Construction Law Insights

Kansas v. SourceAmerica, 2020 U.S. App. LEXIS 30263, 2020 WL 5640409 (4th Cir. Sep. 22, 2020)

The dispute revolves around the procurement of a contract for services to be performed in The Department of the Army’s (“Army”) dining facilities at Fort Riley, Kansas. For the factual background, please see last year’s case digest for Source America v. United States Dept’ of Educ., 368 F. Supp. 3d 974 (E.D. Va. Mar. 15, 2019). The cross-appeals are from the district court’s decision to overturn, in part, the Department of Education (“DOE”) arbitration panel’s award in favor of the State of Kansas (“Kansas”), by and through the Kansas Department for Children and Families (“KDCF”). In the instant appeal, Kansas appealed the district court’s summary judgment decision as to the statutory standing of Lakeview Center, Inc. ("Lakeview") and SourceAmerica, formerly

known as the National Industries for the Severely Handicapped ("SourceAmerica") and its decision that the Randolph-Sheppard Vending Facility Act of 1936 ("RSA") does not apply to the Fort Riley Dining Facility Attendant ("DFA") contract. The DOE and its Secretary, the Department of Defense ("DOD") and its Secretary, and the Department of the Army ("Army") and its Secretary (collectively, the "Government Appellees") cross-appealed the district court’s summary judgment decision as to the application of the RSA Review Requirement to the Fort Riley DFA contract, which requires the DOE’s approval for any limitation on the placement or operation of a vending facility (20 U.S.C. § 107(b)). The Court affirmed the district court’s decision in part, vacated the district court’s decision in part, and remanded the matter for further proceedings.

The Court held that Kansas did not present its claimed statutory standing argument before the district court and, therefore, waived its argument as to statutory standing. The Court affirmed the district court’s decision on the RSA Review Requirement. Section 107(b) provides that any limitation on the placement or operation of a vending facility based on a finding that such placement or operation would adversely affect the interests of the United States shall be fully justified in writing to the Secretary of DOE, who shall determine whether such limitation is justified. The Army’s decision to forego the Full Food Service ("FFS") contract with Kansas in favor of the DFA contract did more than just “limit” a blind vendor’s operation of the vending facility; it eliminated it altogether. Therefore, the Army was required to justify its actions to the Secretary of DOE, and it was undisputed that the Army did not do so. Accordingly, the Court held that the Army’s decision to forego the FFS contract with Kanas in favor of publishing a DFA contract pursuant to the Javits Wagner O'Day Act ("JWOD") – eliminating Kansas’ operation of the Fort Riley cafeteria – invoked the RSA Review Requirement.

Because the Court concluded that, per the RSA Review Requirement, the Army was required to justify its decision with regard to the Kansas FFS contract and because the Secretary of DOE has the authority to accept or reject such justification, the Court determined that it would be premature to reach the other issues on appeal because they hinged on the Secretary’s approval or rejection of the Army’s actions. Thus, the Court vacated the district court’s decision as to those issues and remanded the matter so the Army could properly comply with the RSA Review Requirement.

PLDR Law Scott Kowalski 1 PLDR Law Mark Burgin 1

Thomas Wolf 002 Kenneth Stout 002 Jason Goldsmith 002


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