[Federal Register Volume 60, Number 14 (Monday, January 23, 1995)]
[Notices]
[Pages 4406-4408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1578]
-----------------------------------------------------------------------
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 August 15, 1991, an arbitration
panel rendered a decision in the matter of Florida Department of
Education, Massachusetts Commission for the Blind, and Virginia
Department for the Blind and Visually Handicapped v. United States
Department of Defense, (Docket Nos. R-S/85-8, 87-1, and 87-4). This
panel was convened by the Secretary of the U. S. Department of
Education pursuant to 20 U.S.C. 107d-1(b). The Randolph-Sheppard Act
(the Act) creates a priority for blind vendors to operate vending
facilities on Federal property. Under this section of the Act, 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, Mary
E. 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 and other property. [[Page 4407]]
Background
In 1984 the Department of Defense, through its agents and officers,
solicited proposals for fast food hamburger operations. The Army and
Air Force Exchange Service (AAFES) and the Navy Resale and Services
Support Office (NAVRESSO) subsequently signed contracts with two
national fast food companies, McDonald's Corporation and Burger King
Corporation. By a contract dated August 7, 1984, the Navy awarded to
McDonald's Corporation exclusive rights to operate fast food hamburger
facilities on naval installations for a period of 10 years. The
contract signed by the Navy involved an exclusive franchise effort
consisting of the construction and operation of a minimum of 40 and a
maximum of 300 fast food facilities. These facilities would be owned
and operated by the McDonald's Corporation. On May 15, 1984, AAFES
purchased a franchise from the Burger King Corporation. The AAFES
contract involved the construction of 185 franchised facilities. Under
the terms of the AAFES contract, the Burger King facilities were to be
operated by AAFES, with a portion of the profits being remitted to
Burger King.
The SLAs in the four States initially protested the preceding fast
food contracts. They were in Florida, Massachusetts, Virginia, and
Kansas. The Kansas Department of Rehabilitative Services subsequently
withdrew its request for arbitration.
These SLAs, through representative organizations, brought two
actions in United States District Court for the District of Columbia
regarding the alleged violations of the Act by the Secretary of Defense
and the Secretaries of Navy, Army, and Air Force, along with NAVRESSO
and AAFES personnel. The SLAs requested the Court to terminate the
contracts with McDonald's and Burger King Corporations.
The Court held that the Act did not apply to the disputed
contracts. Randolph-Sheppard Vendors of America v. Weinberger, 602 F.
Supp. 1007 (D.D.C. 1985). On appeal, the United States Court of Appeals
for the District of Columbia Circuit held that plaintiffs were required
to first pursue and exhaust any available remedies under the Act before
seeking judicial relief. Randolph-Sheppard Vendors of America v.
Weinberger, 795 F.2d. 90 (D.C. Cir. 1986).
On April 5, 1985, the Florida Department of Education, the SLA,
requested the Secretary of Education to convene an arbitration panel
concerning the McDonald's contract with the Department of Navy. On
December 31, 1986, this request was amended to include the Burger King
Corporation contract. The SLA alleged that the Department of Defense
(DOD) failed to give notice to any SLA regarding the solicitation of
proposals for fast food service on Navy, Army, and Air Force
installations and that the awarding of the contracts to McDonald's and
Burger King Corporations without regard to the priority given to blind
vendors by Congress was a violation of the Act.
In addition, the Florida Department of Education alleged that the
McDonald's and Burger King franchises on military installations placed
a limitation upon the placement of blind vending facilities and that by
imposing such a limitation DOD failed to submit a justification in
writing to the Secretary of Education seeking a Secretarial
Determination pursuant to 20 U.S.C. 107(b).
On October 21, 1986, the Massachusetts Commission for the Blind
requested arbitration concerning McDonald's contract with the
Department of the Navy and on March 25, 1987, amended its request to
include the Burger King Corporation contract with AAFES. Similarly, on
November 28, 1986, the Virginia Department for the Blind and Visually
Handicapped requested arbitration concerning McDonald's Corporation
contract with the Department of Navy and on August 5, 1988, amended its
complaint to include the Burger King Corporation contract with AAFES.
