[g.bontempi]

See reaction attached. The text asks to explain the mechanism, in particular why there's complete retention of configuration.
My answer would be that in the first basic step a E2 reaction occurs, yielding an alkene intermediate.
The second step would be an acid catalyzed hydration of the alkene to get the final product, but as far as I know this reaction still gives a racemic product. Help?

[AWK]

The second step is decomposition of sodium lactate.

[g.bontempi]

The second step is decomposition of sodium lactate.

Would you care to elaborate? I don't understand this answer.

[AWK]

You have an excess of NaOH and organic acid. What reaction you can expect with strong acid?
Retention of configuration is never associated with elimination.
You did not give all information  - catalyst! Check for:
neighboring-group-participation

[g.bontempi]

yes, I eventually found the complete mechanism over here:

http://www.ochempal.org/index.php/alphabetical/m-n/neighboring-group-participation/

I wasn't considering the formation of an epoxide (here α-lactone). thanks for the reply.