> ![](media/image1.png){width="0.9in"
> height="0.8604166666666667in"}**UNITED STATES DEPARTMENT OF
> EDUCATION**

OFFICE OF INSPECTOR GENERAL

July 31, 2007

> Control Number
>
> ED-OIG/A19H0001

John H. Hager

Assistant Secretary

Office of Special Education and Rehabilitative Services

U.S. Department of Education

400 Maryland Avenue, SW

Washington, DC 20202

Dear Mr. Hager:

This **Final Report**, entitled *Management Procedures Under the
Randolph-Sheppard Act and Javits-Wagner-O'Day Act*, presents the results
of our review. The purpose of the inspection was to review the
Department of Education's (Department) oversight of the
Randolph-Sheppard and Javits-Wagner-O'Day (JWOD) programs.

BACKGROUND

The Randolph-Sheppard program provides blind persons with opportunities
for remunerative employment and self-support through the operation of
vending facilities on federal and other properties. The
Randolph-Sheppard Act gives priority to blind persons in the operation
of vending facilities on Federal property, to include cafeterias, snack
bars, and automatic vending machines. The program is voluntary, with 49
of 50 states opting to operate the program.

Under the Randolph-Sheppard program, state licensing agencies (SLAs)
recruit, train, license and place blind individuals as operators of
these vending facilities. By law, SLAs are agencies providing vocational
rehabilitation (VR) services to individuals who are blind in each state.
These agencies receive grant funds for VR services from the Department.
The Rehabilitation Services Administration (RSA) within the Office of
Special Education and Rehabilitative Services (OSERS) administers the
program.

The Javits-Wagner-O'Day (JWOD) program, in part, provides employment
opportunities to individuals who are blind or have other severe
disabilities. The Federal Government purchases commodities and services
from nonprofit agencies employing such individuals through the JWOD
program. The Committee for Purchase From People Who Are Blind or
Severely Disabled (CFP) is an independent Federal agency that
administers the JWOD program.

It is comprised of 15 Presidentially-appointed members--- 11 represent
Governmental agencies; 4 are private citizens. The Department is
represented on the CFP.

Section 856(c) of the *John Warner National Defense Authorization Act
for Fiscal Year 2007* required the Inspectors General of the Department
of Defense (DoD-OIG) and the Department of Education (ED-OIG) to jointly
review the management procedures under both the Randolph-Sheppard Act
and the JWOD Act. This report includes the results of the ED-OIG review
only. DOD-OIG will be issuing a separate report at a later date that
will provide the results of its management review of the Department of
Defense's (DOD) implementation of the two Acts with regard to military
facilities.

On January 26, 2007, the Government Accountability Office (GAO) issued a
report entitled, "Federal Disability Assistance: Stronger Federal
Oversight Could Help Assure Multiple Programs' Accountability." GAO
reviewed four employment-related programs aimed at helping people with
disabilities obtain jobs, including the Randolph-Sheppard and JWOD
programs. Specifically, GAO assessed the extent to which (1) performance
goals and measures have been established for these programs and (2) the
agencies responsible have established adequate procedures for overseeing
program implementation and assuring laws and regulations are followed.
GAO found that no performance goals or measures currently exist for the
Randolph-Sheppard program, and the Department conducted little oversight
of the program. As a result, GAO recommended that the Department
establish goals for the Randolph-Sheppard program and strengthen program
monitoring and guidance.

INSPECTION RESULTS

We determined GAO recently reviewed the Department's oversight of the
Randolph-Sheppard program.[^1] As such, we considered the duplication of
effort when planning our inspection in accordance with the President's
Council on Integrity and Efficiency (PCIE) Quality Standards for
Inspections (2005).[^2] In addition, we determined the Department is not
responsible for the administration of the JWOD program; therefore, we
did not review and cannot comment on that program's management
procedures.

Overall, our review of management procedures under the Randolph-Sheppard
Act did not identify concerns beyond those recently reported by GAO. To
address these concerns, we found the Department is developing goals and
objectives to improve the program's management, accountability, and
performance. In addition, we found the Department is currently engaged
in rulemaking to clarify program requirements in the key area of
military food service contracting. The Department has been working with
DoD and the CFP to clarify how the priority afforded blind individuals
under the Randolph-Sheppard Act must be applied to the operation of DoD
cafeterias. Because our results were similar to those reported by GAO,
we have no new recommendations for the Department.

In its response to the draft report, OSERS concurred with the finding.
The complete text of the response is included as an attachment to this
report.

