EMPLOYING PEOPLE 

WITH BLINDNESS OR 

SEVERE 

DISABILITIES

Enhanced Oversight of 

the AbilityOne Program 

Needed 

Report to the Committee on Oversight and 

Government Reform, House of 

Representatives

May 2013

GAO-13-457

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-457, a report to the 

Committee on Oversight and Government 

Reform, House or Representatives

May 2013

EMPLOYING PEOPLE WITH BLINDNESS OR 

SEVERE DISABILITIES: 

Enhanced Oversight of the AbilityOne Program 

Needed 

Why GAO Did This Study

In 1938, Congress created a program 

providing employment opportunities for 

people who are blind and expanded it 

in 1971 to include people with severe

disabilities. Now known as AbilityOne, 

the program’s public-private structure

consists of the federal, independent 

U.S. AbilityOne Commission (15 parttime presidentially-appointed members 

supported by 27 staff) to oversee the 

program; two central nonprofit 

agencies (CNAs) to administer much of 

the program; and hundreds of affiliated 

nonprofit companies employing people 

who are blind or severely disabled to 

provide products and services to 

federal agencies. Federal agencies are 

generally required to purchase such

products and services through the 

program. 

GAO examined how the AbilityOne 

Commission: (1) directs and oversees 

the CNAs; (2) adds products and 

services (hereafter called projects) to 

the program and assigns affiliates to 

provide them; and (3) prices program 

projects. GAO reviewed policies, 

procedures, relevant federal laws and 

regulations, and other documents; 

interviewed CNA and AbilityOne 

officials; held five focus groups with 

affiliates; and analyzed data on 

program products, services, and 

pricing reviews. 

What GAO Recommends

We are presenting a matter for 

Congressional consideration to 

establish an inspector general and 

several recommendations to the 

Commission to enhance program

oversight. The Commission and CNAs 

agreed with our recommendations, but 

disagreed with several findings or 

provided additional information, which 

we incorporated as appropriate.

What GAO Found

Federal agencies need to exercise strong oversight to promote effectiveness and 

efficiency and prevent waste, fraud, and abuse—especially in a federal 

procurement program such as this, which is exempt from full and open 

competition requirements. However, although the AbilityOne Commission is 

ultimately responsible for overseeing the program, the Commission cannot 

control how CNAs (1) spend their funds, (2) set and manage their performance 

goals, or (3) set and implement governance policies and other internal controls. 

The Commission’s authority to direct CNA budget priorities—including how much 

they compensate their executives and the level and growth of their reserves—is 

limited. As independent entities, the CNAs are responsible for determining their 

spending. Most of their money comes from fees they charge their affiliates as a 

percent of revenue earned from AbilityOne contracts. Moreover, the Commission 

does not have sufficient authority to set CNA performance and governance 

standards, so it depends on the CNAs to set and enforce such standards.

Although the CNAs have instituted their own internal controls, the Commission 

does not have procedures to monitor alleged CNA control violations, nor is there 

an inspector general to provide independent audit and investigative capabilities 

for the program, including at the CNAs. 

The AbilityOne Commission is responsible for determining which products and 

services can be suitably provided by the program. It delegates to the CNAs most 

of the responsibility for deciding which affiliates should develop and provide

these projects. According to CNA and affiliate officials, the CNAs often do not 

fully disclose how they make these decisions. This limited transparency could 

increase the risk of biased decisions because CNA officials have wide latitude in 

determining which affiliate should be awarded a project. Although AbilityOne 

Commission officials have acknowledged the importance of transparency and 

equity in assigning projects, they have done little to indicate how these outcomes

can be achieved. 

The Commission has statutory responsibility for determining the fair market price 

of projects in the program, but: (1) its written pricing review policies and 

procedures are limited and (2) it does not have sufficient internal controls to 

ensure that prices are appropriately revised over time. The Commission sets 

procedures that encourage affiliates and federal customers to negotiate prices 

that reflect the market. Although Commission staff review these prices in 

accordance with written policies and procedures, they acknowledged that these 

instructions are not sufficiently explicit or transparent. Such limitations can make 

it difficult for the CNAs and affiliates to understand the Commission’s pricing 

review procedures and, by extension, its reasons for rejecting prices. This lack of 

understanding may partially explain the 77 percent rejection rate for initial pricing 

packages. Commission policy also states that CNAs submit for Commission

review any request for adjusting the price of a project beyond a single contract 

period that does not conform with the prior Commission-approved mechanism. 

Occasionally customers and affiliates implement non-conforming price revisions 

without requesting Commission approval. This negates the Commission’s 

internal controls for ensuring fair market prices and results in the Commission not 

knowing the actual price being charged. Neither the AbilityOne Commission nor 

the CNAs have procedures in place to systematically identify such instances.

