…potential for a conflict of interest resulting from a lack of organizatoinal [sic] independence as well as disincentives to perform their monitoring duties effectively…
In 1971 the US Congress passed the Javits-Wagner-O’Day Act (JWOD), a law to create employment for people with significant disabilities who might not otherwise be able to find work. The Act addressed the need to provide employment to such people by creating the AbilityOne program. AbilityOne functions as follows:
A number of nonprofit agencies exist across the United States which provide services and support to people with serious disabilities. Some of these nonprofit agencies provide direct employment to people with serious disabilities, and produce supplies and services. If the majority of the employees of a nonprofit (over 75%) are people with serious to compliance with AbilityOne regulations, able to participate in the AbilityOne program, and is referred to as a JWOD agency, or JWOD nonprofit.
Under the AbilityOne program, a procurement list is curated and published of services and supplies which are offered by JWOD nonprofits under the AbilityOne program. If a federal government agency, such as a government department, requires one of those services, it is obliged to procure that supply or service through the AbilityOne program, from a JWOD nonprofit agency, until the supply or service is no longer required, or until it is no longer offered by any JWOD agency.
So for example, if the Department of Education wishes to procure mousepads, it must check the AbilityOne procurement list. The AbilityOne procurement list lists mousepads as a supply that is purchaseable through the AbilityOne program. The Department of Education is therefore required to purchase mousepads through the AbilityOne program, and is prohibited from procuring mousepads from a private supplier.
In this way, the needs of US government agencies are intended to create direct employment for people with serious disabilities.
The administrative structure of AbilityOne is as follows:
AbilityOne is overseen by the Committee for Purchase from People who are Blind or Severely Disabled, which comprises a panel of fifteen presidential appointees, eleven of whom represent departments and agencies of the federal government, and four of whom represent the interests of people with disabilities. The current panel members are:
- James M. Kesteloot, Chairperson, Private Citizen (appointed Obama 2010)
- Lisa M. Wilusz, Vice Chairperson, Department of Agriculture (appointed Obama 2011)
- J. Anthony (Tony) Poleo, Chief Financial Officer, Defense Logistics Agency (appointed Bush 2007)
- Dr. P. Edward (Ed) Anthony, Deputy Commissioner, Rehabilitation Services Administration, Department of Education (appointed Bush 2006)
- Jan R. Frye, Deputy Assistant Secretary for Acquisition and Logistics, Department of Veterans Affairs (appointed Obama 2011)
- Harry P. Hallock, Deputy Assistant Secretary Of the Army (Procurement), U.S. Army (appointed Obama 2011)
- Robert T. Kelly, Jr., Private Citizen appointed Bush 2003)
- Anil Lewis, Private Citizen (appointed Obama 2012)
- Karen J. McCulloh, Private Citizen (appointed Obama 2011)
- Thomas D. Robinson, Executive Director, Air Force Installation Contracting Agency, Wright-Patterson Air Force Base, U.S. Air Force (appointed Obama 2013)
- William Sisk, Deputy Commissioner, Federal Acquisition Service, General Services Administration (appointed Obama 2011)
- Virna L. Winters, Director for Acquisition Policy and Oversight in the Office of Acquisition Management, Department of Commerce (appointed Obama 2014)
- Rear Adm. Jonathan A. Yuen, Commander, Naval Supply Systems Command and 47th Chief of Supply Corps, Department of the Navy (appointed Obama 2012)
- (vacant, not appointed)
- (vacant, not appointed)
The Committee for Purchase enjoys the responsibility of publishing the AbilityOne procurement list, and of implementing the program. However, the Committee for Purchase does not directly implement most of the AbilityOne program, and instead outsources and delegates much of the administrative and executive work to two “central nonprofit agencies” created for the task, which operate at a national level, and whose role is the direct implementation of AbilityOne.
When they were created 1974, these were known as the National Industries for the Blind (NIB) and the National Industries for the Severely Handicapped (NISH). NIB continues under that name, but in July 2013, NISH was renamed as SourceAmerica. Therefore, the direct implementation of the JWOD Act, and of the AbilityOne program, is carried out by two central nonprofit agencies which operate at a national level, NIB and SourceAmerica.
The publication concerns SourceAmerica, and not NIB. Therefore, hereafter, references to NIB will be omitted.
