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Maryland State Department of Education v. United States Department of Education

United States District Court, D. Maryland

September 25, 2018




         The Court has before it Plaintiffs Amended Complaint for Judicial Review of Agency Action of the United States Department of Education Arbitration Panel Under the Randolph-Sheppard Act 20 U.S.C. §§107-107F [ECF No. 8], Intervenor-Defendant Patricia Homan's Motion to Confirm and Enforce Arbitration Award [ECF No, 29] and the materials related thereto. The Court has held a hearing and had the benefit of the arguments of counsel.[1] The Court has jurisdiction pursuant to the Randolph-Sheppard Act, 20 U.S.C. § 107d-2(a).[2]


         The Randolph-Sheppard Act ("RSA") was enacted by Congress to "enlarg[e] the economic opportunities of the blind" by giving them priority in the bidding of contracts "to operate vending facilities on any Federal property." 20 U.S.C. § 107. Although the RSA applies to all federal agencies, Congress charged the Secretary of the Department of Education ("DOE") with administering, interpreting, enforcing, and resolving disputes arising under the RSA. See 20 U.S.C. §§ 107(b), 107a, 107d-1.

         Under the RSA, the Secretary designates a State Licensing Agency ("SLA") in each state to issue licenses to qualified blind persons to operate vending facilities on federal property. 20 U.S.C. § l07a(a)(5). When a federal agency procures vending-facility services, it does not contract directly with a blind vendor. The agency instead negotiates a contract directly with the SLA or solicits competitive bids for the contract. 34 C.F.R. § 395.33(b), (d). The RSA also provides for a dispute resolution process that ultimately may result in an arbitration panel's decision, which is subject to judicial review. 20 U.S.C. § 107d-2 (a).

         The instant dispute arose out of a solicitation for bids for a vending facility. The solicitation was withdrawn, revised, and rebid, resulting in two different vendors believing that they properly won the contract. An arbitration panel reversed the State agency's decision, which has resulted in this judicial review.


         A. The Parties

         Business Enterprise of the Blind ("BEP") operates the blind vending program in Maryland pursuant to the RSA. It is a unit of the named Plaintiff, Maryland State Department of Education, Division of Rehabilitation Services, which is the SLA and is also referred to in the record as the Division, DORS, or the State.

         Patricia Homan ("Ms. Homan") is the Defendant-Intervenor. She is a licensed vendor in the BEP Program and bid on BEP's initial solicitation for Vending Facility # 25 ("VF25"). She was recommended to the Committee of Blind Vendors as the winning bidder for VF25, but thereafter, the solicitation was withdrawn, revised, and rebid, and a different vendor was selected. Ms. Homan grieved the agency's bidding process and ultimately initiated the arbitration proceeding challenging BEP's decision to withdraw, revise, and reissue the VF25 solicitation.

         The named Defendant United States Department of Education is a nominal party only. As part of the agency review process, it convened the arbitration panel and sponsored[3] the arbitration that issued the decision that is the subject of this judicial review.

         B. The Blind Vendor Program

         The Randolph-Sheppard Act, 20 U.S.C. §§ 107-107f, adopted in 1936 and amended in 1974, established a federal-state cooperative program to promote the employment of blind persons by providing for their operation of vending facilities at federal buildings. The program is .overseen by the United States Department of Education, which authorizes state agencies to implement the program as well as to train and license blind persons to manage and operate vending facilities located in federal facilities. States also administer the application and bidding process by which blind vendors are awarded the right to operate such facilities. Maryland State Department of Education, Division of Rehabilitation Services is designated as Maryland State's licensing agency (i.e., the SLA).

         BEP is the unit that operates the blind vending program in Maryland with the active participation of the Committee of Blind Vendors ("Committee"). The Committee is comprised of eight elected vendors, who represent the interests of all of the licensed vendors. The Committee's responsibilities include:

(A) participation, with the State agency, in major administrative decisions and policy and program development, (B) receiving grievances of blind licensees and serving as advocates for such licensees, (C) participation, with the State agency, in the development and administration of a transfer and promotion system for blind licensees, (D) participation, with the State agency, in developing training and retraining programs, and (E) sponsorship, with the assistance of the State agency, of meetings and instructional conferences for blind licensees.

20U.S.C. § 107b-l(3).

         C. Bidding for Vendor Facility #25

         1. The Bidding Process

         Procedures for the assignment of vendors to facilities are set forth in the State regulations[4] and are also available in the Administrative Manual. Md. Code. Regs. ("COMAR") § 13A.11.04.06C-E. The Administrative Manual[5] is a policy manual developed by BEP with the active participation of the Committee, and it establishes operational procedures for the blind vendor program. COMAR § 13 A. 11.04.02(3).