View GAO-13-457. For more information, 

contact Andrew Sherrill at (202) 512-7215 or 

sherrilla@gao.gov.
Page i GAO-13-457 Review of the AbilityOne Program 

Letter 1 

Background 4

The Commission Has Limited Control Over Some Aspects of CNA 

Operations 7

The Commission Relies on CNAs to Recommend Projects for the 

Program, but Has Not Resolved Concerns about How CNAs 

Assign Projects to Affiliates 19

The AbilityOne Commission Has Final Approval of Project Prices, 

but Procedures Could Be Strengthened 28

Conclusions 33

Matter for Congressional Consideration 33

Recommendations for Executive Action 34

Agency and CNA Comments and Our Evaluation 35

Appendix I CNA Operating Expenses for Fiscal Year 2012 (in millions) 40

Appendix II Comments from the U.S. AbilityOne Commission 43

Appendix III Comments from the National Industries for the Blind 47

Appendix IV Comments from NISH 51

Appendix V GAO Contact and Staff Acknowledgements 55

Figures

Figure 1: Organizational and Funding Structure of the AbilityOne 

Program 5

Figure 2: CNA Operating Expenses for Fiscal Year 2012 (in 

millions) 8

Figure 3: NISH and NIB Reserves for Fiscal Years 2008 to 2013 12

Figure 4: Major Steps in Adding Projects to the AbilityOne 

Procurement List 20

Figure 5: Distribution of Projects among Different-Sized Affiliates 27

Contents 
Page ii GAO-13-457 Review of the AbilityOne Program 

Figure 6: AbilityOne Commission’s Pricing Review Process for 

Projects Proposed as Additions to the Procurement List 29

Figure 7: Staff Decisions on the 336 New Pricing Packages, Jan. 1, 

2012 – Dec. 10, 2012 30

Figure 8: Staff Decisions on the 569 Price Revision Packages, Jan. 

1, 2012 – Dec. 10, 2012 32

Abbreviations

CNA Central Nonprofit Agency

FAR Federal Acquisition Regulations

GDP Gross Domestic Product

HHS U.S. Department of Health and Human Services

IG Inspector General

IRS Internal Revenue Service

NIB National Industries for the Blind

NISH Formerly National Association for the 

 Severely Handicapped

OMB Office of Management and Budget

QWE Quality Work Environment

SES Senior Executive Service

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-13-457 Review of the AbilityOne Program 

441 G St. N.W.

Washington, DC 20548

May 30, 2013 

The Honorable Darrell Issa

Chairman

The Honorable Elijah E. Cummings

Ranking Member

Committee on Oversight and Government Reform

House of Representatives

Census data show that working-aged adults with severe disabilities have 

been employed at about one-third the rate as adults without disabilities.1

The AbilityOne Program relies on nonprofit agencies to employ people 

who are blind or have severe disabilities. These nearly 600 independent 

nonprofit affiliates are assisted by one of two private Central Nonprofit 

Agencies (CNAs): the National Industries for the Blind (NIB), which 

supports the creation of employment opportunities for people who are 

blind, and NISH, which supports the creation of employment opportunities 

for people with severe disabilities other than blindness.

Helping to mitigate this disparity, the AbilityOne Program creates 

employment opportunities for people who are blind or have severe 

disabilities through a unique public-private structure that connects such 

individuals to jobs that provide products and services to the federal 

government. Congress created this program in 1938 and it is now the 

single largest source of employment for people who are blind or have 

severe disabilities. In fiscal year 2012, this program provided jobs for 

approximately 48,000 such individuals and accounted for about $2.8 

billion of federal procurements.

2 The U.S. 

AbilityOne Commission oversees the CNAs and is ultimately responsible 

for the performance of the program.3

 

1 For U.S. Census Bureau report on Americans with varied levels of disability, from none 

to severe, see Americans With Disabilities: 2010, 

The CNAs, in turn, manage much of 

http://www.census.gov/prod/2012pubs/p70-131.pdf.

2 NISH was previously known as the National Industries for the Severely Handicapped, 

but now is officially known as NISH.

3 The Committee for Purchase From People Who Are Blind or Severely Disabled is the 

independent federal agency that administers the AbilityOne program. This agency began 

using the name the U.S. AbilityOne Commission on October 1, 2011. 

 
 

Page 2 GAO-13-457 Review of the AbilityOne Program 

the day-to-day operations of the program, including working with affiliates 

to identify and recommend products and services that the Commission 

may want to add to the program and providing training and other support 

to their affiliates.