SourceAmerica has a number of responsibilities to the federal government, and by extension, to the taxpayer, to ensure that the AbilityOne program is run efficiently, fairly and accountably. When a government agency wishes to purchase supplies or services for which a number of different JWOD nonprofit agencies are in competition, it is SourceAmerica that awards the contract to one of its JWOD nonprofit agencies, on the basis of a fair assessment of the quality and value of the supplies and services offered.
Furthermore, it is SourceAmerica that carries the responsibility of routinely monitoring the JWOD nonprofit agencies to ensure that the services they provide are adequate to the government’s needs, and to ensure that they are in full compliance with the terms and regulations of the AbilityOne program. For example, it is SourceAmerica which must ensure that 75 percent or more of the direct labor hours under JWOD contracts are performed by individuals who have severe disabilities.
But at the same time as it has obligations and responsibilities to the federal government and the taxpayer, SourceAmerica also has a set of responsibilities to the JWOD agencies themselves. It is SourceAmerica’s role to assist the JWOD nonprofit agencies in securing government contracts, and to represent the interests of the JWOD agencies to the Committee for Purchase.
Furthermore, SourceAmerica is empowered to charge a fee for each successfully concluded contract it facilitates between a JWOD nonprofit agency and the federal government.
These structural features of the administration of AbilityOne are the subject of some concern.
Conflict of Interest
A 2007 Congressional Report on Federal Disability Assistance (http://www.gao.gov/assets/260/255776.pdf) based on a study carried out by the US Government Accountability Office (GAO) identified SourceAmerica’s dual responsibility as a conflict of interest.
In the summary of the report:
“[T]he Committee for Purchase delegates most of its oversight responsibilities to two central nonprofit agencies that also represent the interests of the JWOD nonprofit agencies they oversee. This arrangement, as well as the fact that they receive a percentage of the total value of the contracts from the JWOD nonprofit agences, raises questions about their independence and gives them little incentive to identify instances of noncompliance that could result in the JWOD nonprofit agency losing its federal contract.”
On page 11:
“The Committee for Purchase has also established regulations that require the two central nonprofit agencies to evaulate the qualifications and capaibilities of nonprofit agencies that apply for contracts and provide pertinent data concerning the JWOD nonprofit agencies, such as their status as qualified nonprofit agencies and their manufacturing or service capabilities. Additionally, [NIB and SourceAmerica] are to monitor and inspect the activities of participating nonprofit agencies to ensure compliance with the JWOD Act and appropriate regulations. For example, to maintain its status as a qualified nonprofit agency organized for the purposes of the JWOD program, an agency must employ persons who are blind or have severe disabilities to perform at least 75 percent of the work-hours or direct labour during the fiscal year to furnish such commodities or services (whether or not the commodities or services are procured under the JWOD Act).”
On page 25:
“The Committee for Purchase’s regulations create at least two problems for NIB and [SourceAmerica]: the potential for a conflict of interest resulting from a lack of organizatoinal independence as well as disincentives to perform their monitoring duties effectively. Specifically, these regulations require that NIB and [SourceAmerica], on behalf of the Committee for Purchase, monitor the compliance of JWOD nonprofit agencies, but, at the same time, represent them in their dealings with the Committee for Purchase. Moreover, the regulations also permit NIB and [SourceAmerica] to charge a fee based on JWOD nonprofit agencies’ sales to the government […] This system of compensation may create a disincentive for NIB and [SourceAmerica] to identify instances of noncompliance that could result in the JWOD nonprofit agency losing its contract, especially for those JWOD nonprofit agencies that are generating large volumes of JWOD sales.”
On page 28:
“[T]he current approach for overseeing nonprofit agencies operating under the JWOD program poses difficult challenges for [NIB and SourceAmerica] in managing the conflicts of interest that may exist because of their lack of organizational independence […] Ensuring program integrity is particularly important for JWOD since nonprofit agencies are given a competitive advantange over private business and industry in the federal procurement system to ensure that opportunities are provided to individuals with disabilities.”
A 2013 report from the GAO contains similar findings:
“The Commission has not recently taken an active role in setting or monitoring [SourceAmerica] governance standards—such as developing [SourceAmerica] ethics standards and reviewing alleged violations—to help protect the program from possible waste, fraud, and abuse […] Instead, the Commission is dependent upon the [SourceAmerica itself], as well as other governmental entities, such as the Internal Revenue Service, to set and enforce some of these standards. Without strong standards and oversight, however, the program is vulnerable to potential fraud, waste, and abuse of government procurement funds […] Should such improprieties occur, the program’s reputation could be harmed and this could decrease employment opportunities for people who are blind or have severe disabilities.”