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
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
VI. WHENEVER ONE OR MORE VENDING FACILITIES ARE FEASIBLE, VENDING FACILITIES SHALL BE LOCATED ON ALL FEDERAL PROPERTY
A. WHEN IS HALF A LOAF BETTER THAN NONE?
B. CIRCUMVENTING THE PRIORITY
VII. CONCLUSION
APPENDIX
I. SELECTED LEGISLATIVE HISTORY
II. SELECTED RANDOLPH-SHEPPARD CASES
III. SPECIFIC EXEMPTIONS FROM THE RANDOLPH-SHEPPARD PRIORITY
IV. SELECTED REGULATIONS OF FEDERAL AGENCIES CONCERING RANDOLPH-SHEPPARD ACT
IV. THE MILITARY’S “DINING POLICY”
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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 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 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.”
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, 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 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.