Federal agencies are required to obtain the products and services they 

need through the use of full and open competitive procedures, unless 

otherwise authorized by law.4 Full and open competition promotes 

transparency and integrity within the federal procurement system 

because it allows for all responsible businesses that meet a customer’s 

stated requirements to submit proposals in response to that customer’s 

request for the product or service. In contrast, products and services 

procured through the AbilityOne Program are exempt from full and open 

competition requirements, but ensuring that the program is managed 

transparently and with integrity remains critically important. Such 

accountability must be ensured through appropriate levels of oversight 

and reporting of program operations. This includes overseeing the overall 

management and operations of the CNAs as well as ensuring that key 

program functions—such as determining which affiliate is assigned to 

provide a project and the pricing of those projects—are transparent. 5

In light of the program’s importance in creating employment opportunities 

for the disabled and its unique public-private structure, you asked us to 

examine some key aspects of the program’s oversight. We focused on 

the following questions:

Without this accountability, it is impossible to know the extent to which 

this uniquely structured public-private program is truly benefiting the blind 

and other persons with severe disabilities and whether federal customers 

are charged fair prices for the products and services they receive.

1. How does the AbilityOne Commission direct and oversee the CNAs 

and what limitations may exist with this oversight?

2. How are products and services added to the AbilityOne Program and 

how are providers of such projects assigned?

 

4 Competition in Contracting Act of 1984, Pub. L. No. 98-369, § 2701.

5 From this point on, we refer to both products and services produced through the 

AbilityOne Program as projects.
 

Page 3 GAO-13-457 Review of the AbilityOne Program 

3. What processes does the AbilityOne Program follow when pricing 

projects?

To answer these questions, we reviewed the policies and procedures of 

the AbilityOne Commission and the CNAs, as well as their relevant 

reports, including annual business plans, annual financial statements and 

budget justifications, strategic plans, compensation studies, IRS Form 

990s, as well as relevant federal laws and regulations.6

 

6 The Internal Revenue Service (IRS) requires nonprofit entities to annually submit a Form 

990 that provides some basic information about the nonprofit, including its mission and 

governance structure; its balance sheet, income and expenses; and tax and financial 

information, such as whether its financial statements were audited by an independent 

accountant and compensation information on certain officers, directors, trustees, key 

employees, and the highest-compensated employees. 

We also 

interviewed officials from the AbilityOne Commission (members of the 

presidentially appointed Commission and senior staff) as well as officials 

from both CNAs (members of their boards of directors, senior executives, 

and senior staff). These interviews focused on: (1) how projects are 

added to the program, assigned to affiliates, and priced; (2) how the 

Commission oversees the CNAs; (3) concerns about project assignment, 

pricing, and oversight; and (4) how these concerns could be addressed. 

In addition, we spoke with 10 directors or managers of NISH affiliates 

about their perspectives on the AbilityOne Program and used this input in 

part to develop and conduct five focus groups. We conducted the focus 

groups with both NISH and NIB affiliates. To ensure that we obtained a 

range of viewpoints from the focus groups, four groups that we convened 

included affiliates that varied by size as well as their affiliated-CNA. The 

fifth focus group included affiliate directors who had appealed project 

assignment decisions. We spoke with 35 affiliates in all, in groups of 5 to 

10. These group discussions focused on obtaining perspectives regarding 

the program in general and processes and practices associated with 

assigning and pricing projects in particular. To review the distribution of 

projects, we analyzed AbilityOne data on what projects were produced 

within the program and which affiliates produced them as of the end of 

fiscal year 2012. We assessed the reliability of these data and determined 

that they were sufficiently reliable for our purposes. Finally, we analyzed 

information from the Commission on the number and types of pricing 

reviews conducted between January 1, 2012 and December 10, 2012 

(the latest period for which the Commission has data) and the outcome of 

these reviews.
 

Page 4 GAO-13-457 Review of the AbilityOne Program 

We conducted our work between February 2012 and May 2013, in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

In 1938, Congress established a program under the Wagner-O’Day Act 

that created employment opportunities for the blind.7 People employed 

under the program manufactured and sold certain products, such as 

brooms and mops, to the federal government. In 1971, Congress 

expanded the program under the Javits-Wagner-O’Day Act to employ 

people with other severe disabilities and provide services (in addition to 

products) to federal customers.8 Today, the AbilityOne program provides 

more services than products. As of September 30, 2012, the program’s 

list of projects (known as the Procurement List) included 4,639 projects—

65 percent of which were services and 35 percent of which were 

products. Services include janitorial, landscaping, and document 

destruction services as well as staffing call centers and base 

commissaries. Products include office and cleaning supplies, military 

apparel, and bedspreads. Federal agencies that need the specific 

products and services on the Procurement List are generally required to 

purchase them through the program.9 Unlike contracts that are reserved 

exclusively for small businesses—which generally must be competed 

among qualified small businesses—contracts for projects on the 

Procurement List are not competed within the program. Once projects are 

included on this list, they can remain there indefinitely and continue to be 

provided by the initially-assigned affiliate.10

 

7

Pub. L. No. 75-739, 52 Stat. 1196. 

