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Oles Morrison

How the AbilityOne Program Provides Federal Contracting Jobs to Individuals with Disabilities

By on January 7, 2015 | Posted in Procurement Issues

The National Industrial Recovery Act, part of the New Deal policies in 1934, allowed businesses employing individuals with disabilities to pay less than minimum wage to their disabled workers. This “sub-minimum” wage policy was buttressed by the 1938 Fair Labor Standards Act which allows employers to apply for Section 14(c) certificates to pay their employees with disabilities less than the prevailing wage if their disability impacts their productivity. So, if a disabled worker’s productivity is reported to produce 50% of the productivity of a nondisabled worker doing the same kind of work, the disabled worker can be legally compensated with 50% of the prevailing wage. As of 2011, approximately 420,000 people with disabilities are employed under Section 14(c) of the Fair Labor Standards Act.

In a slightly different category is the AbilityOne program. The Javitz-Wagner-O’Day Act of 1971 (41 U.S.C. §§ 46-48) requires federal agencies to purchase certain supplies and services from non-profit agencies with a minimum of 75% of the total agency work hours being performed by individuals with disabilities. Today, the program is administered by the Committee for Purchase from People Who are Blind or Severely Disabled, an independent federal agency, and is called AbilityOne. FAR Subpart 8.7 prescribes the policies and procedures for purchasing from AbilityOne sources to satisfy procurement needs. A significant minority of employees with disabilities are employed through AbilityOne and under a 14(c) certificate, making AbilityOne a more ethically attractive option in terms of hiring practices. In fact, the average wage of workers in the AbilityOne program in FY2013 was  $13.03 per hour.

AbilityOne aims to provide employment opportunities in the manufacture and delivery of goods and services to the Government to persons who are blind or severely disabled. Today, the AbilityOne Program is the single largest source of employment in the United States for people who are blind or have other significant disabilities. Currently, the program coordinates Government purchase of goods and services from nonprofit agencies employing almost 45,000 people who are blind or severely disabled. This includes more than 3,000 veterans and service-disabled veterans who perform work on these contracts. The work on Federal contracts may be facility-based, such as a contract to manufacture uniforms, or community-based, such as a call center service contract with the Environmental Protection Agency established to assisted consumers with questions about the harmful effects of lead.

However, recent changes to federal agency guidelines have steered millions of dollars away from AbilityOne contractors.  Last year, the Department of Defense changed its guidelines to encourage some military operations to use local suppliers. Subsequently, the General Services Administration (GSA) created a catalog of products foreign manufacturers would be able to make for U.S. military forces stationed in those countries. But many of these products have historically been purchased from AbilityOne contractors. As a result, some AbilityOne contractors have seen a reduction in their sales on account of products sold by foreign manufactures through the GSA catalog.  For example, AVRE, an AbilityOne contractor that makes Skilcraft products (such as file folders, copy paper, and cleaning supplies), has seen a marked drop in sales of over $1 million in the last year due to recent changes in how the General Services Administration (GSA) distributes and procures its supplies along with government-imposed markups on Skilcraft products. These changes, which GSA refers to as “Supply Transformation,” have impacted AbilityOne program participants and have resulted in federal agencies purchasing products from other vendors.

To date, the largest customer of the AbilityOne Program is the Department of Defense, procuring more than $1.7 billion in business during 2014, which equates to 62% of AbilityOne’s sales and an estimated 30,000 jobs for people with disabilities. The Department’s increase in contract awards to AbilityOne participating nonprofit agencies has the direct and positive result of creating job opportunities for individuals who are blind or who have other significant disabilities. This will be an interesting field to keep an eye on as the GSA continues to make changes to its procurement program.