Congress passed the Randolph-Sheppard Act (the Act) to
give blind persons more economic and employment opportunities and to help them
become more self-sufficient.
To this end, the Act provides blind vendors with
a priority for contracts for the operation of cafeterias for Federal agencies. Consequently, blind vendors
often compete for cafeteria contracts on Federal installations,
including military bases. Unfortunately, both the Act and its implementing
regulations fail to define all key terms, such
as "priority," "operate," "operation," and "competitive range." This
creates confusion and disagreement among interested parties as to how to implement the statute properly, and that leads to
lengthy arbitration and litigation.
On average, from the time a complainant files an
arbitration complaint with the Department
of Education (DoEd), Federal agencies wait 685
days for a decision from an arbitration panel organized pursuant to the
length of time that leaves all parties in limbo.
This delay is particularly relevant to the Armed Forces because military
cafeterias are involved in fifteen of the seventeen posted arbitration
between Federal agencies and a state licensing agency (SLA), which is the
entity designated to represent blind vendors in submitting proposals for
and adjudicating disputes with Federal agencies. While changing a statute about cafeterias may seem
minor compared to the overall Department of Defense (DoD) mission set,
the costs associated with this delay can add
up when considering there is at least one cafeteria at many, if not most, DoD installations. This is all the more
important when considering that the
DoD has identified improving acquisition and fiscal efficiency and
discipline as one of its primary goals.
The majority of these cases arise from the
solicitation or award of a contract. Each
state has an SLA, and each SLA can file an arbitration request when it
determines a Federal agency "is failing to comply with the provisions of [the
There is no statutory or regulatory bar on when an SLA can file for
arbitration. Upon receipt of the request, the DoEd, which Congress charged with implementing the Act, is required to
Parties contend with not only
lengthy arbitrations but also a lack of statutory and regulatory definitions,
often forcing agencies (and, subsequently, arbitration panels)
to guess at Congress’s intent. The lack of definitions also allows arbitration
panels to apply whichever definitions they
favor, regardless of the impact on the Federal acquisition system. To make matters worse, there is no requirement for
any panel member to have experience with the Federal acquisition system or
the Act. Panels are comprised of three individuals:
the SLA selects one, the Federal agency selects
another, and then those two members select the panel chairperson. If the two selected members cannot agree on
a panel chairperson, the DoEd selects the third member.
The panel’s rulings often come down to the panel chairperson, who may be interacting with the Federal acquisition
system and the Act for the first time.
To mitigate this unfamiliarity, improve implementation
of the Act, and decrease the time devoted to arbitration and litigation, Congress
should revise the Act and its implementing
regulations by defining at least the terms "priority," "operate," and "competitive range" and identifying their
relation to the overall Federal acquisition scheme. These terms often
form the basis of arbitration and
litigation, as parties disagree on their definitions and how (and sometimes, whether) they relate to the overall
Federal acquisition scheme. This
article will discuss each term in turn. Each section will examine the
relevant statutory and regulatory language, discuss the court cases that shed
light on their meaning, and identify where arbitration panel decisions have
strayed from the law. This article will conclude with a discussion of several
potential solutions to better incorporate the Act into the Federal acquisition scheme and reduce confusion, arbitration, and
"Priority": Not a Guarantee of Contract Award
The meaning of "priority" has been
the subject of litigation since shortly
after Congress included the term in the Act in 1974. Since then,
its meaning has continued to be a source of confusion in arbitration and litigation, making it difficult for agencies to
know how to implement the Act in cafeteria solicitations. State
licensing agencies have argued that priority almost
guarantees the award of a contract for the operation of a cafeteria to SLAs, while Federal agencies have countered that
priority is not so generous. Arbitration panels and courts have
described the Act’s priority as a "prior right," something
other than an "absolute right,"
and simply the regulatory contract award process. Panels have
also described it as taking precedence over all other socioeconomic
The failure to define "priority" clearly is a significant oversight because it
is one of the key measures that implements the Act’s primary purpose. This
section examines the statutory and regulatory background of "priority," how
courts have interpreted the term, and how arbitration panels have expanded the
meaning of the term beyond what the statutory and regulatory plain language
requires and how courts have interpreted it.