8

Pub. L. No. 92-28, 85 Stat. 77. 

9

41 U.S.C. § 8504. The program allows for exceptions to such mandatory purchases, 

including when affiliated agencies cannot provide projects within timeframes federal 

customers require or when affiliates cannot economically provide the required quantity. 

See, e.g., 41 C.F.R. § 51-5.4. 

10Federal contracting agencies may set aside, or reserve, an acquisition exclusively for 

participation by small business concerns. Small business concerns generally compete for 

these contracts.

Background 
 

Page 5 GAO-13-457 Review of the AbilityOne Program 

Three types of entities comprise the AbilityOne Program: (1) the 

AbilityOne Commission, (2) the CNAs, and (3) the affiliates. Figure 1 

shows the program’s organizational structure and how each of these 

entities is funded.

Figure 1: Organizational and Funding Structure of the AbilityOne Program

The AbilityOne Commission consisted of a 15-member presidentially 

appointed Commission and 27 full-time staff as of the end of fiscal year 

2012.11

 

11 Eleven Commission members are representatives from federal agencies and four 

members are private citizens representing the interests of people who are blind or have 

severe disabilities.

Its responsibilities include (1) establishing rules, regulations, and 

policies to assure the effective implementation of the program; (2) adding 

The Organizational and 

Funding Structure of the 

AbilityOne Program
 

Page 6 GAO-13-457 Review of the AbilityOne Program 

new projects to the Procurement List, after determining whether they can 

be suitably provided by people who are blind or have severe disabilities; 

and (3) setting prices for these projects that reflect the market (fair market 

prices) and appropriately revising them over time. In regard to the CNAs, 

the Commission has the authority to (1) authorize and de-authorize one 

or more CNAs to help administer the program, (2) set the maximum fee 

ceiling the CNAs can charge their affiliates, and (3) provide guidance and 

technical assistance to the CNAs to ensure the successful 

implementation of the program. The Commission is funded through 

congressional appropriations which, in fiscal years 2011 and 2012 were 

almost $5.4 million each year.

The AbilityOne Commission designated two CNAs—NIB and NISH—to 

help administer the program. The Commission designated NIB in 1938 

and in calendar year 2011, NIB had 161 employees and, as of the end of 

fiscal year 2012, NIB worked with 70 agencies affiliated with the program 

that employ people who are blind. The Commission designated NISH in 

1974 and at the end of calendar year 2011, NISH had 352 employees 

and, as of the end of fiscal year 2012, NISH worked with 528 agencies 

affiliated with the program that employ people with severe disabilities. The 

CNAs are funded almost entirely through fees they charge their affiliates 

as a percentage of the revenues the affiliates earn from federal 

customers on AbilityOne contracts.

The affiliated agencies that provide AbilityOne projects to federal 

customers can be private nonprofit agencies or state-run nonprofit 

agencies. Some affiliates are part of well known nonprofit agencies, such 

as Goodwill Industries or Easter Seal agencies, and others are lesser 

known affiliates. Moreover, some affiliates rely exclusively or mostly on 

AbilityOne sales, whereas others have a substantial amount of sales 

outside of the AbilityOne Program. Regardless of how much business an 

affiliate conducts through the AbilityOne Program, the program requires 

that at least 75 percent of the total direct labor hours it uses to provide all 

products and services, including those outside of the AbilityOne Program, 

be carried out by people who are blind (in the case of NIB) or have severe 

disabilities or blindness (in the case of NISH). 
 

Page 7 GAO-13-457 Review of the AbilityOne Program 

The Commission has limited authority to oversee and control the CNAs, 

which manage much of the program’s day-to-day operations because 

they are independent nonprofit agencies. Even though the Commission 

has ultimate responsibility for program management and oversight

because of the unique public-private structure of the program it cannot 

control how CNAs (1) spend their funds, (2) set and manage their 

performance goals, or (3) set and implement governance policies and 

other internal controls.

