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RANDOLPH-SHEPPARD VENDORS OF AMERICA v. WEINBERGER

January 7, 1985

RANDOLPH-SHEPPARD VENDORS OF AMERICA, et al., Plaintiffs,
v.
Caspar W. bWEINBERGER, et al., Defendants. NATIONAL COUNCIL OF STATE AGENCIES FOR THE BLIND, et al., Plaintiffs, v. Caspar W. WEINBERGER, et al., Defendants



The opinion of the court was delivered by: PARKER

 BARRINGTON D. PARKER, District Judge:

 In this consolidated litigation, representatives of several blind vendor groups and interested individuals challenge two procurements awarded by the Secretary of Defense on the grounds that they violate the provisions of the Randolph-Sheppard Act ("Act"), 20 U.S.C. § 107 et seq. The Act authorizes licensed blind persons to operate vending facilities on any Federal property and was enacted for the "purposes of providing blind persons with remunerative employment, enlarging the economic opportunities of the blind, and stimulating the blind to greater efforts in striving to make themselves self-supporting." Id., § 107(a).

 The procurement awards authorized the construction and operation of fast-food facilities on military bases by McDonald's Corporation ("McDonald's") and Burger King Corporation ("Burger King"). In Randolph Sheppard Vendors of America v. Weinberger, 602 F. Supp. 1007, the plaintiffs challenge the award of a Navy contract to McDonald's. National Council of State Agencies v. Weinberger, C.A. No. 84-3489, presents a challenge to a contract award by the Army and Air Force to Burger King. The two proceedings were consolidated as related cases involving the same statute and presenting similar factual and legal issues. In each proceeding, the plaintiffs request declaratory and injunctive relief, which if granted, would result in the termination of the two contracts. McDonald's was granted leave to participate as a defendant-intervenor in C.A. No. 84-3211 on December 17, 1984.

 The plaintiffs in both actions are the National Council of State Agencies for the Blind ("National Council"), the Randolph-Sheppard Vendors of America ("Randolph-Sheppard Vendors") and its president, Paul Verner, the Blinded Veterans Association, Inc. ("Blinded Veterans"), the Association for the Education and Rehabilitation of the Blind and Visually Impaired ("Association"), the American Council of the Blind ("American Council"), the Affiliated Leadership League of and for the Blind of America ("Affiliated Leadership League"), and Senator Jennings Randolph, the chief sponsor of the Act and its amendments.

 On December 19, 1984, the Court heard argument in the Randolph-Sheppard Vendors of America proceeding on the motions to dismiss filed by the government and McDonald's, and the plaintiffs' motion for a preliminary injunction. It was agreed among the parties that the arguments advanced would apply equally to the National Council of State Agencies proceeding in which similar motions were pending. At the conclusion of the hearing, the parties stipulated that on basis of the argument, memoranda of points and authorities, affidavits and exhibits, it was appropriate for the Court to consider and resolve the merits of the two proceedings. The government also agreed to halt ongoing construction on the majority of the fast-food facilities authorized under the contract awards until January 4, 1985, by which time a final ruling on the merits would be rendered by the Court.

 The issues in this case require resolution of threshold jurisdictional questions of standing and the availability of administrative remedies, as well as the ultimate issue of whether the procurement decisions of Secretary Weinberger violated the Randolph-Sheppard Act.

 With respect to the question of jurisdiction, the Court finds that all but four of the plaintiffs have standing to litigate these issues. The Court also determines that the plaintiffs were not required to exhaust their administrative remedies under the particular circumstances of this case. While the Defense Department's apparent insensitivity to the plight of the blind vendors is deplored and there remain troublesome and vexing questions as to whether or not the Department has complied with the spirit of the law, the Court finds that the procurements complied with the minimum requirements of the letter of the Randolph-Sheppard Act.

 THE BLIND VENDORS PROGRAM

 Before addressing the central issues presented by the parties, a brief description of the operation of the blind vendors program and a summary of the undisputed material facts is warranted. In a Stipulation of Facts, filed January 2, 1985, the parties agreed to many of the relevant facts.

 The Randolph-Sheppard Act was first enacted in 1936, and amended in 1954 and 1974. The Act was designed to provide employment opportunities to licensed blind persons and to give preference to blind operators of vending stands on federal property. S.Rep. No. 937, 93d Cong., 2d Sess. 4 (1974) ("Senate Report"). Congress believed that

 
the property of the Federal government should be more fully and freely utilized in expanding the vending stand program for the blind, and that no department or agency should be permitted to refuse suitable stand locations to this blind program except where such stand would clearly conflict with the proper functioning of the department or agency.

 Id. at 7.

 This program is run under the auspices of state agencies for the blind, which are designated by the Secretary of Education. *fn1" The state agencies bear a substantial responsibility for administering the blind vendor program. They seek permits for the establishment of vending facilities on federal property, 34 C.F.R. § 395.16, 395.35, and issue operating licenses to blind vendors. 20 U.S.C. § 107a(a)5; 34 C.F.R. § 395.7(b). These vending facilities include "automatic vending machines, cafeterias, snack bars, cart services, shelters, counters, and such other appropriate auxiliary equipment" for the sale of a wide variety of items, 20 U.S.C. § 107e(7), including "newspapers, periodicals, confections, tobacco products, foods, beverages, and other articles or services dispensed automatically or manually." Id., § 107a(a)(5).