Statutory and Regulatory Background
The plain language of the statute makes clear that
Congress did not intend for every single SLA
proposal submission on behalf of a blind vendor to result in that SLA receiving a contract award.Instead, Congress left it to the
"prescribe regulations to establish a priority for the operation of cafeterias
on Federal property."
The DoEd established priority by creating
two selection methods for contracts to operate cafeterias.
The first method provides that
priority may be afforded by Federal agencies when entering into "direct
negotiations" with an SLA for a contract to operate a cafeteria. The only
limitation is the agency must determine the SLA can provide the services at a "reasonable cost, with food of a high quality
comparable to that currently provided employees." The agency
is not required to use this selection method, but if this method fails, the
agency must use the second selection method.
The second selection method is a competitive selection
process with three requirements.
First, the Federal agency must invite the SLA "to respond to solicitations for offers when a
cafeteria contract is contemplated."
Second, the solicitations "shall establish criteria under which all
responses will be judged."
Third, if the SLA’s proposal is "judged to be within a competitive range and
has been ranked among those proposals which have a reasonable chance of being
selected for final award," the Federal agency must consult with the Secretary
of Education (SecEd) to ensure the SLA’s services can be provided at a
reasonable cost and provide "food of a high quality comparable to that
currently provided employees."
The opportunity to choose between these two selection methods—one allowing direct negotiation with an SLA
to the exclusion of other potential sources and the other allowing competition
among multiple offerors—shows the
DoEd’s intent clearly: it did not see Congress’s use of "priority" as a mandate for contract award to SLAs
under all circumstances, nor would it mandate the use of SLAs for all
Judicial Approach to Priority
Courts have tended to support
this approach. In NISH v. Cohen, the U.S. Court of Appeals for the Fourth Circuit explained a Federal
agency honors the established priority when
it employs one of the two selection methods. NISH v. Cohen
revolved around the definition of "cafeteria"
and the application of the Competition in Contracting Act (CICA) to the Act. In exploring
CICA’s application, the Fourth Circuit confirmed two important points about the Act’s priority. First, that Congress charged
the DoEd with establishing regulations
to implement priority. Second, that the DoEd
"regulations offer two options by which a federal agency may implement the
priority mandated for blind vendors."
The court then outlined the two selection methods discussed above (i.e., direct
negotiation and competitive selection). The court concluded that the Act’s
inclusion of procurement procedures exempts
it from CICA’s full and open competition requirement. Based on this case,
applying the priority appears straightforward so long as the Federal agency
chooses one of the two selection methods outlined in the DoEd’s implementing
regulations. It also supports the notion that a Federal agency is not required
to award a cafeteria contract to an SLA.
The D.C. Circuit similarly
confirmed that the Act’s priority is not a guarantee of award.
Shortly after Congress amended the Act in 1974 and the DoEd implemented its
regulations, a U.S. senator, blind vendors, and several advocacy groups for blind people sued the DoEd. The
plaintiffs were concerned that the new
implementing regulations did not go far enough in capturing Congress’s intent with regard to priority.
The court concluded that priority is not an "unqualified" right to
contract award, explaining it would be "unreasonable to require agency
heads to grant unqualified priorities to blind vendors to operate cafeterias,
despite the vendor’s
Based on this, while a Federal agency has the authority
to negotiate directly with the SLA, when the competitive selection method is employed, priority does not guarantee
contract award. Mandating award to the
SLA in the competitive selection method would seem to undercut the
purpose of having a competitive selection method, which is to allow multiple
potential vendors the opportunity to compete for contract award.
While priority may not guarantee
award in every circumstance, courts have examined how it compares to other programs in
the Federal acquisition scheme
designed to benefit certain groups or entities such as small businesses. This understanding is helpful because
small businesses are often SLAs’
primary competitors, and agencies may seek to incorporate small business programs and the Act into their
solicitations. Those cases hold that the Act priority does not
necessarily conflict with other set-asides, such as the historically underutilized business zones (HUBZone) set-aside
and other small business
Because the preference in the Javits-Wagner-O’Day (JWOD) Act is in direct
conflict with the Act priority, courts have
historically found that the Act controls because it is more specific than the JWOD Act.