The Commission has limited influence over how CNAs spend their funds 

because the CNAs, as independent nonprofit entities, have their own 

boards of directors that determine how much the CNAs will spend on 

each item in their budgets. However, the Commission can influence the 

CNAs overall budgets by (1) reviewing CNA annual business plans and 

(2) limiting the maximum amount of revenue the CNAs can collect from 

their affiliates to fund their operations. Commission reviews of CNA 

business plans consist of examining the plans to ensure that they are 

aligned with the Commission’s core goals and asking clarifying questions 

or requesting changes. The Commission limits CNA revenues by setting 

the maximum fee amount the CNAs can charge their affiliates based on 

revenues from their AbilityOne contracts.12

In fiscal year 2012, NISH spent $78 million and NIB spent $32 million on 

operations. The major expenses of each are depicted in figure 2 and all 

expenses are provided in appendix I.

 

12 For regulations regarding the Commission’s ability to set the CNA fee limit (also 

referred to as the fee ceiling) and the CNAs’ ability to collect the fees, see 41 C.F.R. §§ 

51-2.2(f), 51-3.5.

The Commission Has 

Limited Control Over 

Some Aspects of CNA 

Operations 

The Commission Has 

Limited Control Over CNA

Spending 
 

Page 8 GAO-13-457 Review of the AbilityOne Program 

Figure 2: CNA Operating Expenses for Fiscal Year 2012 (in millions)

a Fees for non-employee services include legal, accounting, investment management and other 

services.

b The other category includes a wide range of expenses, such as office expenses, insurance and 

other costs, which are identified in appendix I.

c The personnel category includes costs for the compensation of current officers and key employees, 

other salaries and wages, pension plan accruals and contributions, other employee benefits and 

payroll taxes.

d Occupancy expenses are for rent and utilities.

Because the CNAs are independent nonprofit agencies, the 

Commission’s influence over their budgets does not and cannot extend to 

(1) controlling CNA cost areas, such as employee salaries and benefits or 

lobbying costs; (2) establishing a policy on the appropriate level of CNA 

reserves; and (3) ensuring that the CNAs provide sufficient funding to 

support key program initiatives designed to promote employment 

opportunities for people with severe disabilities.

Compensation and benefits. According to the Commission, it has no 

direct control over the amount that CNAs pay their executives and other 

employees, an important driver of CNA expenditures. In November 2004, 

the Commission proposed to exert more control through proposed 

regulations that included, among other things, standards regarding the 

reasonableness of executive and other employee compensation at the 

Controlling Key CNA 

Cost Areas 
 

Page 9 GAO-13-457 Review of the AbilityOne Program 

CNAs.13 The Commission eventually withdrew the entire regulatory 

proposal citing the number and nature of issues raised by commenters.14

Federal laws limit the amount of federal funds that can be used to pay the 

salaries of certain federal agency contractors and nonprofit agency 

executives receiving federal grants to the level II federal senior executive 

service (SES) salary, which in fiscal year 2012 was the maximum SES 

pay of $179,700.15 CNA executive salaries, however, are not limited in 

this way because although the fees the affiliates pay the CNAs originate 

with federal customers, once they are remitted to the affiliates they are no 

longer federal funds. SES pay ranged from $119,554 to $179,700 in fiscal 

year 2012. Our review of the financial information submitted by NISH and 

NIB of their 25 highest-paid executives for this year shows that 11 

executives had a salary above this range, 12 were within this range, and 

2 were below this range. NISH and NIB employees, including the highestpaid executives, also received bonuses and benefits, such as pensions, 

and health, dental, disability, and life insurance. The highest-paid NISH 

executives as well as staff were entitled to first-class or business air travel

in certain circumstances and reimbursement for eligible wellness program 

expenses up to a maximum of $250 annually.

16

 

13 69 Fed. Reg. 65,395 (Nov. 12, 2004). The Commission proposed to assess the 

reasonableness of compensation by considering a number of factors, such as the size and 

complexity of the CNA’s mission, the compensation packages at other comparable 

affiliates or the other CNA, and the technical and professional qualifications required for 

the positions. In addition, the Commission also planned to consider the extent to which the 

executive compensation packages exceeded the total compensation offered to the typical, 

highest paid senior executive service (SES) career federal employee. If compensation 

exceeded this amount, the Commission planned to consider it unreasonable unless the 

CNA could provide justification for the compensation. The proposed regulatory changes 

were also intended to address the standards for assessing the reasonableness of 

compensation at the CNA affiliates.

Also, the NISH Chief 

Executive Officer received a stipend for a car. 

1470 Fed. Reg. 38,080 (July 1, 2005). The notice withdrawing the rule noted the 

Commission’s intent to propose new regulations on this topic by the end of 2005, but the 

Commission has not taken any additional action in this area. 

15 Examples include people employed at Head Start agencies, people working in the Job 

Corps program, and people whose salaries originate with the Employment and Training 

Administration. 