## 

## FINDING- Improvements Are Needed in Management Procedures Under the Randolph-Sheppard Act

# Lack of Performance Goals for the Randolph-Sheppard Program

The GAO report found the Department did not have Government Performance
Results Act goals for the Randolph-Sheppard program, and neither the
Randolph-Sheppard Act nor its implementing regulations require them. In
its report, GAO stated that according to Department officials, no formal
performance goals currently exist, but they were under development.

During our review the Department provided an internal workplan, which
describes the goals and objectives it is developing to improve the
management, accountability, and performance of the Randolph-Sheppard
program. These goals and objectives include: demonstrating efficient and
effective administration of the Randolph-Sheppard Act; determining the
cost, benefits and effectiveness of the Randolph-Sheppard program;
obtaining detailed information on military food service contracts; and
engaging in rulemaking to clarify program requirements in the area of
military food services. The Department has obtained input from
stakeholder groups to assist with determining performance goals and
outcome measures, and the state data collection forms will be revised to
collect information necessary to support and measure the program goals
established.

# Limited Oversight of the Randolph-Sheppard Program

The GAO report found the Department provided little oversight of the
Randolph-Sheppard program. Specifically, GAO determined that the
Department had no formal procedures for evaluating state programs and
had performed few on-site monitoring reviews of SLAs in recent years.

In response to the GAO report, the Department stated it would develop an
annual monitoring plan, to include on-site monitoring of a minimum of
four programs per year. Randolph-Sheppard program monitoring will be
coordinated with activities to monitor VR programs. At the time of our
review, the Department was completing final monitoring reports for four
states and the District of Columbia. Department staff informed us they
had previously tried to perform four to five site visits per year, but
due to a lack of staff and funds, the site visits had not been a
priority.

GAO also reported the Department relied primarily on self-reported state
data for its monitoring of the Randolph-Sheppard program and did not
test the accuracy or routinely analyze the data it collects. As a
result, the GAO report concluded the Department could not assess trends
in performance, identify possible best practices, or help states that
may need assistance.

[]{.mark}

Department staff informed us that in the past, a grantee of the
Department was collecting and reporting on the Randolph-Sheppard program
data submitted by the states. The Department informed us that it learned
the grantee's data was incomplete and did not include information on
large contracts, and therefore it began collecting the information
in-house. Department staff said a comprehensive report has been compiled
for the FY 2003 data, and it has the data for FYs 2004 through 2006.
However, the Department has not yet cleared the FY 2003 report for
release.

GAO also reported that the Department had not provided clear guidance to
states on emerging issues that could have nationwide implications.
Instead, GAO said the Department responded to individual state concerns,
which results in states having different policies.

During our review, one area we noted where states had differing policies
was with regard to vendor eligibility and training. We reviewed the
websites of states with prime contracts for military dining facilities
and found disparity among state requirements. For example, not all
states listed the same requirements for a high school diploma or
equivalent, minimum-age, or minimum reading and math level. We also
noted differences among the states with regard to the length of vendor
training. One state's website stated the training program was 12-weeks,
whereas another state's program was approximately 30-weeks.

States are not currently required to have identical policies and
requirements for vendors. The regulations implementing the
Randolph-Sheppard Act allow each state to establish and maintain
objective criteria for licensing qualified applicants. According to
*Code of Federal Regulations* (CFR) Title 34, section 395.7, (2006) "The
issuance and condition of licenses," the criteria must include
provisions to assure that licenses will be given only to individuals who
are determined by the SLA to be: 1) blind; 2) a U.S. citizen; and 3)
certified by the state VR agency as qualified to operate a vending
facility. In addition, the regulations do not specify the length of
training that must be provided to blind individuals. According to 34 CFR
395.11, "Training program for blind individuals," the SLA "shall ensure
that effective programs of vocational and other training
services...shall be provided to blind individuals as vocational
rehabilitation services."

In May 1997, the RSA Commissioner issued training performance standards
to the state VR agencies. The standards incorporated the National
Restaurant Association's programs that provide the national training and
certification requirements for the restaurant industry. The National
Automatic Merchandising Association provided input and support through
its well-established training program and certification requirements.
RSA encouraged their use to facilitate overall program improvement, to
reduce the need for training of vendors who move from one state to
another, and to promote uniformity in the administration of the program
by the states. However, there was no requirement that the standards be
adopted in whole or in part.

> Department staff stated the true operation of the Randolph-Sheppard
> program is at the state level, and noted that some states would claim
> a hardship if RSA imposed new training standards, because it did not
> offer grants specifically for this purpose. States would likely need
> to move funds from other VR programs to support more extensive
> training. Staff also said they believe flexibility is exactly what was
> desired when the program was created, in part due to states having
> different regulations with respect to food safety certifications. The
> training, in theory, is intended to produce the skills perceived
> necessary to be successful in a particular program.

