By Bill Coates, bill.coates@azcapitoltimes.com
Shortly before noon, diners line up at the Capitol Café. On busy days, the line spills out into the hallway of the Executive Tower basement. The daily special is written in grease pencil on a small portable sign.
On this day, it’s roast turkey for $4.59.
One of the cashiers is Mike Feeney, wearing wraparound sunglasses. He runs the business.
He’s also legally blind. And that’s no coincidence. Feeney operates the Capitol Café under a federal law known as the Randolph-Sheppard Act. In Arizona, this is administered through the Arizona Business Enterprise Program, part of the Department of Economic Security.
As Feeney rings up the customers, he’s pleasant. He’s efficient.
But, under the surface, not all is well with AzBEP. Among its 30 or so blind operators, some complain DES runs the program with a heavy hand. Others say agency red tape makes it difficult for them to make simple repairs or replace worn-out equipment. And, they say, DES has dragged its feet in opening up new sites — including inside state prisons.
DES has its own side of the story. Kathy Levandowsky, program administrator for Rehabilitation Services Administration — AzBEP’s parent division — says she is just asking operators to follow state procurement policies. And that new business sites will be available soon.
As for the operators, the undercurrent of dissatisfaction surfaced last April, when they met as the Arizona Participating Operators Committee (APOC), a representative group required by federal law. At the meeting, members voted to seek the removal or reassignment of two DES administrators, both of whom work for Levandowsky. The vote was non-binding. It was also unanimous.
Henry Grijalva recalls the atmosphere in the room leading up to the vote. It transcended the usual business of discussing new inventory controls and hearing from wholesalers — including one who gave a Starbucks coffee taste test.
“In the back of our minds, we knew something was going to hit the fan,” says Grijalva, 55.
One day he sat at the dining table of his Glendale home, sporting a T-shirt soaked in sweat. He had just finished mowing his lawn, which he does blind. He has been visually impaired from birth. Under AzBEP, Grijalva services vending machines at interstate highway rest stops. An employee drives.
There was little discussion about the vote, Grijalva says. The minutes of the meeting offered few specifics.
But there were undercurrents. And there was Robert Smith.
Smith, the riptide
Smith’s case was the riptide. For many operators, Smith was the victim of an agency that failed to play by the rules. AzBEP policy is set by DES with input from the operators.
The 61-year-old Smith runs Trebor’s, an AzBEP cafeteria at the Maricopa County court complex in Mesa. Trebor, he points out, is Robert spelled backward. He takes a visitor to a small office in the back. He is an outgoing, affable man, as well as a plain-spoken ex-Marine.
He lost his sight in an industrial accident.
“I’m blind as a bat,” he says.
His complaints against DES are both philosophical and personal. On the philosophical side, he says the Randolph-Sheppard Act comes with a built-in conflict.
Created in 1936, the New Deal program offered blind people a chance to run their own businesses on federal and state property. As amended, Randolph-Sheppard gives blind operators priority in setting up cafeterias and vending-machines in federal facilities. Under AzBEP, they also operate food services in state, county and city buildings. Arizona law also gives them priority.
Operators must first undergo six months of training. Right now, about half-dozen newly trained operators await an opening.
Like businessmen, operators hire employees, pay overhead and seek to make a profit.
But unlike most businessmen, they’re wedded to a state bureaucracy. For Smith, it’s like an unholy alliance between government and private enterprise.
For the most part, it works. He says AzBEP has given him a livelihood he would not have had otherwise. But there’s always room for improvement.
“I feel very strongly about this program, and I’m just irritated to death it is so screwed up,” he says.
Then he hands a visitor a stack of papers. He can’t read them, but he knows what order they’re in. They’re a record of his complaint against DES, which goes back to early in the year when Joni Spinka put in a bid to take over a snack bar at the Phoenix Indian Medical Center.
At the time, Spinka operated the Capitol Café in the Executive Tower basement. After she received the go-ahead for the Indian Center, Smith put in a bid for Capitol Café.
A winning bid requires approval from two committees. Each committee has four members, two from the agency and two operators. The first, the qualifying committee, screens applicants. The selection committee makes the final choice among qualified applicants. Candidates take a test and undergo a face-to-face interview.