16 First-class or business air travel is allowed by NISH only for uninterrupted flights of 8 

hours or more or as a reasonable accommodation for an employee with a disability. 
 

Page 10 GAO-13-457 Review of the AbilityOne Program 

Within the last 5 years, each CNA has had different consultants conduct 

compensation assessments to determine whether their compensation 

was comparable to other organizations. The organizations used for 

comparison had similar missions and levels of revenue for the 

assessments conducted for NISH, and similar locations for the 

assessments conducted for NIB. These assessments took into 

consideration some factors similar to those in the Commission’s proposed 

regulations, such as comparing the salary of job positions at the CNAs 

with positions at other organizations deemed similar. However, none of 

the assessments compared CNA compensation to federal sector 

compensation. One consultant who conducted one of the studies 

explained that this was because CNA job titles and functions were more 

comparable to the for-profit and nonprofit sectors than the federal sector. 

These assessments also varied in scope and methodology. For example, 

while some NISH assessments included a review of the value of all 

salary, cash incentives and benefits, the NIB assessments did not include 

a review of benefits. The 2011 study for NISH found that with the 

exception of salaries for three executives, the salaries of all NISH 

executives were comparable to the market median.17 The 2009 study for 

NIB found, in part, that the salaries for NIB’s leadership team needed to 

be increased to be competitive with the market, and NIB subsequently 

raised their salaries.18

Lobbying. Another CNA budgetary area which the Commission cannot 

control is the extent of lobbying conducted by NIB and NISH. Federal 

agencies generally cannot use federal appropriations to lobby 

Congress,19 and the Federal Acquisition Regulation (FAR) limits 

reimbursement of federal government contractors’ lobbying and political 

activity costs.20

 

17The salary for three executives ranged from being: (1) above the competitive range of 

the 75th percentile, (2) within the competitive range for the 75th percentile, and (3) between 

the competitive range of the 50th and 75th percentile. 

NISH and NIB are under no such restriction, however. 

The income NISH and NIB receive through fees from federal contracts 

are not appropriated funds, thus they may use these fees or other income 

to fund their lobbying efforts. For 2012, NIB reported spending $175,729 

18The NIB study found that the salaries for NIB’s leadership team were at 79 percent of 

the market median.

19 18 U.S.C. § 1913.

20 FAR § 31.205-22.
 

Page 11 GAO-13-457 Review of the AbilityOne Program 

and NISH reported spending $700,000 on lobbying.21 In the same period, 

NIB reported lobby activities related to the AbilityOne Program, the 

Rehabilitation Act, Social Security and federal procurement, and NISH 

reported lobbying related to 10 different bills or laws.22

Because the CNAs are independent nonprofit agencies, the Commission 

also lacks direct control over the amounts CNAs set aside as reserves. 

Reserves are important to ensure that an organization has sufficient 

funds to meet changing cash flow requirements. However, in the case of 

the AbilityOne Program, it is also important that the CNAs do not retain 

excess reserves that could be used to maintain and develop the program. 

A member of the Commission told us, for example, that the CNAs have 

generally been accumulating reserve funds, even though his expectation 

was that the dollar amount of reserves should fluctuate in both positive 

and negative directions as opposed to simply continue to grow. Although 

the Commission has the authority to adjust the CNAs’ fee limits which 

could be used to curb unnecessary growth in the CNAs’ entire budgets 

over time, this authority does not result in direct control over CNA reserve 

levels. Moreover, beyond the Commission’s written guidance that CNA 

annual business plans report their level of reserves and how they will use 

any surplus revenue to accomplish strategic goals, the Commission has 

not provided written guidance to the CNAs about what they should 

consider when setting their reserve policies. The Commission also has

not requested that the CNAs provide financial analyses that fully support 

their level of current reserves and their reserve policies.

Over the last 5 

years, from 2008 to 2012, NIB reporting spending about $976,729 and 

NISH reported spending $3.5 million on lobbying.

23

 

21Federal law requires lobbyists to file quarterly lobbying disclosure reports and 

semiannual reports on certain political contributions. 2 U.S.C. § 1604.

Since NISH and 

NIB have different reserve policies, a comparison of reserves held by 

22 Some of the bills for which NISH reported lobbying activities before congressional 

bodies included: (1) the Acquisition Savings Reform Act of 2011, S. 1736, 112th Cong. 

(2011); (2) the Fair Wages for Workers with Disabilities Act of 2011, H.R. 3086, 112th

Cong. (2011); and (3) the Workforce Investment Improvement Act of 2012, H.R. 4297, 

112th Cong. (2012).

