United States District Court, S.D. Georgia, Brunswick Division
The STATE OF GEORGIA, by and through THE GEORGIA VOCATIONAL REHABILITATION AGENCY, and BASE SERVICES OF ATHENS, INC., Plaintiffs,
THE UNITED STATES OF AMERICA, by and through the HONORABLE PATRICK SHANAHAN, Secretary of Defense; and the HONORABLE RICHARD V. SPENCER, Secretary of the Navy, Defendants.
LISA GODBEY WOOD, JUDGE.
the Court is Plaintiffs the State of Georgia, by and through
the Georgia Vocational Rehabilitation Agency's, and Base
Services of Athens, Inc.'s Application for a Preliminary
Injunction. Dkt. No. 9. This application has been fully
briefed, and with the benefit of an evidentiary hearing held
on May 15, 2019, dkt. no. 23, it is ripe for review. For the
following reasons, Plaintiffs' Application for a
Preliminary Injunction is GRANTED.
The Randolph-Sheppard Act
"Congress enacted the [Randolph-Sheppard Act] ¶
1936 to 'provid[e] blind persons with remunerative
employment, enlarg[e] the economic opportunities of the
blind, and stimulat[e] the blind to greater efforts in
striving to make themselves self-supporting.'"
Ga. Dep't of Human Res, v. Nash, 915 F.2d 1482,
1483 (11th Cir. 1990) (quoting Ch. 638, 49 Stat. 1559, 1559
(1936) (codified at 20 U.S.C. § 107(a) (1982))).
accomplish this goal, the Randolph-Sheppard Act
(''RSA") gives blind persons "priority in
the bidding of contracts 'to operate vending facilities
on any Federal property.'" Kan, by & through
Kan. Dep't for Children & Families v.
SourceAmerica, 874 F.3d 1226, 1231 (10th Cir. 2017)
(quoting 20 U.S.C. § 107(a)).
''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." Id.
(citing 20 U.S.C. §§ 107(b), 107a, 107d-1).
RSA provides that ''[t]he Secretary, through the
Commissioner, shall prescribe regulations to establish a
priority for the operation of cafeterias on Federal property
by blind licensees when he determines, on an individual basis
and after consultation with the head of the appropriate
installation, that such operation can be provided at a
reasonable cost with food of a high quality comparable to
that currently provided to employees, whether by contract or
otherwise." 20 U.S.C. § 107d-3 (e).
"Those regulations provide that all contracts
'pertaining to the operation of cafeterias on Federal
property' are subject to the RSA." Kan.
Dep't for Children & Families, 874 F.3d at 1231
(quoting 34 C.F.R. § 395.33(c)).
''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." Id. (citing 20 U.S.C. §
107a(a)(5)). The Tenth Circuit has summarized how a
designated SLA works with a blind vendor and a federal agency
to procure vending-facilities services as follows:
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. If the federal
agency solicits bids, it must invite the SLA to bid on the
contract. The SLA then selects a licensed blind vendor and
submits a bid on that vendor's behalf if the vendor can
provide services ''at comparable costs and of
comparable high quality." If the SLA's bid is
''within a competitive range and has been ranked
among those proposals which have a reasonable chance of being
selected for final award," then the procuring agency
must consult with the Secretary. The Secretary must then give
priority to the blind vendor if she determines that the
"operation can be provided at a reasonable cost"
and at a comparatively ''high quality." If the
SLA and its blind vendor are awarded the contract, then the
blind vendor operates the dining facility and manages the
Kan. Dep't for Children & Families, 874 F.3d
at 1231-32 (quoting 34 C.F.R. § 395.33(a), (b)).
RSA also "provides for arbitration of all disputes
between an SLA and a federal agency that has solicited
vending-facility services." Id. The Act states
that whenever any SLA determines that any federal agency
''is failing to comply with the provisions" of
the RSA, the SLA ''may file a complaint with the
[Secretary of Education] who shall convene a panel to
arbitrate the dispute pursuant to section 107d-2 of this
title." 20 U.S.C. § 107d-l(b). If the arbitration
panel finds the agency to have violated the RSA, then the
head of the federal agency at issue "shall cause such
acts or practices to be terminated promptly and shall take
such other action as may be necessary to carry out the
decision of the panel." Id. § 107d-2(b)
''The arbitration panel's decision is subject to
judicial review as a final agency action under the
Administrative Procedure Act (APA) . . . see 5 U.S.C. §
706(2)(A)." Kan. Dep't for Children &
Families, 874 F.3d at 1232.
