The Randolph-Sheppard Act: Major Judicial Decisions

The Randolph-Sheppard Act:

Major Judicial Decisions

-name redactedLegislative Attorney

October 9, 2008

Congressional Research Service

7-....

www.crs.gov

RS22968

CRS Report for Congress

Prepared for Members and Committees of Congress

The Randolph-Sheppard Act: Major Judicial Decisions

Summary

The Randolph-Sheppard Act requires that blind individuals receive priority for the operation of

vending facilities on federal property. “Vending facilities” include automatic vending machines,

cafeterias, and snack bars. This report will discuss several significant court decisions and recent

legislation related to the Randolph-Sheppard Act. Two federal court of appeals decisions, NISH v.

Cohen and NISH v. Rumsfeld, held that military troop dining facilities are “cafeterias” under the

Randolph-Sheppard Act and that the act controlled over the Javits-Wagner-O’Day Act, which

provides employment opportunities for the severely disabled. Other cases have analyzed the

scope of the Randolph-Sheppard Act’s application to military troop dining facilities. S. 3112,

which was introduced on June 11, 2008, would amend the Javits-Wagner-O’Day and RandolphSheppard Acts and address several issues raised by these judicial decisions.

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The Randolph-Sheppard Act: Major Judicial Decisions

Contents

Background ................................................................................................................................1

The Randolph-Sheppard Act and Military Troop Dining Facilities ...............................................1

Application of the Act to Military Troop Dining Facilities .....................................................1

NISH v. Cohen ................................................................................................................1

NISH v. Rumsfeld ............................................................................................................2

Other Cases.....................................................................................................................3

Limits on the Act’s Application to Military Troop Dining Facilities .......................................3

Legislation in the 110th Congress.................................................................................................5

Contacts

Author Contact Information ........................................................................................................5

Acknowledgments ......................................................................................................................5

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The Randolph-Sheppard Act: Major Judicial Decisions

Background

The Randolph-Sheppard Act,1 originally signed into law by Franklin D. Roosevelt in 1936,2

requires that blind individuals receive priority for the operation of vending facilities on federal

property. The 1974 amendments to the act3 changed the term “vending stand” to “vending

facility” and defined the term as meaning “automatic vending machines, cafeterias, snack bars,

cart services, shelters, counters, and such other appropriate auxiliary equipment as the Secretary

[of Education] may by regulation prescribe as being necessary for the sale of the articles or

services described in section 107a(a)(5) of this title and which may be operated by blind

licensees....”4 The regulations promulgated by the Department of Education define “cafeteria” as

“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 from

displayed selections. A cafeteria may be fully automated or some limited waiter or waitress

service may be available and provided within a cafeteria and table or booth seating facilities are

always provided.”5 The act does not apply to “income from vending machines within retail sales

outlets under the control of exchange or ships’ stores systems[,] ... income from vending

machines operated by the Veterans Canteen Service[,] ... or income from vending machines not in

direct competition with a blind vending facility at individual locations” on the federal property.6

The Randolph-Sheppard Act and Military Troop

Dining Facilities

Application of the Act to Military Troop Dining Facilities

Two major circuit court cases have dealt with the issue of whether the term “cafeteria” in the

Randolph-Sheppard Act applies to military troop dining facilities. Both the Fourth Circuit and the

Tenth Circuit concluded that military troop dining facilities are “cafeterias” under the RandolphSheppard Act.

NISH v. Cohen

In NISH v. Cohen,7 the court held that the Randolph-Sheppard Act applied to military troop dining

facilities at Fort Lee in Virginia. NISH, a nonprofit agency designated “to represent other

1

20 U.S.C. § 107 et seq. (2008). For an overview of the act’s provisions and the program’s current operation, see CRS

Report RL34609, The Randolph-Sheppard Act, by Scott Szymendera.

2

P.L. 74-732.

3

P.L. 93-516.

4

20 U.S.C. § 107e(7) (2008). Section 107a(a)(5) requires the Secretary of Education to designate state agencies to issue

licenses for blind persons to operate vending facilities “for the vending of newspapers, periodicals, confection, tobacco

products, foods, beverages and other articles or services dispensed automatically or manually and prepared on or off the

premises in accordance with all applicable health laws....”

5

34 C.F.R. § 395.1(d).

6

20 U.S.C. § 107d-3(d).

7

247 F.3d 197 (4th Cir. 2001).

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The Randolph-Sheppard Act: Major Judicial Decisions

nonprofits employing the severely disabled in the production of items and services for

government agencies under the Javits-Wagner-O’Day Act”8 (JWOD Act), had unsuccessfully

sought to negotiate a contract for military troop dining facilities that was granted to a blind

licensee. NISH filed suit seeking a declaratory judgment concerning the proper interpretation of

the Randolph-Sheppard Act. In its appeal to the Fourth Circuit, NISH argued that military troop

dining facilities are not “cafeterias” under the Randolph-Sheppard Act “because, in contrast to

typical cafeterias (where meals are purchased by the general public from private funds), meals at

military mess halls are provided to soldiers from appropriated funds.”9 Using a two-part Chevron

