Public Contract Law Journal

Shepherd Away from Arbitration: Rethinking the Randolph-Sheppard Act’s Arbitration Scheme

by Stephanie Villalta

I.   Introduction

The Randolph-Sheppard Act (RSA or “Act”) aims to increase economic opportunities for the blind, provide the blind remunerative employment, and increase efforts to help make the blind self-supporting.To achieve that objective, the Randolph-Sheppard Act requires priority be given to blind persons licensed by a designated state licensing agency whenever vending facilities are set up on any federal property.2 The state licensing agency licenses3 and trains blind vendors on how to operate vending facilities,4 and ensures licensed blind vendors have vending facility equipment and initial products to stock that equipment.5

For nearly a century, the Randolph-Sheppard Act has been a source of revenue for blind vendors.6 According to the U.S. Department of Education, the Department charged with implementing the Randolph-Sheppard Act,7 during Fiscal Year (FY) 2014, 2,108 blind vendors operated 2,389 vending facilities, generating approximately $693.6 million in revenue and leaving each vendor with approximately $59,012 in earnings.8 During FY 2015, total gross income under the Randolph-Sheppard Act was $697 million — leaving vendors with $118.2 million in earnings.9 Evidently, for nearly a century, many contracts have been and currently are being awarded pursuant to the Randolph-Sheppard Act.10 Despite the many contract awards made pursuant to the Act, the Act’s language and case law reveals that bid protests lodged by state licensing agencies relating to the Act do not follow traditional bid protest procedures.11

Congress built a comprehensive arbitration scheme into the Randolph- Sheppard Act.12 Under the Act’s arbitration scheme, the Secretary of Education must convene an arbitration panel whenever a blind vendor is dissatisfied with actions arising from a vending facility program’s operation or administration, or when a dispute arises between a state licensing agency and a federal agency that fails to comply with the Randolph-Sheppard Act’s provisions.13 Arbitration panel decisions are reviewable under the Administrative Procedure Act.14 Notably, the Randolph-Sheppard Act requires an arbitration panel to adjudicate disputes brought by state licensing agencies against federal agencies whenever federal agencies fail to comply with any of the Act’s provisions or regulations, including, for example, limiting a vending facility’s placement or operations.15 The Act thus gives arbitration panels the ability to hear a broad category of disputes, and sends to arbitration all Randolph-Sheppard Act-related disputes lodged by state licensing agencies against federal agencies.16 Thus, the Randolph-Sheppard Act makes no procedural distinction between contract award controversies and controversies or claims arising during the administration or performance of a contract subject to the Act.17

In government procurement law, disputes challenging a contract’s award follow certain procedures18 — procedures that procurements subject to the Randolph-Sheppard Act do not follow.19 Conventionally, in government procurement law, disputes brought by aggrieved parties challenging a contract’s award are deemed bid protests,20 and are reviewed exclusively by the Government Accountability Office (GAO) and/ or the U.S. Court of Federal Claims,21 not the U.S. Federal District Courts (“traditional bid protest dispute process” or “traditional bid protest procedures”).22 Unlike the traditional bid protest dispute process, the GAO has held that it does not have jurisdiction to entertain bid protests presented by state licensing agencies concerning the Randolph-Sheppard Act.23 The U.S. Court of Federal Claims has had to ascertain whether the Randolph-Sheppard Act’s arbitration scheme is mandatory, what disputes must go to arbitration, 24 and has had to weigh the court’s broad bid protest jurisdiction against the Randolph-Sheppard Act’s broad arbitration scheme.25 Ultimately, the U.S. Court of Appeals for the Federal Circuit has deemed arbitration under the Randolph-Sheppard Act mandatory if a Randolph-Sheppard violation is alleged, and has held that government procurement violations need not be arbitrated, but sent to arbitration a state licensing agency’s bid protest.26 Furthermore, unlike the traditional bid protest dispute process,27 district courts have even issued preliminary injunctions pending arbitration for bid protests lodged by state licensing agencies concerning the Randolph-Sheppard Act, and have also deemed arbitration under the Act mandatory.28 Evidently, bid protests lodged by state licensing agencies for procurements subject to the Randolph-Sheppard Act do not follow traditional bid protest procedures.29

This Note will posit both legal and practical reasons for why Congress should clarify the Randolph-Sheppard Act’s arbitration scheme such that bid protests lodged by state licensing agencies challenging procurements subject to the Act are not arbitrated, and transform the arbitration scheme such that those bid protests are directed to the GAO and/ or the U.S. Court of Federal Claims to follow traditional bid protest procedures. Accordingly, Part II will examine the Randolph-Sheppard Act’s statutory scheme and, in particular, its arbitration provisions. Part III will detail traditional bid protest procedures. Part IV will detail problems with the Randolph-Sheppard Act’s arbitration scheme and how these can be resolved by transforming the Act’s arbitration scheme to reflect traditional bid protest procedures. Part V suggests how Congress should transform the Act’s arbitration scheme to reflect traditional bid protest procedures.

Premium Content For:
  • Public Contract Law Section
Join - Now