By letter dated April 24, 1987, the arbitration complaints of
Florida, Massachusetts, and Virginia were consolidated into one
complaint, and hearings were held by the arbitration panel on July 20,
1988 and November 15, 1988 at the United States Department of Education
Headquarters Office in Washington, D.C.
Arbitration Panel Decision
In an Interim Award dated January 31, 1990, the arbitration panel
found that DOD violated the Randolph-Sheppard Act and applicable
regulations.
The panel concluded that DOD failed to notify the SLAs of its
intention to solicit bids for vending facilities. DOD contended that it
was not obligated to notify the SLAs. The panel ruled that the explicit
notice requirements established by Congress in 34 CFR 395.31(c) are
evidence of Congressional intent that SLAs be afforded adequate
opportunity to protect their interests by receiving advance
notification of the Federal Government's plans to purchase, lease,
renovate, or otherwise acquire property that might trigger an
obligation to provide priority for blind vendors.
Finally, the arbitration panel found that DOD failed to meet the
requirements of section 107b, which states in relevant part that ``Any
limitation on the placement or operation of a vending facility based on
a finding that such placement or operation would adversely affect the
interests of the United States shall be fully justified to the
Secretary, who shall determine whether such limitation is justified.''
The arbitration panel concluded that, whether or not DOD believed it
would gain approval from the Secretary of Education regarding its
limitation request, DOD was required to seek the Secretary's approval
pursuant to section 107b.
In dissent one panel member agreed with the District Court
interpretation of the statutory meaning of the words ``priority'' and
``limitation.'' That panel member stated that DOD's solicitation for
fast food operations does not come within the statutory or regulatory
definition of cafeteria and that, therefore, no violation of the Act
and regulations occurred.
The arbitration panel retained jurisdiction of the complaint for
the purpose of determining remedy and other remaining aspects of the
dispute. On August 15, 1991, the arbitration panel rendered its final
award and opinion on remedy.
The panel ruled that AAFES should contact the petitioner SLAs in
each State where a Burger King facility now exists and should establish
a procedure acceptable to the SLAs for identifying, training, and
installing blind vendors as managers of all current and future Burger
King operations conducted within their jurisdiction pursuant to the
disputed contract. Additionally, DOD should give the SLAs 120 days
written notice of any new Burger King operations to be established. The
SLA and DOD would arrange for remuneration of the blind vendor
consistent with custom and practice of other SLA-sponsored food
facilities under the Act. Any dislocation of persons currently managing
these facilities would be at the discretion of AAFES provided that the
management of the facility would be transferred to the blind vendor
upon successful completion of training.
Regarding the NAVRESSO contract with McDonald's Corporation, DOD
would provide to the appropriate SLA no less than 120 days notice of
any new McDonald's facility to be established. The SLA then would
determine whether it wished to exercise its priority and to
[[Page 4408]] provide funds to build and operate a new McDonald's
facility within its jurisdiction. If timely notice were delivered in
writing to DOD within 60 days after receipt by the SLA, a priority
right to operate the McDonald's franchise would be given to the SLA and
to a competent, qualified manager recommended by the SLA.
Further, NAVRESSO within 60 days must communicate to the SLAs
involved in the dispute a plan for establishing the priority of blind
vendors pursuant to the Act in the event that another McDonald's
restaurant would be established within the jurisdiction of these SLAs.
The parties also would draft procedures for communicating notice of
intent to operate McDonald's restaurants within the jurisdiction and
determine criteria for selecting competent blind managers.
Subsequently, concurrent court proceedings before the United States
District Court for the District of Columbia regarding this dispute have
been cancelled, and the case has been dismissed.
The views and opinions expressed by the panel do not necessarily
represent the views and opinions of the U.S. Department of Education.
Dated: January 11, 1995.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 95-1578 Filed 1-20-95; 8:45 am]
BILLING CODE 4000-01-P