The Solicitation and Plaintiffs' Bid
July 31, 2018, the United States Navy (''the
Navy") issued a Solicitation, Solicitation No.
N68836-18-Q-0099, for "a new dining facilities contract
(''the Solicitation") at the Naval Submarine
Base, Kings Bay, Georgia (''Naval Base"), which
requested proposals by August 23, 2018. Dkt. No. 9-1 ¶
4; Dkt. No. 12-3.
that time, the dining facilities services were being provided
by Plaintiff Base Services of Athens, Inc.
(''BSA"). Dkt. No. 12-1 ¶ 4.
incumbent contractor, BSA, saw an opportunity to team with
The Georgia Vocational Rehabilitation Agency
(''GVRA") (collectively ''Plaintif f
s")-Georgia's SLA under the RSA-to participate in
the RSA program and continue to help GVRA operate the
contract. Transcript (hereinafter ''TR") 72,
Dkt. No. 22.
and GVRA agreed that BSA would provide technical and
management assistance to GVRA for preparing a proposal for
and performing the contract awarded by the Solicitation.
Although the exact relationship between GVRA and BSA is
unclear, the evidence shows the following: GVRA and BSA
agreed to submit a proposal for the Solicitation and had an
unwritten agreement to operate the contract if GVRA won the
award; GVRA, as the designated SLA for Georgia and with the
assistance of BSA's incumbent status and expertise,
drafted and submitted a bid for the Solicitation; BSA would
continue to work on the Naval Base performing the same dining
services under the new contract; BSA would train and mentor a
new blind manager to operate the entire contract on the base.
TR 84-87, 99-101, 104-05, 108-109.
GVRA had already contacted the Navy, specifically the Fleet
Logistics Center Jacksonville (''FLCJ") that
handles these contracts, to notify the agency of its interest
in competing for the Solicitation on March 14, 2018, and the
FLCJ determined that the Solicitation was subject to the
provisions of the RSA. Dkt. No. 12-1 ¶ 6.
Solicitation indicated that the award would be set aside for
small business concerns because it qualified under the
HUBZone program, unless it was determined that award should
be made to the SLA under the regulations implementing the
RSA. See Dkt. 12-3 at 80.
Solicitation also provided that ''[p]ursuant to 20
USC 107 and 34 CFR 395.33, a Randolph-Sheppard Act (RSA)
State Licensing Agency (SLA) that submits an offer will be
granted a priority in the source selection. If an SLA submits
an offer that is in the competitive range, the Contracting
Officer may initiate discussions solely with the SLA for the
purpose of facilitating an award to the SLA without further
consideration of the other Offerors." Id. A
contracting officer, Libia Cristancho, sent an email to GVRA
on behalf of FLCJ stating the same and requesting some
additional information after Plaintiffs submitted their
proposal. Exhibit 7.
Four entities, including GVRA, bid on the Solicitation, and
GVRA's proposal presented the highest price.
Defendants' maintain that GVRA's initial price was
$134, 700 per month. Dkt. No. 12-1 ¶ 8. Plaintiffs
contend that it was $134, 100 per month. TR 89.
Competitive Range Determination and Subsequent
FLCJ Contracting Officer determined that all four offers were
among the most highly rated proposals and, therefore, fell
into the competitive range. Dkt. No. 12-1 ¶ 8. As such,
FLCJ entered into sole-source discussions with GVRA for the
purpose of facilitating an award to GVRA without further
consideration of the other proposals. See Exhibit 7.
this point, FLCJ contacted cost analyst Stacy McClendon and
asked her to perform calculations to determine what price
would be reasonable for the Solicitation contract. TR 11, 18.