“The final analysis is what your gut instinct is — who’s going to be the most successful in an operation,” Smith says.
The qualifying committee gave Smith a pass in his bid for the Capitol Café. The selection committee chose him over other candidates, including Mike Feeney, who operated a cafeteria at the Desert Schools Federal Credit Union in east Phoenix.
Randolph-Sheppard administrator Ed House, however, overturned the decision. The agency has final say, but Smith says House was wrong in this case. Smith filed a grievance against DES.
He says the case hinges on $50,000 he borrowed to make payroll after he took over a cafeteria about eight years ago at Fort Huachuca. Most operators — upon taking over a business — get a few a hundred dollars in the cash drawer, in addition to the inventory.
He had five years to pay off the debt, he says. But a massive heart attack put matters on hold. He doesn’t dispute the debt, and says he had paid off most of it. But he had no record of what he still owed, and couldn’t find out, he adds.
Grijalva was on Smith’s selection committee. No one from DES told the qualifying committee that Smith had stopped making payments, he says.
“Robert did do his homework, and he asked the office if he owed any money, if he was all right — if there were any issues. There were none,” Grijalva says.
Debt itself doesn’t disqualify an applicant. But the operator has to arrange payments. DES administrator Levandowsky says privacy issues bar her from discussing individual operators.
Sorting it out
The agency did make its case before Administrative Law Judge Richard Woodlock in early June, however. Woodlock held what amounted to a preliminary hearing to sort out the facts.
Assistant Attorney General Kevin Smith told Woodlock that House had acted properly in denying the bid. In addition, Robert Smith had a payment plan, but he wasn’t paying.
“If he had been in conformance with that payment plan, they would not have rejected the recommendation,” Kevin Smith said at the hearing.
Robert Smith acknowledged the debt, but says the agency never gave him an exact figure.
“I made every attempt to discover how much was owed,” Smith told Woodlock.
A full hearing on Smith’s case is set for Aug. 14.
Generally speaking, Levandowsky says, DES does not send out statements.
“Once they made that arrangement, then they’re responsible for just making monthly payments,” she says.
Most operators go into debt, she says, because they fall behind on payments to what’s known as a set-aside. Each operator pays the agency 20 percent of net profit. On a $50,000 profit, for example, the operator pays DES a $10,000 set aside. The money benefits the operators.
This year’s total set aside comes to roughly $465,000. Of that, two-thirds goes toward operators’ health and dental insurance. About 10 percent guarantees a minimum wage for operators whose profits fall short. Another $108,000 draws in federal matching funds, totaling $400,000 to replace and repair equipment.
The set-aside varies from state to state. Arizona has one of the highest, says Kevan Worley, president of the National Association of Blind Merchants, an advocacy group headquartered in Colorado Springs, Colo.
He doesn’t see a problem, he adds, if it’s money well spent.
Levandowsky says it is.
“Some states require operators to pay for their own maintenance and repairs,” she says.
In Arizona, a new case-management system should make it easier to track set-aside debt, as well as inventory.
“That will help them to see what their balance is,” Levandowsky says.
What’s more, DES provides a debtor list at each APOC meeting. Smith says his name never appeared on that list.
Aside from Smith’s complaint, operators have other issues on their plates, including timely replacement and repair of equipment. Red tape has hampered that, they say.
Levandowsky says it’s not red tape; it’s policy. She insists that operators use DES contractors. It’s required by the procurement code, she says. She adds she understands operators’ frustrations, suggesting they were taken out on the two DES officials who report to her.
That would be RSA administrator House and AzBEP program manager Otis Stevenson, targets of the APOC no-confidence vote in April.
Despite the vote, Levandowsky has no plans to back down.
“I can’t go against policy. And I don’t want my staff to go against policy,” she says.
DES declined to make House or Stevenson available for comment.
No time to wait
Allan Curry, past APOC president, says operators don’t always have the luxury of waiting for DES to approve an equipment order.
“If you’re at the Capitol and your ice machine goes down, and you got to spend $9,000 on a new machine, and you have to wait several days or weeks for that, that puts a hardship on the operator,” says Curry, who runs the Rain or Shine cafeteria at the main Phoenix post office.
Curry, 44, has his own hardship story. His cafeteria could use a new sandwich-prep counter.