The Department has been working to improve its efforts to provide clear
guidance. On August 29, 2006, the Department, DoD, and CFP submitted a
Joint Report to Congress, as required by Section 848 of the *National
Defense Authorization Act for FY 2006*. This report provided a joint
policy statement for the application of the JWOD Act and
Randolph-Sheppard Act to contracts for the operation and management of
military dining facilities. The joint analysis was performed to reach an
agreement on issues where there had been long-standing confusion or lack
of agreement among parties. The Department is in the process of drafting
new regulations to implement the joint policy report and clarify program
requirements with regard to military food service facilities. These
regulations are currently under review at DoD. DoD has been tasked with
drafting complementary regulations.

In addition, the Department plans to issue to SLAs an inventory of
policy directives, technical assistance circulars, and other written
guidance previously issued by the Department relevant to the
Randolph-Sheppard program. Department staff stated policy guidance will
also be placed on the ed.gov website, so it will be easily available to
program participants, state government agencies, federal procurement
officials and property-managing agencies.

# Conclusion

As a result of its findings, GAO recommended that the Secretary of
Education provide more effective leadership of the Randolph-Sheppard
program by: establishing performance goals; being more proactive in
disseminating clear, consistent, and routine guidance; and strengthening
monitoring of SLA and Randolph-Sheppard program performance. Because our
findings were similar to those of GAO, we have no new recommendations
for the Department.

**OSERS Comments**

In its response to the draft report, OSERS concurred with the finding.

OBJECTIVE, SCOPE, AND METHODOLOGY

The objective of our inspection was to review the Department's oversight
of the Randolph-Sheppard and JWOD programs. We subsequently determined
the Department is not responsible for the administration of the JWOD
program; therefore, we did not perform any further review of this
program.

To accomplish our objective, we conducted interviews with Department
officials to gain an understanding of how the Randolph-Sheppard program
is administered and monitored. We reviewed federal regulations that
established and implemented the program as well as Department guidance
provided to SLAs. We reviewed prior GAO and Congressional reports. We
also reviewed documentation maintained by OSERS relating to the
Randolph-Sheppard program. This included site visit reports, annual
reports, information memoranda, and a technical assistance circular.
Further, we reviewed the websites of 25 states identified as having
prime contracts for military dining facilities as of September 2005. Of
these 25 states, 11 had information on their websites pertaining to
vendor eligibility and/or training requirements.

> The fieldwork for our inspection was conducted at Department offices
> in Washington, D.C., during the period December 2006 through March
> 2007. Our inspection was performed in accordance with PCIE Quality
> Standards for Inspections.

ADMINISTRATIVE MATTERS

In accordance with the Freedom of Information Act (5 U.S.C. § 552),
reports issued by the Office of Inspector General are available to
members of the press and general public to the extent information
contained therein is not subject to exemptions in the Act.

We appreciate the cooperation given us during this review. If you have
any questions, please call Michele Weaver-Dugan at (202) 245-6941.

Sincerely,

George A. Rippey /s/

Acting Assistant Inspector General

> for Audit

Attachment

cc: Edward Anthony, Acting Commissioner, Rehabilitation Services
Administration

Melanie Winston, Audit Liaison Officer

Attachment: Department Response to Draft Report

Michele Weaver-Dugan

Director, Operations Internal Audit Team

U.S. Department of Education

Office of Inspector General

400 Maryland Avenue. S.W.

Washington, DC 20202

Dear Ms. Weaver-Dugan:

Thank you for the opportunity to review the Draft Report\--Management
Procedures Under the Randolph-Sheppard Act and Javits-Wagner-O'Day Act,
ED-OIG/A19H0001. We concur with the draft report. My office provided
technical and editorial suggestions we understand will be incorporated
into the final report.

Your report contains no new recommendations for the Department because
of your recognition of the prior related work done by the Government
Accountability Office and the management improvements the Office of
Special Education and Rehabilitative Services is presently implementing
for the Randolph-Sheppard program.

We appreciate your interest in improving the effectiveness of the
Department's program providing services to individuals with
disabilities.

Sincerely,

> John H. Hager

cc: Edward Anthony

[^1]: GAO-07-236: "Federal Disability Assistance: Stronger Federal
    Oversight Could Help Assure Multiple Programs' Accountability,"
    issued January 2007.

[^2]: Page 12 of the PCIE Quality Standards for Inspections (2005)
    states the standard for inspection planning includes coordinating
    inspection work and avoiding duplication.