 In addition, state licensing agencies may request arbitration of any dispute with the federal government concerning compliance with the Act. Specifically,

 
whenever any State licensing agency determines that any department, agency, or instrumentality of the United States that has control of the maintenance, operation, and protection of Federal property is failing to comply with the provisions of this Act [ 20 U.S.C. §§ 107 et seq.] or any regulations issued thereunder (including a limitation of the placement or operation of a vending facility as described in section 1(b) of this Act [ 20 U.S.C. § 107(b)] and the Secretary's determination thereon) such licensing agency may file a complaint with the Secretary who shall convene a panel to arbitrate the dispute pursuant to section 6 of this Act [ 20 U.S.C. § 107d-2] and the decision of such panel shall be final and binding on the parties except as otherwise provided in this Act [ 20 U.S.C. § 107(b)].

 20 U.S.C. § 107d-1(b).

 FACTUAL BACKGROUND

 On April 2, 1984, the Army and Air Force Exchange Service ("AAFES") issued a solicitation for proposals to establish an exclusive franchise agreement for AAFES to operate fast-food hamburger facilities at selected Army and Air Force installations nationwide. The contract was awarded to Burger King on May 15, 1984. Under the contract, AAFES will manage the franchise operation directly, using its own supplies, equipment and personnel. The contract is designed to phase in as many as 185 franchise facilities during the next five years, and provides for the construction of a maximum of 24 franchise sites during 1985.

 On June 5, 1984, the Navy Resale and Services Support Office ("NAVRESSO") requested proposals for procurement of fast-food hamburger operations to be located at Naval installations throughout the United States and overseas. Proposals were solicited from offerors who were "nationally recognized fast-food hamburger organizations." McDonald's was awarded a contract on August 7, 1984 for the construction and operation of a minimum of forty and a maximum of 300 hundred restaurants. Sixty-four restaurants are currently targeted for construction in sixteen states, Puerto Rico, Guam and in several foreign countries. Construction has already begun on at least four of these facilities.

 The Department of Defense became aware of the plaintiffs' concerns about the two procurements as early as June of 1984. At that time, Senator Randolph wrote Secretary of Defense Weinberger, expressing his concern that the fast food operations of the military exchange services violated the Act. Ex. A. *fn2" In a response dated July 30, 1984, Secretary Weinberger indicated that the Department of Defense "claimed no exemption from the Randolph-Sheppard Act in conjunction with providing nationally known fast-food service. To the contrary, we would be pleased to have the participation of the state blind licensing agencies." Ex. B. Secretary Weinberger did not explicitly address Senator Randolph's concern that the procurement request violated the Act by failing to provide adequate opportunities for blind vendors.

 Shortly thereafter, the Department of Education also relayed its concerns about the procurements to the Department of Defense. Theodore Bell, the Secretary of Education, wrote Secretary Weinberger to request his analysis of the legality of the fast-food procurements under the Act. Ex. L. He noted that

 
since blind vendors licensed under the Randolph-Sheppard program cannot now meet this multi-state requirement [of providing fast food facilities in at least several states], they were precluded from responding to the Request for Proposals (RFP). I am concerned that, as a result, the RFPs may have failed to afford blind vendors an opportunity to be considered for the priority envisioned for them in the Act. I am also concerned that the multi-state requirements [] may constitute a limitation on the placement or operation of a Randolph-Sheppard facility that, under 20 U.S.C. § 107(b), must be cleared in advance by the Secretary of Education. It is my understanding that those requirements were not submitted for clearance.

 The record does not indicate that Secretary Weinberger responded to this request.

 In a recent September 13, 1984, response to a Freedom of Information Act request initiated by one of the plaintiffs, the American Council of the Blind, George Conn, the Commissioner of the Rehabilitation Services Administration, expressed views similar to Secretary Bell's:

 
the Department has taken the position that the issuance of a request for proposal by a Federal entity which restricts applications only to fast-food concerns capable of operating in numerous States appears to impose a limitation on the placement of Randolph-Sheppard vending facilities. Under Section 107(b) of the Randolph-Sheppard Act such limitation may be imposed by a Federal entity only if justification has been provided to the Secretary of the Department of Education and the Secretary has determined that it would be adverse to the interests of the United States to deny the limitation.

 Ex. I. It is undisputed that the Department of Defense has not submitted the two procurements to the Secretary of Education for approval. See 20 U.S.C. § 107(b).

 During this same time period, the House Appropriations Committee also discussed the applicability of the Randolph-Sheppard Act to the McDonald's contract. In a September 26, 1984 report dealing with the 1985 Department of Defense Appropriations bill, the Committee stated:

 
Information provided to the Committee indicates that the methods used by the Department in contracting for [the McDonald's] food service operation circumvented, if not the ...

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