The case discussing the HUBZone
preference determined that, although the Act is more specific than the
HUBZone preference, the Act and the HUBZone preference were not incompatible. Practitioners should
understand that while the Act’s priority does not guarantee award in
every solicitation, it might carry greater weight when in conflict with
other Federal acquisition program benefits.
Arbitration Problems with Priority
Unfortunately, the plain language understanding has
not borne out in arbitration. Panel members’ general lack of expertise in and
disregard for the Federal acquisition process has led to panels incorrectly
applying priority to the exercise of contract options, expanding the plain
language meaning of "priority," and outright rejecting the Federal Acquisition
Regulation (FAR)—the very regulation that controls Federal acquisitions. This misapplication of law can have a chilling
effect on contracting officers tasked with balancing how an arbitration
panel might rule, small business acquisition
requirements, and installation food service needs. Some agencies choose
to forgo the nearly two-year arbitration fight knowing arbitration panels will
likely rule against them if they do not award to the SLA.
As an example, a panel improperly invoked priority in
a dispute about the exercise of an option in
an arbitration case at Fort Sill, Oklahoma. In this case, the
Army decided not to exercise an option on a cafeteria contract it held with the Oklahoma SLA.
Rather, it decided to resolicit the contract. The SLA
requested arbitration to determine if the decision not to exercise the option
violated the Act and whether the SLA’s exclusion from the competitive range violated the Act.
The first allegation in the arbitration centered on
whether the Army’s decision not to exercise an option was a limitation that the
SecEd should have previously cleared.
An agency’s discretion to exercise an option is governed by FAR 17.207 and is typically within the
sole discretion of the contracting
officer. The arbitration panel
rejected the FAR, concluded the Army violated its obligations under the
Act, and turned to the Act priority to, at least in part, justify its holding. Speaking on
the agency’s discretion to exercise an
option, the panel held that "[w]hen conducting a procurement subject to
the [Act], a federal agency’s discretion is limited by the priority given to
While the arbitration panel’s assertion may be true in some circumstances, it is not true in all situations. For
example, it is not true when it comes
to the exercise of an option because the implementing regulations make clear that the priority applies
at contract award. The decision to
exercise an option comes at the end of a term of performance, only after a contracting officer determines that
it is in the best interest of the agency to exercise the option; it has
nothing to do with contract award.
The arbitration panel was wrong in relying on priority in its decision about
the exercise of an option.
As others have done,
this panel also incorrectly determined the FAR did not apply to this situation. The panel relied on NISH v. Cohen
to support its conclusion that the FAR
does not apply "when the [Act’s] priority applies." This is
simply an incorrect application of NISH v. Cohen and the Act’s priority.
As previously discussed, the Fourth Circuit determined in NISH v. Cohen that solicitations conducted pursuant to the Act are not subject to CICA, not that they are exempt from every
procurement regulation included in the FAR. Any time an
arbitration panel relies on NISH v. Cohen for the proposition that the FAR does not apply to
solicitations subject to the Act, it misapplies the law. Furthermore, to the
extent that Act procurements exist outside normal acquisition procedures, the
DoEd’s implementation of priority allows an agency to apply as much of the FAR that does not contradict with the Act to
contracts for the operation of a cafeteria. The second requirement in
the competitive selection method
requires solicitations to "establish criteria under which all responses
will be judged."
Nothing here precludes the application of the FAR to contracts for the
operation of a cafeteria.
Arbitration panels have rejected
the plain meaning of the term "priority," using it instead as a magic carpet to
take SLAs to any destination they want. When agencies cannot rely on the
plain meaning of the Act, it creates confusion in the statute’s application.
This, if anything, results in more
arbitration and litigation. A clear definition of "priority" and its
application will mitigate confusion and time spent in arbitration.
"Operation": A Cafeteria by Any Other Name
Congress has left undefined the
terms "operate" and "operation," which are key to understanding which cafeteria contracts
the Act covers. Currently, the Act provides that blind vendors get
priority in cafeteria contracts only if the contract is for the operation of a
That is, if a contract is for the operation of a cafeteria, the Act applies; if
the contract is not for the operation of a cafeteria, the Act does not apply.