23 According to the Commission, to decrease reserves the Commission reduced CNA fee 

limits in fiscal year 2007.

Establishing a Policy on 

Appropriate Reserve Levels 
 

Page 12 GAO-13-457 Review of the AbilityOne Program 

each CNA is inappropriate.24

Figure 3: NISH and NIB Reserves for Fiscal Years 2008 to 2013

Figure 3, however, shows the trend in 

reserves for NISH and NIB separately over time. Specifically, the annual 

reserves for NISH for fiscal years 2008 to 2012 as well as its reserve 

projection for fiscal year 2013 continued to grow, while NIB’s reserves 

declined slightly in 2011and 2013 (see fig. 3). 

a

NISH (nominal) and NIB (nominal) data are the actual data from NISH or NIB from certified financial 

statements for fiscal years 2008 through 2012 and the budget data are for fiscal year 2013.

b

 

24 NISH’s reserve policy is to target 6 months of its annual expense budget in cash and 

investments. NIB’s policy is to reserve 6 to 12 months of its annual expense budget in net 

assets. In recent years, NISH has been somewhat below its 6-month target and NIB has 

exceeded its upper limit once in the last 8 years. 

NISH (constant dollars) and NIB (constant dollars) data have been inflated for fiscal years 2008 

through 2012 using fiscal year 2013 as the base year and fiscal year Gross Domestic Product (GDP) 

index projections from the Congressional Budget Office, The Budget and Economic Outlook 

(Washington, D.C.: Feb. 2013).
 

Page 13 GAO-13-457 Review of the AbilityOne Program 

While AbilityOne officials told us that the CNAs have generally supported 

the Commission’s leadership of the program, including the funding of key 

initiatives, they also said that at any time the CNAs could become 

unsupportive and decide that they do not want to move in the 

Commission’s direction. This situation exists in part because the CNAs, 

as private independent entities, determine how to spend their own funds. 

Thus, instead of requiring the CNAs to take certain actions to support the 

program, the Commission often has to seek their voluntary cooperation. 

In 2009, for example, according to CNA officials, the Commission tried to 

mandate CNA participation in its quality work environment (QWE) 

initiative to improve employee satisfaction and expected the CNAs to 

immediately incorporate funding for it into their budgets. However, CNA 

officials told us that the Commission did not have the authority to require 

such participation. According to Commission officials, this type of 

response from the CNA officials demonstrates the Commission’s past and 

ongoing problems with trying to exert control over CNA spending. CNA 

officials explained that they needed time to develop implementation plans 

and determine the level of financial support they would provide before 

determining how to include it in their budgets. While the CNAs reported 

that they have continually funded QWE since its first year, AbilityOne 

officials still remain concerned about their lack of authority to require and 

enforce program improvements and the potential for future resistance 

from the CNAs.

CNA officials also pointed out that they have routinely provided noninherently governmental support to the AbilityOne Program.25

 

25 AbilityOne regulations require the CNAs to perform various administrative functions, 

including activities to increase awareness of the program. 41 C.F.R. § 51-3.2. Noninherently governmental functions are functions that a government agency can contract or 

pay an external party to perform. 

For fiscal 

year 2013, NIB budgeted $600,000 to provide support to the program in 

five areas: (1) information management, (2) technical writing, (3) 

communications and collaboration among program partners, (4) 

publications, and (5) distributors for AbilityOne services. For example, 

NIB plans to provide a communications manager to strengthen 

collaboration and communication among AbilityOne partners and to 

provide additional assistance to expand the number of distributors for 

various AbilityOne services, such as food and janitorial services. For 

fiscal years 2013 and 2014, NISH plans to provide assistance in six 

areas: (1) information systems coordination and integration, (2) AbilityOne 

Ensuring CNA Funding of 

Program Initiatives 
 

Page 14 GAO-13-457 Review of the AbilityOne Program 

web site support, (3) communications, (4) research, (5) program awards, 

and (6) brand management. NISH estimated that it spent $1.8 million for 

fiscal year 2012 and will spend $1.6 million for fiscal year 2013 for this 

type of support.

The Commission has set and monitored a limited number of strategic 

overall program goals and performance standards (specific measures and 

targets), but because it has limited authority, it relies on the CNAs to set 

and monitor their own performance standards. During our last review of 

the program and its overall goals published in 2007, the program had five

strategic goals and more than 30 performance measures that were not 

clearly defined or were difficult to measure, which made it difficult to 

assess performance.26 However, the Commission has made substantial 

progress in addressing these weaknesses by further reducing its goals to 

focus on four core program areas: (1) effective stewardship; (2) customer 

and employee satisfaction; (3) employment growth; and (4) business 

excellence.27

The Commission has not recently taken an active role in setting or 

monitoring CNA governance standards—such as developing CNA ethics 

The CNAs have used these core program areas to develop 

their performance measures and targets. While the Commission is aware 

of the CNA performance measures and targets, it cannot revise them to 

help manage CNA performance. Thus, even when the Commission 

believed that one CNA performance target—15 percent annual growth in 

AbilityOne services—could not be achieved; the Commission could not 

require that the target be changed.