Ms. McClendon testified that she was told to review the
proposal and negotiate with GVRA. TR 11.
determine whether GVRA's price was "fair and
reasonable," Ms. McClendon developed a target price, a
minimum price, and a maximum price based on performance data
provided by GVRA and BSA and what she understood to be a
decrease in the amount of meals served under the new
Solicitation contract as compared to BSA's prior
contract. TR 18-19. She testified that she was told about the
decrease in meals served-what she remembered as a decrease of
about 600, 000 to 400, 000 a year-from the contracting
specialist. TR 20.
Contrary to Ms. McClendon's understanding, the
''Daily Workload Estimate" in the Solicitation,
which provides contractors with estimated future information
about the anticipated labor costs to use in constructing
their bids-including the number of meals-was identical to the
estimate given in BSA's prior contract with the Naval
Base and with the bridge contracts that BSA subsequently
entered into with the Naval Base. See Exhibits 4, 5,
other words, any alleged drop in meals was not reflected in
the ''Daily Workload Estimate" of the
Solicitation. See Exhibits 4, 5, 6.
Moreover, Don James, the CEO of BSA, testified that even if
the meal numbers had decreased, such a decrease would not
affect operating costs as compared to the earlier contract
because the dining services labor costs would be about the
same. TR 76. That is, even if meals served decrease from 600,
000 to 400, 000, the cost to the operator to serve these
meals would not decrease much, if at all.
Regarding Ms. McClendon's minimum, target, and maximum
price values, she testified that the minimum and maximum
would be about five percent below and above the target price.
With her minimum, target, and maximum price values in hand,
Ms. McClendon held two conference calls on the same day with
Charlie Garrett from GVRA, Don James for BSA, and others to
discuss GVRA's proposal. TR 89-91, 107.
McClendon testified that after speaking with Plaintiffs'
representatives during the call, she was concerned about the
explanations given for ''some cost elements and no
explanations on others," specifically the lack of
explanation for profit increase and the general and
administrative rate. TR 35-36.. She also testified that
Plaintiffs refused to lower their initial bid price, so the
conversation ended with her telling Plaintiffs that she would
let the contracting officer know. TR 26, 34. Based on the
phone conversation and the explanations given by
Plaintiffs' representatives, Ms. McClendon determined
that their proposal was not fair and reasonable. TR 35.
McClendon's testimony was contradicted by two witnesses.
Don James and Charlie Garrett testified that they did lower
their price two times to a final number of $130, 000. TR 88,
Both Mr. James and Mr. Garrett explained that their higher
price of $134, 100 was predominantly due to the addition of a
blind manager who would be trained and mentored by BSA and
would operate the contract. TR 85-87, 108-109. The addition
of the blind manager added $6, 000 per month to the contract
James and Mr. Garrett testified that FLCJ wanted them to
substitute the blind manager for one of BSA's two
existing managers, but both of them testified that because of
the complexities of operating a dining services contract on a
large military base like the Kings Bay Naval Station, the
blind manager would not have the knowledge necessary to
perform either of the other two managers' jobs. TR 87-89,
James and Mr. Garrett testified that they lowered their bid
in an effort to alleviate FLCJ's concerns about the price
of including the blind manager. TR 88-90, 108-109.
Garrett testified that the conversation ended with FLCJ's
representatives saying that they would talk about it and get
back to them, but FLCJ never gave a counter offer or
continued negotiations. TR 109-110.
Based on Ms. McClendon's determination that GVRA's
proposal was not fair and reasonable, FLCJ sent GVRA a letter
on January 22, 2019, informing GVRA that FLCJ had eliminated
GVRA's bid from the competitive range because it
determined that GVRA's proposal was ''no longer
considered to be among the most highly rated proposals being
considered for award" and was not ''ranked among
those proposals which have a reasonable chance of being
selected for final award." Dkt. No. 9-1 (Letter from
Mark Brock). Mark Brock, the Director of Large Service
Contracts for FLCJ and the contractor officer for the
Solicitation, testified that had GVRA's price been
reasonable, it would have been awarded the contract. TR 7
is undisputed that neither FLCJ nor anyone else with the Navy
consulted with the Secretary of Education before eliminating
GVRA's bid from consideration. See Dkt. No. 12
Prior Contract and Bridge Contracts
BSA's initial contract with the Naval Base ran from 2015
until September 30, 2018 for a price of ...