Randolph-Sheppard Vending Facility Program — Priority Rights for Blind Vendors on Federal Property

The Randolph-Sheppard Vending Stand Act (20 U.S.C. §§ 107–107f), first enacted in 1936 and significantly expanded in 1974, gives blind individuals a federal legal preference to operate vending facilities — food stands, cafeterias, snack bars, and vending machine routes — on federal property. Every federal department, agency, and instrumentality is required by law to give priority to blind vendors licensed under the program when establishing or renewing vending facility contracts on federal premises. The program is administered by the Rehabilitation Services Administration (RSA) within the Department of Education, which oversees approximately 50 State Licensing Agencies (SLAs) — one per state plus the District of Columbia and territories — that train, license, and place blind vendors in facilities on federal and other property in their jurisdiction. The implementing regulations at 34 CFR Part 395 govern how SLAs operate, how vendors are licensed and supported, and how disputes are resolved.

Current Rule (2026)

What This Rule Does

The Randolph-Sheppard Act creates a statutory priority: any federal entity that wants to install or renew a vending facility (including a vending machine contract) on federal property must give a blind vendor licensed by the state program the right of first refusal. The federal agency cannot skip blind vendors and award the contract to a commercial vending company without going through the statutory process. If no licensed blind vendor can be placed at a location, only then may the agency contract with a commercial vendor — and even then, a portion of the commercial vendor's income from vending machines may be subject to a "set-aside" to support the blind vendor program.

The Act created a two-tiered system: federal property (covered by the mandatory preference statute) and other property (where states may advocate for blind vendor priority but cannot legally compel it). RSA promulgates the minimum standards; states may adopt more stringent requirements.

Part 395 governs the SLA's responsibilities — licensing, training, equipment maintenance, vendor support, the elected vendor committee, and the dispute resolution process.

Key Provisions

• § 395.2 — SLA designation: states must apply to RSA to become a State Licensing Agency; the SLA must be authorized under state law to provide vocational rehabilitation services to individuals with visual disabilities; RSA may suspend an SLA's designation if it fails to administer the program in compliance with the Act and Part 395
• § 395.3 — SLA application content: the SLA application must include a state plan for program administration, evidence of legal authority, proposed licensing procedures, equipment acquisition and maintenance plan, and vendor training program description; RSA evaluates whether the proposed program meets the Act's minimum standards before granting designation
• § 395.10 — Equipment maintenance: the SLA must maintain all vending facility equipment in good repair and replace equipment when it is no longer serviceable; maintenance costs are funded from the Randolph-Sheppard set-aside fund derived from vending machine commissions on federal property; vendors are not personally responsible for equipment replacement costs
• § 395.11 — Vendor training: SLAs must provide effective vocational and other training services to blind individuals who want to become licensed vendors; training must cover all aspects of vending facility operation — food preparation, inventory, cash management, customer service, and business management; ongoing in-service training must be available to licensed vendors
• § 395.12 — Access to financial data: every licensed blind vendor has the right to access all financial data of the SLA relating to its vending facility program, including set-aside fund balances and expenditures; this transparency requirement was added in 1974 after complaints that SLAs were mismanaging vendor funds
• § 395.13 — Vendor complaints and arbitration: vendors who disagree with SLA decisions (including placement decisions, equipment issues, or financial disputes) have the right to request an evidentiary hearing before the SLA; if the vendor is dissatisfied with the SLA's decision, the vendor may request arbitration before a federal panel convened by RSA; the arbitration decision is final and binding and may be appealed to federal court; this arbitration right is one of the program's most significant protections — vendors can challenge SLA favoritism, unfair placement practices, or denial of priority rights
• § 395.14 — State Committee of Blind Vendors (SCBV): a committee of elected blind vendor representatives must be organized in each state; the SCBV is elected by the licensed blind vendors in the state every two years; the SLA must actively consult with the SCBV on all major program decisions — licensing policies, equipment standards, set-aside fund uses, and training programs; the SCBV functions as a vendor self-governance body, giving blind entrepreneurs a voice in how the program that employs them is administered
• § 395.15 — Nominee agreements: an SLA may enter into a "nominee agreement" with another agency or organization to furnish services or facilities on behalf of the SLA — effectively designating a non-profit or other entity to administer aspects of the program; nominee agreements must not diminish the rights or protections of blind vendors or the SLA's accountability for program outcomes
• § 395.16 — Permit for facility establishment: before establishing each vending facility (other than a cafeteria), the SLA must obtain a permit from the federal property management authority; the permit must ensure access to foot traffic in the building, adequate space, and access to electrical and water service; the federal agency property manager cannot deny a permit based on preference for a commercial vendor if a qualified blind vendor is available
• § 395.17 — Suspension of SLA designation: RSA may suspend an SLA's designation if the SLA is not administering the program in compliance with federal standards; suspension does not remove blind vendors from their facilities — their placements remain protected during any suspension period; suspension triggers RSA-mediated corrective action with the state
• § 395.30 — Federal property priority: each federal department, agency, and instrumentality must give blind licensees the right to operate vending facilities on federal property to the greatest extent possible; when a new facility is established or a contract comes up for renewal, the agency must first notify the SLA and give qualified blind vendors the priority right; commercial contracts may be awarded only when no qualified blind vendor is available for the location

How It Affects You

If you are blind or have a visual impairment and want to operate a vending business: The Randolph-Sheppard program is one of the few federal programs that creates an affirmative legal right for people with disabilities to operate businesses. To participate, contact your state's SLA (typically located within the state vocational rehabilitation agency) to inquire about licensing requirements. The SLA provides training, equipment, and placement in a vending location — you do not need to independently secure a location on federal property, because the SLA arranges placement with the federal agency. Licensed vendors operate their facilities as independent entrepreneurs, setting their own hours and keeping their profits after equipment maintenance costs and any set-aside contributions. The SCBV gives you a democratic voice in program governance — attending SCBV meetings and running for election gives blind vendors collective influence over SLA policy.