Unfortunately, because "operation" is
undefined, this tautology is wholly unhelpful in practice. Two general approaches have filled the void—one broad
and one narrow. The broad approach has the effect of giving almost any
contract having anything to do with a
cafeteria to the SLA, effectively removing any agency discretion in the
award of the contract. The narrow approach covers contracts where the contractor will exercise management or control over
the cafeteria’s operations, which allows contracting officers some measure of discretion in tailoring contracts
to meet the agency’s needs.
The U.S. Court of Appeals for the Fifth Circuit has
favored the broad approach. It held the terms "operate" and "operation" were
ambiguous before determining that an expansive definition should apply on a
The Fifth Circuit case stems from a contracting officer’s decision to solicit two contracts—one for limited
services, including custodial and sanitation services for a cafeteria
and another for full food services—where both contracts were historically
solicited as the same cafeteria contract.
The question before the court was whether the first contract qualified as a contract for the "operation" of a cafeteria.
The court found the term "operate" ambiguous for two reasons. First, the
statute does not define the term.
Second, the court concluded that, even following a review of case law and multiple dictionary definitions, the definition
could not be narrowed.
Finding the term ambiguous, the court relied generally
on the statute’s overall purpose and specifically on a letter from the SecEd to
a member of Congress to determine that, under the circumstances presented, the
In examining the term in light of the Act’s objective, the court concluded that
a "broader reading of ‘operate’ which includes more than only executive-level functions would further the
Act’s purpose." The court viewed the SecEd’s assertion in her letter that
the definition of "operate" did not
require a "vendor to participate in every activity of the cafeteria in order
to ‘manage’ or ‘direct the working of’ the cafeteria" supported
this end. However, the court explained that "operate" may not apply to
contracts "which are limited to discrete
tasks." While the court’s ruling
was limited to this particular contract, its approach
brings almost any contract related to a
cafeteria within the Act’s purview. If custodial services—something reasonably viewed as ancillary to a cafeteria’s
operation and management—qualify as "operating" a cafeteria, it is
difficult to see what would not qualify. This expansive view of the term "operate"
was at odds with a narrower characterization coming, up until recently, out of
the Fourth Circuit.
Conversely, the District Court for the Eastern
District of Virginia took a narrower
approach to "operate" and "operation." The court relied on the
"plain language of the [Act’s] preference, the meaning of ‘operate’ in other
parts of the [Act], and the regulations issued pursuant to the [Act]." In doing so,
the court stated that the "plain language of the [Act] makes clear that its
preference applies only where the vendor exercises control or management over the functioning of the vending
facility as a whole." The court added that
"‘[o]peration’ requires control or management of the vending facilities. One cannot be said to operate something unless one
is in some sense in charge; operation requires more than mere
performance of assigned tasks."
This approach meant that the Act would not
apply unless the SLA was actually managing
the cafeteria or controlling its functions.
Until recently, the district court’s narrow approach
created a circuit split as to the
definition of "operate." In September 2020, the Fourth Circuit weighed
in on the Act by vacating the district court’s opinion on grounds unrelated to
the definition of "operate."
However, it did not address the meaning of the term.
While the Fourth Circuit’s
decision resolved the circuit split for the time being, it did not obviate the need for a precise definition of "operate"
and "operation." If anything, parties need greater clarity as to which
contracts the Act applies now more than ever. Currently, Federal agencies,
blind vendors, and SLAs are left with a term deemed ambiguous and
court-provided direction for agencies to look at each contract individually and
apply the "standard" correctly. Given the low threshold for initiating Act arbitration, without more clarity on the meaning
of the terms "operate" and "operation," litigation will likely only
IV. "Competitive Range": Starting to Get It Right—Not
the Finish Line
The failure to define
"competitive range" on its own or in relation to the Federal acquisition system is an oversight that
confuses parties and makes it difficult for contracting officers to accomplish
their mission. In Federal acquisition, competitive ranges are a tool for
contracting officers to refine proposals in an effort to ensure the Government
gets what it needs.
They provide an opportunity for agencies and contractors to identify and
resolve significant weaknesses and deficiencies before contract award,
alleviating contract management issues that might otherwise arise during the
life of a contract.
