicapped and, subsequently, to the United States Court of Appeals for the Eighth Circuit by the Department of Veterans Affairs and the Department of Education. On March 11, 1994, the U.S. Court of Appeals for the Eighth Circuit upheld the District Court's findings that the DVA/VCS is not exempt from the Randolph-Sheppard Act and must comply with ED regulations on blind vendors' operation of vending facilities. Specifically, the court found that the regulations require the issuance of permits for an indefinite period of time and prohibit the charging by VCS of commissions on sales from blind vendors' operations without the approval of the Secretary of Education. The court rejected the VCS contention that the Randolph-Sheppard Act's permit system interferes with its mission to provide merchandise to hospitalized veterans at reasonable prices and to remain self- sustaining. Although the Veterans Canteen Act empowers the VCS to operate canteens on DVA property, nothing in the Veterans Canteen Act authorizes the VCS to exercise this statutory control over Randolph- Sheppard vendors who also operate on DVA property. Because blind vendors operate vending facilities under the Randolph-Sheppard Act and ED regulations, the blind vendors' operation is neither a VCS canteen nor subject to the Veterans Canteen Act and the VCS regulations. The views and opinions expressed by the arbitration panel do not necessarily represent the views and opinions of the U.S. Department of Education. Dated: October 19, 1994. Judith E. Heumann, Assistant Secretary for Special Education and Rehabilitative Services. [FR Doc. 94-26359 Filed 10-24-94; 8:45 am] BILLING CODE 4001-01-P