analysis10, the court analyzed statutory and administrative interpretations and ruled that Fort Lee’s

contracting officer did not act unreasonably in applying the term “cafeteria” to the military troop

dining facilities at Fort Lee.11

NISH also argued that the JWOD Act applied to the awarding of the military troop dining

facilities contract at Fort Lee because the Competition in Contracting Act (CICA) “preclud[ed]

application of the Randolph-Sheppard Act.”12 CICA “requires that the military use ‘full and open

competition’ when contracting for ‘property or services’ except ‘in the case of procurement

procedures otherwise expressly authorized by statute.’”13 The court ruled that the procurement

provisions found in the Randolph-Sheppard Act met CICA’s sweeping definition of

procurement,14 which meant both the Randolph-Sheppard Act and the JWOD Act could apply to

the situation. The court further held that, of the two statutes, the Randolph-Sheppard Act was

more specific and therefore controlling. 15

NISH v. Rumsfeld

In NISH v. Rumsfeld,16 the court held that the Randolph-Sheppard Act applied to military troop

dining facilities at Kirtland Air Force Base in New Mexico. NISH had a one-year contract for

food services at the base with options for four additional years. Following the first year, the Air

Force did not renew the contract with NISH and instead awarded it to the New Mexico

Commission for the Blind (NMCB), citing compliance with the provisions of the RandolphSheppard Act. NISH filed suit seeking a declaratory judgment concerning the proper

interpretation of the Randolph-Sheppard Act. In its appeal to the Tenth Circuit, NISH argued that

Congress did not intend to include military troop dining facilities in the Randolph-Sheppard Act’s

definition of “vending facilities.”17 The court rejected this argument by ruling that the plain

8

Id. at 199. The JWOD Act is codified at 41 U.S.C. §§ 46-48c (2008).

247 F.3d at 203.

10

See Chevron U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984). “When a court reviews

an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the

question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is

the end of the matter.... [I]f the statute is silent or ambiguous with respect to the specific issue, the question for the

court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 842-43.

11

247 F.3d at 204.

12

Id. at 200.

13

Id. at 201.

14

Id. at 204.

15

Id. at 204-05.

16

348 F.3d 1263 (10th Cir. 2003).

17

Id. at 1267.

9

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The Randolph-Sheppard Act: Major Judicial Decisions

language of the statute is unambiguous with respect to the inclusion of “cafeterias.”18 NISH

further argued that the Randolph-Sheppard Act did not grant authority to the Department of

Education (ED) to regulate military mess halls,19 but the court ruled that Congress did grant this

authority to the ED. Using a two-part Chevron analysis, 20 the court held that the Air Force

reasonably relied on the ED’s determinations about the meaning of the Randolph-Sheppard Act as

well as its own determination in awarding the contract to NMCB.21

As in NISH v. Cohen, NISH also argued that the JWOD Act applied because of CICA.22 The court

here reached the same conclusion, holding that the Randolph-Sheppard Act met CICA’s

procurement definition and controlled over the JWOD Act. 23

Other Cases

Small business concerns24 eligible to participate in a program or contract under Section 8(a) of the

Small Business Act25 and HUBZone entities26 have also filed claims objecting to the application

of the Randolph-Sheppard Act to the military troop dining facility contract process.27 In these

cases the Comptroller General and the Court of Federal Claims both held that the blind vendor

contracts within the competitive range of contracts had priority over the other groups’ contracts.

Limits on the Act’s Application to Military Troop Dining Facilities

The application of the Randolph-Sheppard Act to military troop dining facility contracts is limited

by the requirement found in 48 C.F.R. 15.306 that the contract fall within the competitive range.

In Southfork Systems, Inc. v. United States,28 the Court of Appeals for the Federal Circuit held that

a contract proposal from a blind vendor could fall within the competitive range of contracts as

determined by the contracting officer. In this case Southfork lost its contract with the Air Force

for military troop dining facility services to the Texas Commission for the Blind (the

Commission) and contested the inclusion of the Commission’s contract proposal in the

competitive range. 29 The lower court rejected Southfork’s claims.30 The appellate court agreed

with the lower court and specifically stated that it failed to see “how ... the Air Force could have

18

Id. at 1269.

Id.

20

See supra note 11.

21

348 F.3d at 1271.

22

Id.

23

Id. at 1272.

24

See 15 U.S.C. § 632(n) (defining small business concerns).

25

15 U.S.C. § 637(a).

26

See 15 U.S.C. § 632(p) (defining HUBZone entities).

27

In re Intermark, Inc., 2002 Comp. Gen. Proc. Dec. P180 (2002); Automated Commc’n Sys., Inc. v. United States, 49

Fed. Cl. 570 (2001).

28

141 F.3d 1124 (Fed. Cir. 1998).

29

The Air Force established that its contract process would have a competitive range that “‘consist[ed] of all proposals

which are considered to have a reasonable chance of being selected for award.’” Id. at 1136.

30

Southfork filed twelve total counts in the case. Id. at 1130. Among other claims, Southfork alleged that the Air Force

deviated from its contract process by considering, as part of the contract proposal, the experience of a non-blind

subcontractor who would support the blind cafeteria manager. Id. at 1138.