A competitive range is by no
means a finish line, though, as the competition among offerors continues into
the competitive range. Because it is not an end
point, it makes no sense to use it as such whereby a Federal agency must award a contract to the SLA, especially
when the SLA’s proposal is rife with weaknesses and deficiencies that the SLA
refuses to fix.
A 2016 Fort Stewart arbitration panel
took this exact approach when it reviewed
a contracting officer’s decision to remove an SLA from the competitive range
because, after discussions, the SLA failed to address its deficiencies. In this
case, the contracting officer received five proposals, including one from an
One determining factor in establishing a
competitive range was that none of the five proposals was good enough
for contract award; each proposal had weaknesses and deficiencies that the
offeror needed to address.
The contracting officer sent letters outlining each offeror’s deficiencies and
requesting revised proposals.
The SLA’s proposal had anywhere from
thirty-two to sixty-six weaknesses and deficiencies.
The SLA addressed the deficiencies in a letter to the contracting
officer but failed to revise its proposal.
Because of this, the contracting officer subsequently eliminated the SLA’s
proposal from the competitive range.
In response, the SLA requested arbitration to protest its elimination, and the
DoEd convened a panel to determine if the
"Army’s failure to apply the priority
to the solicitation was in violation of the Randolph-Sheppard Act."
The panel concluded that "[a]t the point where the
[contracting] officer found that the SLA proposal was within the competitive range, he was required to apply the Act’s
In essence, even though the contracting officer included all offerors in
the competitive range (because none of them were initially good enough for award), the panel determined that because the
SLA was placed in the competitive range, it should have received the contract award. However, in Federal
acquisition, a competitive range
provides a tool for offerors to improve their proposals and a chance for
contracting officers to winnow competition for reasons including efficiency. A contracting officer even
has the discretion to remove an offeror
from the competitive range if the contracting officer "decides that an offeror’s proposal should no longer be included
in the competitive range." The panel decision
reinforces the incorrect notion that a competitive range is merely a finish
line, and it flies in the face of the common understanding of a competitive range’s purpose: to improve
proposals and provide the best value to the Government.
The DoEd previously attempted to
formalize this "finish line" perspective in a manual it rescinded in 2017
and has not since replaced. Regardless, in a 2020 arbitration, the panel
relied on the following passage from the
rescinded manual to determine that the contracting officer should have placed the
SLA within the competitive range so the contracting officer could
examine the possibility of making the SLA’s proposal acceptable.
determining factor for judging whether a proposal [of the SLA] should be within
the competitive range is if the offer can be
made acceptable by conducting meaningful discussions. To be more specific, this should be interpreted as meaning whether the contracting officer is of
the opinion that clarification, modification, or appropriate minor
revision to the SLA proposal may result in the offer being fully acceptable.
This judgment would be consistent with an
action involving a commercial offeror under comparable circumstances. The
proposal must be considered within the
competitive range unless it is technically inferior or contains unduly
high selling prices to patrons that the possibility of being made acceptable
through meaningful negotiations is precluded.
Essentially, an SLA’s offer should be included in a
competitive range after a determination that meaningful discussions can make it
acceptable. As just demonstrated, there is no way for a contracting officer to
know if discussions will make an SLA’s offer acceptable. A contracting officer cannot
know at the outset whether an SLA will revise its proposal once in the competitive range. Because of the very
generous nature of the finish-line theory, though, SLAs continue to rely
on this manual despite its rescission. The
next paragraph requires agencies to award the contract to an SLA when it
is within the competitive range.
However, reliance on this passage is
problematic not only because it has been rescinded but also because it presupposes
the establishment of a competitive range at all. Agencies are not required to
establish competitive ranges under the Act or the FAR. Award can still be made to an SLA (or any other
offeror) in the absence of a competitive range.