If you manage federal property or are a federal contracting officer: The Randolph-Sheppard Act is a mandatory statutory preference — not a discretionary policy. Before awarding any vending facility contract (including vending machine service contracts), you must notify the SLA and give it the opportunity to place a licensed blind vendor. Awarding a vending contract to a commercial vendor without going through this process exposes the agency to grievance and potential arbitration. The SLA coordinates the placement process; your role is to provide the notification, identify available space, and issue a permit to the SLA-designated vendor. Military installations, VA facilities, and GSA-managed buildings have all faced arbitration claims from blind vendors whose priority rights were bypassed.

If you work in vocational rehabilitation or disability policy: The Randolph-Sheppard program is distinct from the Vocational Rehabilitation (VR) state grants program under the Rehabilitation Act Title I. VR funds job placement and vocational services for all individuals with disabilities; Randolph-Sheppard specifically funds the vending enterprise program for blind vendors. The two programs interact: many blind vendor trainees first receive VR services before entering the Randolph-Sheppard program. RSA oversees both programs and cross-references them in federal monitoring. The program has faced pressures from federal property consolidation (fewer federal buildings = fewer vending locations), the shift to card-based vending systems, and competition from food service contractors on military bases who dispute the Act's application to certain facility types.

Legal Authority

• 20 U.S.C. § 107 — Randolph-Sheppard Act § 1; establishes blind vendor priority on federal property; directs all federal departments, agencies, and instrumentalities to give priority to blind persons licensed by SLAs; grants Secretary of Education authority to prescribe regulations
• 20 U.S.C. § 107a — Designates RSA as program administrator; requires SLA designations; establishes set-aside fund mechanism for vending machine commissions; mandates arbitration for vendor complaints against SLAs
• 20 U.S.C. § 107b — Requires all federal agencies to provide advance notice to SLAs before establishing or renewing vending facility arrangements on federal property; mandates RSA reporting on facility locations
• 20 U.S.C. § 107d-1 — Arbitration panel procedure: three-member panels (one RSA, one SLA, one vendor nominee); 180-day decision deadline; decision final and binding on federal agencies
• 34 CFR Part 395 — RSA implementing regulations; governs SLA operations, vendor licensing, set-aside fund management, cafeteria priority rules, and arbitration procedures

Key Mechanics

The Randolph-Sheppard priority operates as a mandatory preference, not a tie-breaker: when a federal department or agency establishes or renews a vending facility contract on federal property, it must give first priority to a blind vendor licensed by the relevant State Licensing Agency (SLA), over all other operators including food service contractors. Federal cafeterias — not just vending machines — are covered when a blind vendor is available and qualified. The program operates through three layers: (1) RSA (federal) — sets national standards, approves SLA plans, manages interstate operations, oversees arbitration panels; (2) State Licensing Agencies — each state/territory designates an SLA (typically the state VR agency) to recruit, train, license, and place blind vendors; SLAs hold the underlying contracts with federal property managers; (3) Licensed blind vendors — operate under agreements with the SLA; receive 100% of sales proceeds from their assigned facilities; pay into a set-aside fund (capped by statute) that finances equipment, training, and retirement benefits. The set-aside fund (§ 107a(c)) is the program's self-financing mechanism: vendors contribute a percentage of net proceeds to a state-managed fund that covers capital equipment purchases, repairs, and — in many states — a form of retirement income for aged vendors. Federal vending machines located on federal property not operated by blind vendors must remit a portion of their commissions to the relevant SLA's set-aside fund under § 107d-3. Dispute resolution uses mandatory arbitration: a vendor aggrieved by SLA action has a right to arbitration before a three-member federal panel; panel decisions are binding on both the SLA and any federal property managing agency, and are reviewable in federal district court only for fraud, misrepresentation, or other misconduct under § 107d-1.

Statutory Authority

This rule implements:

• 20 U.S.C. § 107 (Randolph-Sheppard Act § 1) — establishes the blind vendor priority on federal property; directs all federal departments, agencies, and instrumentalities to give priority to blind persons licensed by SLAs to operate vending facilities on federal property; grants the Secretary of Education authority to prescribe rules and regulations
• 20 U.S.C. § 107a — designates the Secretary of Education (acting through RSA) as program administrator; requires designation of SLAs; establishes the set-aside fund mechanism for vending machine commissions; mandates the arbitration process for vendor complaints against SLAs
• 20 U.S.C. § 107b — requires all federal agencies to provide adequate notice to SLAs before establishing or renewing any vending facility arrangement on federal property; requires reporting to RSA on the number and locations of vending facilities on federal property

Recent Rulemakings

2016 amendment (81 FR 55629) — updated the program regulations to align with the Workforce Innovation and Opportunity Act (WIOA) amendments to the Rehabilitation Act; clarified the relationship between the Randolph-Sheppard program and state VR agencies, updated the SCBV election procedures, and revised the set-aside fund accounting requirements.

No major amendments since 2016. Regulatory activity has focused on informal guidance about the program's application to military base food service contracts (which are governed by a complex intersection of the Randolph-Sheppard Act and military morale, welfare, and recreation (MWR) authorities).

Pending Action