“The one I have is broken, and it costs too much to repair it. So they’ve got to replace it,” Curry says. “I’ve been waiting for that for six months.”
Levandowsky, however, says emergency repairs have been streamlined.
“They call it in, and then we request emergency procurement authority from our DES procurement office,” Levandowsky says.
Curry says the emergency plan is helpful, if not perfect. But he gives the AzBEP consultants — who advise the operators — an “A” for effort.
“They’re trying the best they can,” Curry says.
For Grijalva, DES remains heavy on the stick and light on the carrot.
“Here in this state, unfortunately, I think we got more of a police program than a proactive program,” he says.
For one thing, he’d like DES to do more to expand AzBEP’s reach. He cites the agency’s inability to set up vending machines in visitation rooms at state prisons.
“We should be able to do all the vending machines in the prisons,” he says.
Levandowsky says she has been talking to prison officials.
“We’re trying to work with the Department of Corrections,” she says.
But security arrangements don’t mesh easily with the requirements of Randolph-Sheppard, she adds. Among other things, operators need access to the machines.
“We’ve got to work through those, so we make sure the operators get behind the gates,” Levandowsky says.
A DOC spokesman had little to add, except to say no agreement has been reached.
More to come
Levandowsky says other facilities are opening up, however. In addition to a new snack bar at Phoenix parks senior center, a coffee shop is going inside Phoenix Burton Barr Central Library. AzBEP is spending about $450,000 to build and equip the facility, with the city paying for utility hookups.
“It should be open at the end of August, the first of September,” Levandowsky says.
In addition, DES seeks to set up more businesses outside the Phoenix and Tucson areas, Levandowsky says.
“We’re going to be sending out a letter that that says, ‘You may not be aware of the BEP program. We’d like you to know what our services are, and what our program is about,’ ” she says.
Even as AzBEP expands, Randolph-Sheppard has hit a rough patch nationwide, says Worley, president of the Blind Merchants Association.
“I think it’s no secret that the program nationally is struggling a bit,” he says.
Every state but Wyoming has a Randolph-Sheppard program.
But business for many of the nation’s 2,500 blind merchants is down for a number of reasons, Worley says. One is the outsourcing of federal work to the private sector. That means fewer employees in federal buildings, where cafeterias are located. Then there’s the growing popularity of the four-day workweek. Business might be good Monday through Thursday, but bad on Friday.
Many state employees already have “flex time,” allowing them to work longer days in exchange for Friday, or every other Friday, off. This appeared to hit home in the cafeteria at the Department of Education, run by Joy Winston. Ordinarily, the lunch business is brisk and booths are hard to come by. On a recent Friday, though, the seating was wide open.
What’s become a frustrating trend for AzBEP operators — there are more than a half-dozen in the Capitol area — could get worse. Gov. Janet Napolitano is looking into a four-day workweek for many state employees to cut commuting costs and pollution.
All the same, AzBEP operators have to make a profit to stay in business. At minimum, an operator is expected to make a profit of $25,000 yearly. Below that, an operator could not make a living, Levandowsky says. For any operation, net revenue should run 12 percent above expenses.
When Grijalva earned only 6 percent on his own operation, he was disqualified for a bid on another site in 2007. He filed a grievance. The administrative law judge found in his favor, ruling out negligence and mismanagement as possible reasons for Grijalva’s poor showing. His business suffered from circumstances beyond his control, the judge wrote.
Grijalva says he had trouble finding labor and had asked AzBEP for help.
“I had multiple requests for assistance, and it wasn’t coming,” he says.
Despite the battles with bureaucracy, Grijalva has no plans to give up on Randolph-Sheppard anytime soon. It has given him steady, stable work since 1979. Many, if not most, operators have been in the program job for years.
“It has been the most effective employment tool ever devised,” says Worley, who operates a cafeteria on a Colorado military base.
Emilio Mosca, 59, agrees, in a measured, low-key way while sitting across from a visitor in a booth at his cafeteria, Emilio’s — on the second floor of the Arizona State Compensation Fund building near uptown Phoenix.
Mosca says simply that AzBEP is a good program. And, though he understands the complaints against it — in his 18 years as an operator, he’s heard them all before.
With a memory that stretches beyond experience, he adds: “They’re the same issues we’ve been hearing for 25 years.”