The finish-line approach strains
the common understanding of a competitive
selection method and belies the purpose of the two selection methods the DoEd
established. The term "competitive range" appears
only when using a competitive
selection method. It seems absurd for an agency to put together a
competitive solicitation and review multiple offers if the agency must
ultimately award the contract to the SLA once it "crosses the competitive range
finish line." The agency may as well have entered into direct negotiations with
the SLA rather than set up the ruse of getting several different small businesses’
hopes up only to disappoint them because a potentially flawed SLA proposal made
it into the competitive range. Defining what is otherwise a common term and its
relation to the overall Federal acquisition process will reduce confusion and
frustration for contracting officers trying to implement the Act and reduce
arbitration and litigation.
V. Proposed Solutions:
Mandatory Source or Room for Agency Discretion
Reform efforts should focus on the amount of
discretion Congress wants agencies to exercise in making contracting decisions.
The amount of discretion an agency’s contracting officer exercises will inform
how the terms are defined or whether they remain in the Act and its
implementing regulations at all. If Congress wants to remove all discretion for
contract award from contracting officers, making SLAs (and the blind vendors
they represent) mandatory sources will accomplish this. If, on the other hand,
Congress wants to balance the purpose of the Act with a contracting officer’s
traditional discretion, it can do so by clearly incorporating the Act into the
overall Federal acquisition scheme. In any case, Congress should define the terms with an eye towards minimizing
arbitration and improving implementation.
A. Mandatory Source: Simple and
Straightforward—Reduced Agency Discretion
Establishing the Act as a mandatory source statute
would simplify its implementation and remove much of the discretion an agency
traditionally exercises. A mandatory source designation requires Federal
agencies to procure certain products or services from a particular source. This is not a novel concept; Congress is familiar with
mandatory sources. For example, it has statutorily designated as mandatory sources in the Federal acquisition
system both Federal Prison Industries, Inc. and the
Committee for Purchase from People Who Are
Blind or Severely Disabled pursuant to the JWOD Act. These statutes differ from the Act in that they include
"shall procure" language instead of the Act’s "priority" language.
A mandatory source designation would require amending the Act to remove
the priority language and insert language along the following lines: "An
entity of the Federal Government intending
to procure services for the operation of a cafeteria shall procure the
service from the state licensing agency of the
state where the services will be performed." With this requirement,
there would be confusion about neither the meaning of "priority" nor how
competitive range fits into an Act acquisition because there would be no competitive selection method. Making SLAs
mandatory sources would also clarify
the role of competitive ranges in cafeteria procurements. Simply put, because there would be no competition in the award
of these contracts, there would be no
need for a competitive range. Removing the agency’s discretion in this way would reduce arbitration and
litigation by eliminating confusion about who should get these contracts
and how the contracts should be awarded.
One alternative for enacting the mandatory source
approach is folding the Act’s cafeteria contract aspects into the JWOD Act. The JWOD
Act requires contracting officers to
purchase products or services identified on a procurement list from
non-profit agencies organized for the benefit of the blind or severely
This would not be a significant shift because the
JWOD Act procurement list already provides cafeteria services for many
military installations and other Federal agencies. Listing
cafeteria services on the JWOD Act
procurement list would maintain both economic opportunities for the blind and the mandatory source designation for
One significant problem with the
mandatory source solution is that once Congress
makes that designation, it removes the incentives inherent in a competitive
selection process to control prices and produce quality food. Once a vendor knows the agency has no recourse,
there is no effective method to ensure prices remain reasonable, which
can be a problem when agency budgets are tight. An engorged cafeteria budget diverts
money from other agency priorities. Similarly, when freed from competition, the
advantage in serving high quality food
disappears. Under a mandatory source regime, there is little to encourage a
vendor to rein in cost and produce quality food.
While a mandatory source regime
would resolve priority and competitive
range issues, the term "operate" would still be in play to the extent it is used to determine for which cafeteria
contracts SLAs would serve as the mandatory source. If Congress intends
to follow the broad approach outlined above, it should remove "services for the
operation of a cafeteria" from the definition proposed above and replace it with "any cafeteria-related
services," making clear that an agency must award any contract for cafeteria-related services to an SLA.
However, if Congress intends to limit
the types of cafeteria contracts to which the Act applies to preserve agency discretion, it should
define "operate" in a way that is easy to understand and implement. For
example, Congress could define "operation" and "operate" as, "management or
control over the cafeteria. Ordering food, writing a menu, preparing the food,
and serving the food, when together, qualify as ‘operating’ a cafeteria.