19

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The Randolph-Sheppard Act: Major Judicial Decisions

concluded that the Commission did not have a ‘reasonable chance of being selected for award’”

without rejecting “out of hand the proposition that economic opportunities for the blind could be

enlarged by having a blind individual” managing the cafeteria.31 The court recognized that the

“contracting officer had broad discretion to consider each factor [in the contract process] as a part

of a totality of the circumstances” in making the competitive range determination. 32 The

determination of the competitive range has also been part of several federal district court

rulings. 33

The application of the Randolph-Sheppard Act to military troop dining facility contracts also may

be limited by the types of services provided by the blind individual. In one case, Washington State

Department of Services for the Blind v. United States,34 the Court of Federal Claims held that

dining facility attendant services contracts were not covered by the Randolph-Sheppard Act. In

this case, the Washington State Department of Services for the Blind (WSDSB) challenged the

Army’s determination that the Randolph-Sheppard Act did not apply to contracts for dining

facility attendant services at Fort Lewis. 35 WSDSB argued that the Randolph-Sheppard Act’s

requirement that blind persons be given priority for “operation of a vending facility” on federal

property included dining facility attendant services contracts,36 but the court held that the Army’s

interpretation that “operation” did not include dining facility attendant services was not arbitrary

or capricious.37 However, in Mississippi Department of Rehabilitation Services v. United States,38

the Court of Federal Claims held that a contract for day-to-day services, as opposed to dining

facility attendant services, fell under the Randolph-Sheppard Act even though the Navy retained

control over menu selection and food supply purchasing.39 In this case, the Mississippi

Department of Rehabilitation Services challenged the Navy’s determination that the RandolphSheppard Act did not apply to a contractor for services at the Naval Air Station in Meredian,

Mississippi, who was required to “manage the cafeteria, prepare the food, serve the food, provide

cleanup and cashier services, implement quality control and training programs, provide certain

supplies and equipment and hire the personnel, both managerial and support.”40 The court

concluded that the contractor was considered the facility’s “operator” because of its daily

responsibilities. 41

31

Id.

Id. at 1139.

33

See, e.g., North Carolina Division of Services for the Blind v. United States, 53 Fed. Cl. 147 (2002); Oklahoma

Department of Rehabilitation Services v. United States, 1998 U.S. Dist. LEXIS 23041 (W.D. Okla. 1998).

34

58 Fed. Cl. 781 (2003).

35

Id. at 782. “‘Under a dining facilities attendant contract, military personnel cook the food in a mess hall, but an

outside contractor provides other services, such as washing dishes.’” Id.

36

Id. at 786-87.

37

Id. at 796. This statutory standard of review is found in 5 U.S.C. § 706(2)(A).

38

61 Fed. Cl. 20 (2004).

39

Id. at 29-30.

40

Id. at 30.

41

Id.

32

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Legislation in the 110th Congress

The Javits-Wagner-O’Day and Randolph-Sheppard Modernization Act of 200842 was introduced

by Senator Enzi on June 11, 2008. This legislation would, among other things, address several

issues raised by the judicial decisions previously discussed. The bill would establish the

Committee for the Advancement of Individuals with Disabilities that would jointly administer

both the Randolph-Sheppard program and the AbilityOne program (which implements the JWOD

Act). 43 The bill also would require state licensing agencies to grant licenses for the operation of a

vending facility to individuals with disabilities other than blindness starting three years after the

bill’s enactment. 44 Additionally, with respect to military troop dining facilities, the bill would

grant equal priority in the contract process to a state licensing agency bidding for a contract under

the Randolph-Sheppard Act, a small business concern eligible to participate in a program or

contract under Section 8(a) of the Small Business Act, a HUBZone entity, an Alaska Native

Corporation, 45 and other socially disadvantaged groups as defined by the Department of

Defense. 46 For military troop dining facility contract proposals from the AbilityOne program, the

bill would prohibit new proposals and require that proposals be removed from the procurement

list five years after the bill becomes law.47 Finally, the bill would specify that the term “cafeteria”

in the Randolph-Sheppard Act, when used in reference to a military troop dining facility, would

refer only to “services pertaining to a full food service military dining facility.”48 This definition

would not include “mess attendant, dining facility attendant, dining support” or other activities

that supported the operation of the cafeteria.49

The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions on June

11, 2008. No similar legislation has been introduced in the House.

Author Contact Information

(name redacted)

Legislative Attorney

[redacted]@crs.loc.gov, 7-....

Acknowledgments

This report was originally prepared by (name redacted), Legislative Attorney.

42

S. 3112, 110th Cong. (2nd Sess. 2008).

Id at § 3. This committee would replace the existing Committee for Purchase From People Who Are Blind or

Severely Disabled.

44

The individuals also must receive training required by the state licensing agencies.

45

See 43 U.S.C. § 1602(m) (defining Alaska Native Corporation).

46

S. 3112 at tit. III, § 303(c).

47

Id. at tit. III, § 302(a)(2).

48

Id. at tit. III, § 303(a).

49

Id.

43

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