[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Notices]
[Pages 40509-40510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19865]


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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.

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SUMMARY: Notice is hereby given that on June 11, 1996, an arbitration 
panel rendered a decision in the matter of Mississippi Department of 
Rehabilitation Services v. United States Department of Defense, 
Department of the Air Force (Docket No. R-S/94-3). This panel was 
convened by the U.S. Department of Education pursuant to 20 U.S.C. 
107d-1(b), upon receipt of a complaint filed by the Mississippi 
Department of Rehabilitation Services.

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, SW., Room 3230, Mary 
E. Switzer Building, Washington, DC 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 in the Federal Register a 
synopsis of arbitration panel decisions affecting the administration of 
vending facilities on Federal and other property.

Background

    On or about June 24, 1993, the U. S. Department of Defense, 
Department of the Air Force (Air Force), issued a request for proposals 
(RFP) for full food services at Keesler Air Force Base, Mississippi. 
The Mississippi Department of Rehabilitation Services, State licensing 
agency (SLA), responded

[[Page 40510]]

to the RFP, providing both technical and cost information.
    In August 1993, the Air Force's Technical Evaluation Committee 
(TEC) met to evaluate the SLA's proposal along with the other proposals 
that were submitted. Subsequently, the Air Force contracting officer 
informed the SLA that its proposal was determined to be within the 
competitive range along with 15 of the original 19 offerors. On 
September 16, 1993, the TEC sent a discussion letter to the SLA and to 
the other offerors who were within the competitive range. Shortly 
thereafter, the SLA responded to the Air Force regarding the questions 
asked in the discussion letter.
    On September 28, 1993, the SLA filed a protest with the Air Force's 
contracting officer concerning the Air Force's alleged failure to award 
the SLA the food service contract following the determination that it 
was within the competitive range. The SLA contends that, based upon 
Department of Defense (DOD) Directive 1125.3 and regulations of the 
Secretary of Education (34 CFR 395.33(b)), either the contract must be 
awarded to the SLA following a determination that the SLA is within the 
competitive range established by the contracting office or the 
contracting office must consult with the Secretary of Education 
regarding its justification for not doing so. The Air Force never 
responded to the SLA's protest, nor was the contract awarded to the 
SLA.
    On November 12, 1993, the TEC met to review the offerors' responses 
to questions asked regarding DOD's concerns and determined that 9 of 
the 13 remaining offerors' proposals, including the SLA's, were 
acceptable. Subsequently, the contracting officer sent a second round 
of discussion letters to all 13 offerors, including those that were 
deemed technically unacceptable. The SLA received the second discussion 
letter on November 23, 1993, and again responded, objecting to the Air 
Force's failure to comply with Randolph-Sheppard requirements. At the 
same time, in order to maintain its eligibility for the award, the SLA 
fully responded to all discussion questions.
    The TEC again met and conducted a final technical evaluation, at 
which time the SLA's proposal was determined to be fully acceptable 
from a technical standpoint. However, the contracting officer later 
made a determination that the SLA's proposal was technically 
unacceptable as the result of its response to a section of the RFP 
regarding the use of sighted employees.
    Subsequently, a second competitive range was established by the Air 
Force's contracting officer. Following the establishment of the second 
competitive range, the SLA received from the Air Force a Determination 
for Exclusion letter indicating the exclusion of the SLA's proposal. 
The Air Force's stated reasons for the exclusion of the SLA's proposal 
from the second competitive range were the SLA's response on the use of 
sighted employees at the facility and the SLA's higher pricing 
structure compared to the other offerors within the competitive range.

Arbitration Panel Decision

    The issues heard by the arbitration panel were--(1) Whether the Air 
Force violated the Randolph-Sheppard Act, 20 U.S.C. 107 et seq.; Air 
Force regulation 34-2, DOD Directive 1125.3; Section L-901 of RFP No. 
F222600-92-R-0156; and Randolph-Sheppard regulations in 34 CFR 395.33 
by its alleged failure to award the full food service contract to the 
SLA and by its alleged failure to consult with the Secretary of 
Education following the determination that the SLA was within the 
competitive range; and (2) Whether the Air Force's alleged arbitrary, 
capricious, and bad faith conduct violated the Administrative 
Procedures Act, 5 U.S.C. 706, and Federal Acquisition Regulations, 48 
CFR 1.602-2(b) and 48 CFR 15.608(a).
    As to the first issue, the panel majority concluded that the 
process by which the Air Force determined the competitive range in 
March 1994 was fully in accord with all governing laws and regulations. 
Specifically, the majority members concluded that an earlier decision 
by the contracting officer that 4 of the 19 offerors had submitted 
noncomplying proposals, based upon a review for technical sufficiency, 
did not establish a competitive range within the meaning of DOD 
Directive 1125.3 or Randolph-Sheppard regulations in 34 CFR 395.33(b). 
The panel majority ruled that the Air Force determined a competitive 
range, as contemplated under the governing regulations, only after full 
cost data was submitted by the 15 remaining offerors, including the 
SLA, who were solicited on the basis of their technically sufficient 
initial submissions. The panel majority concluded the SLA was properly 
excluded from the final competitive range because its proposal was not 
competitive in comparison to the numerous proposals offering lower 
costs.
    One panel member dissented regarding this part of the majority 
opinion.
    The panel members unanimously ruled that the Air Force violated the 
Randolph-Sheppard Act and applicable regulations by excluding the SLA 
from the competitive range, in part, because of its alleged failure to 
give the assurance required concerning minimizing the employment of 
sighted persons at the cafeteria facility. The panel ruled that 
compliance issues raised by this requirement should be addressed 
through pre-contract negotiations with the contractor and not by 
exclusion from the bid process. The majority of the panel ruled, 
however, that this action by the Air Force was a harmless error 
inasmuch as the SLA's proposal had been properly excluded on other 
grounds.
    The views and opinions expressed by the panel do not necessarily 
represent the views and opinions of the U.S. Department of Education.

    Dated: July 23, 1997.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 97-19865 Filed 7-28-97; 8:45 am]
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