Services performed in a cafeteria or in relation
to a cafeteria do not qualify as ‘operating’ or the ‘operation’ of a
cafeteria unless the contract is also for
the management function of the cafeteria. Custodial services, by
themselves, do not qualify as ‘operating’ a cafeteria." This definition
would make clear that "operate" means more than an ancillary activity like
custodial services—it requires overall control of the cafeteria. Alternatively,
"operation" and "operate" could be changed to
"manage and exert overall control over the cafeteria’s
operations." There may be greater understanding about what it means to
manage something than there appears to be with operating a cafeteria. While
these are not a cure-all for arbitration and litigation, they would help to offer clarity and create space for
agency discretion in determining how to best meet its food service
A balanced approach can preserve
the benefits the Act affords and those inherent in competition while also reducing
Act arbitration and litigation. If Congress wants to preserve agencies’
discretion to determine how to best satisfy
cafeteria requirements at military installations, a nuanced approach is
necessary. To maximize discretion while preserving the Act’s benefits, Congress should define priority as a price
preference, "operate" as a management function, and "competitive range"
as it is in the FAR.
In most Federal acquisition
programs designed to benefit a certain group, a contract is specifically designated, or
set-aside, for that group in the solicitation. The
difficulty with defining priority as a set-aside for SLAs is that there is only one SLA in each
state, so creating a set-aside approach would, in effect, make the SLA a
mandatory source in that state. Defining priority as a price preference, where
either the SLA’s price is adjusted downward by a certain percentage or the
other offerors’ prices are adjusted upward at the evaluation stage would mark a
clearer reflection of congressional intent under these circumstances than the
statute’s current language. It would also
give agencies the freedom to consider multiple factors (e.g., price, management
plan, food quality) when soliciting a cafeteria
contract. This is similar to the approach for HUBZone contracts.
This approach recognizes that an SLA
might not be able to diffuse its overhead costs across many contracts like
other contractors. This straightforward
benchmark would reduce arbitration and litigation because it would be
easier to determine if and how priority was applied in the contract selection
Similarly, defining "operate" and
"operation" as providing management services for cafeterias would provide flexibility
to the agency in determining its needs while preserving the benefit for
the blind vendors on those contracts that would involve a management function.
This approach does not prevent an agency from lumping all cafeteria-related
services into the same contract, nor does it preclude contracting for ancillary
services with non-SLA vendors outside of the auspices of the Act if agencies
determine that is in their best interest. It does remove the inherent ambiguity
in terms and encourage a common
understanding among SLAs and agencies, thereby reducing the need to turn
to arbitrators for a solution.
Finally, the implementing regulations should clearly
state that the concept and definition of "competitive range" as implemented in
the FAR govern in Act acquisitions. There is no compelling reason to have one term
mean two things in the same area of the law. This approach requires an agency to consult with SecEd only if the SLA’s
proposal is both within a competitive range and among those that have a
reasonable chance of selection for final award. If, after being included
in a competitive range, an SLA’s proposal still has weaknesses and deficiencies
such that it is not ranked among those proposals that have a reasonable chance
of final award selection, the agency may award to a different offeror without
having to seek SecEd’s approval. Not only will this reduce the administrative
burden of coordinating with another Federal agency to award what should be a
relatively straightforward contract, but it will also reduce arbitration and
litigation because agencies will no longer have to guess at what meaning an
arbitration panel will give "competitive range." Instead, its meaning will be
clearly outlined in the FAR.
Because most military installations have cafeterias,
the Act has a significant impact across the DoD. Disagreements about the
meanings of key terms in the Act and its implementing regulations can lead to
lengthy arbitration and litigation. Congress can clarify the process for
awarding cafeteria-related contracts for all parties by defining these key
terms in the following ways: "priority" as a
price preference, "operate" as a management function, and "competitive range" as defined in the FAR. While
differences may remain about other aspects of the Act, making the
recommended changes will go a long way to freeing valuable time and resources
for agencies, SLAs, and blind vendors. These changes will ensure all parties
are on the same page with regard to these key terms, which will reduce
confusion about implementation and minimize the time and money spent in
arbitration and litigation.