         According to the Administrative Manual, Section 4, when a vending facility[6] becomes available for assignment, BEP will send bid announcements (also referred to as "solicitations") to all eligible licensed vendors. The Administrative Manual Section 4.A.3 requires BEP to list the minimum assignment criteria[7] for each announcement.

         In order to be assigned a vending facility, the applicant must meet the general criteria as well as the specific criteria established for that facility. R. 305. The administrative regulation describes the process for selection by BEP:

(a) After the due date for responses, the Division shall submit to the Committee Chair the name of the applicant recommended for the assignment.
(b) If the recommended applicant is not the most senior applicant, the Division shall also submit to the Committee Chair a report identifying any applicants with more seniority and the reasons for finding the applicants unqualified.
(c) The Division shall also notify the applicant who is found unqualified of the reasons for the finding and the applicant's right to appear before the Committee to present information supporting qualifications for the assignment.

         COMAR§ 13 A. 11.04.06(E)(2).

         If a more senior applicant who was deemed unqualified wishes to show that he or she is actually qualified, a meeting is scheduled with the Committee.[8] The Committee must agree or disagree with BEP's recommendations within seven calendar days after receipt of the recommendation, unless the time is extended by mutual agreement. COMAR § 13 A. 11.04.06(E)(4). If the Committee does not respond within this period, BEP's recommendation is effective. Id. If the Committee disagrees with BEP's recommendation, BEP and the Committee hold a conference to resolve the disagreement. Id. If BEP and the Committee do not resolve the disagreement, BEP's recommendation will be effective. Id. Any dissatisfied applicant may then appeal BEP's decision by requesting an administrative review under COMAR 13A.11.04.13.

         2. VF25

         VF25 is a convenience store, known as a dry stand, [9] at the National Institutes of Health ("NIH") in Bethesda, Maryland. On or about February 14, 2013, [10] BEP issued a solicitation for VF25 at NIH. R. 321. The solicitation for bids, under the heading "Specific Criteria," states "Must have a current Food Service Sanitation Certification." R. 322, see also R. 324 ("5. On-site manager must be certified in safe food handling, Serv-Safe Certification and employees are required to have food handler certification.")[11] The bidding for VF25 closed on March 7, 2013. R.321. Ms. Homan and eight other licensed vendors submitted bids, and Ms. Homan was the third bidder in seniority. R. 83 at ¶¶ 7, 22, R. 327. However, the two bidders senior to her did not have Serv-Safe certification as required. R. 340. Since Ms. Homan's bid was the "next most senior applicant who qualifies," BEP recommended her for the assignment to VF25. COMAR § 13A.11.04.06 (D)(3). BEP notified the two unqualified senior applicants (Mr. Borja and Mr. Reyazzudin) that they were not selected.

         Messrs. Borja and Reyazzudin requested a meeting with the Committee because they were senior bidders for VF25 who were passed over for failure to meet the specific criteria. R. 340. A meeting was held, and it appears that the losing bidders did not present evidence of being qualified, but instead argued that the qualification of a Serv-Safe certificate should not be required for bidding on VF25, because such certification had not historically been required and because the Committee had not been involved in the decision to add it as a specific criterion for VF25. Opening Br. 5-6, ECF No. 30; R. 158-59. The Committee made a decision to recommend to BEP that it withdraw and revise the language of the solicitation and rebid VF25. R. 297-299. The Committee recommended that the wording be modified to allow all interested vendors to become Serv-Safe certified prior to the assignment of the facility rather than requiring the certification as part of the eligibility to bid. Id.

         BEP's notice of rebidding stated:

This Bid is being re-submitted because of recent recommendations by NIH stating that facilities making coffee are classified as food service facilities and now are requiring all vendors and the on-site managers to have Food Service Sanitation Certifications. In the original submission of this bid, the Program errored [sic] by not allowing sufficient time for the vendor to become certified prior to signing the Operating Agreement. With the active participation of the Committee of Blind Vendors and upon their recommendation, the bid is being resubmitted with the following requirement
The vendor must have a valid Food Service Sanitation Certification (Serv-Safe) at the time of signing the Operating Agreement, or will forfeit the facility to the next qualified vendor. The Serv-Safe certification will be valid with the MBEPB for three (3) years from the date of the Serv-Safe exam[.]

         R. 342. The revised announcement incorporated the Committee's recommended language. R. 343-46. There were four bids submitted, not including Ms. Homan. R, 349. Mr. Borja was then selected as the ...

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