 

26 GAO, Federal Disability Assistance: Stronger Federal Oversight Could Help Assure 

Multiple Programs’ Accountability, GAO-07-236 (Washington, D.C.: Jan. 26, 2007).

27 For the AbilityOne fiscal years 2010 to 2014 Strategic Plan, see 

http://www.abilityone.gov/media_room/publications.html. 

The Commission Has 

Limited Authority over 

CNA Performance 

Management, Governance 

Standards, and Other 

Internal Controls

Overseeing CNA Performance 

Management 

Overseeing Governance 

Standards
 

Page 15 GAO-13-457 Review of the AbilityOne Program 

standards and reviewing alleged violations—to help protect the program 

from possible waste, fraud, and abuse. Instead, the Commission is 

dependent upon the CNAs themselves, as well as other governmental 

entities, such as the Internal Revenue Service, to set and enforce some 

of these standards. In November 2004, the Commission published 

proposed rules that would have imposed some governance standards 

upon the CNAs, but later withdrew the proposal citing the number and 

nature of the objections raised by commenters. In the proposed 

regulatory changes, the Commission proposed to incorporate a number of 

governance standards that would limit membership on the CNAs’ boards 

and address conflict of interest policies, among other things. For example, 

the Commission proposed to ensure that the Chairperson of the Board of 

a CNA was not also the Chief Executive Officer, President, or Executive 

Director of the CNA or any of its affiliates. Also, the Commission 

proposed that the CNAs and their affiliates adopt conflict of interest 

policies and disclose board members’ business relationships with the 

CNA. According to AbilityOne Commission senior officials, the 

Commission has not made another attempt to formulate governance 

standards because they do not believe they have sufficient legal authority 

or resources to enforce them. Without strong standards and oversight, 

however, the program is vulnerable to potential fraud, waste, and abuse 

of government procurement funds. Moreover, 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.

According to NIB officials, other nonprofit boards, such as Goodwill 

Industries, United Way, and Easter Seals, have chosen to minimize their 

conflict of interest exposure by not having a majority of their directors 

employed by a related nonprofit. NIB and NISH, however, have decided 

to allow half or more of their board members to be executives or 

employees of affiliates in the program.28

 

28 According to a NIB official, employees or executives of a NIB affiliate cannot serve as 

officers on NIB’s board, but those individuals can serve on the board.

Both CNAs recognize that the 

makeup of their boards increases the risk of possible conflicts of interest 

on the part of their boards. The CNAs have, therefore, taken several 

steps to help mitigate these risks. For example, to reduce the potential for 

conflict of interest, the CNAs no longer have their boards involved in day-
 

Page 16 GAO-13-457 Review of the AbilityOne Program 

to-day management decisions, such as determining which affiliate would 

be assigned to develop a potential project. 

The Commission plays a limited role in overseeing how well CNAs are 

implementing their own internal controls. Even though the Commission 

has delegated the performance of much of the program’s day-to-day 

activities to the CNAs, as the independent federal agency over the 

program, it is responsible for overseeing the CNAs to ensure that all 

applicable government standards are met. For example, under the 

standards for internal controls in the federal government, management 

must continually assess and evaluate its internal controls to assure that 

the control activities being used are effective and updated when 

necessary to effectively manage the program to achieve its goals and 

avoid potential for waste, fraud, or abuse.29 Although the Commission 

does have high-level efforts in place to oversee the CNAs’ ability to 

achieve the program’s strategic goals, it has not—as suggested in the 

Office of Management and Budget (OMB) circular on management and 

accountability of federal programs30

The CNAs perform audits and reviews of their internal controls and collect 

information on allegations of misconduct or potential internal control 

violations reported through their whistleblower or other mechanisms, such 

as their review of CNA employee conflict of interest forms. Both CNAs 

have had independent financial and human resource audits conducted as 

well as recent audits of their procurement systems. NISH has also

performed an internal risk assessment, but NIB has not conducted such 

an assessment in the last 5 years. The Commission has not reviewed 

findings from any of the CNA audits and assessments, with the exception 

of CNA financial audits. Such reviews would allow the Commission to 

—made certain that it has, or that the 

CNAs have, controls in place at the CNAs that are appropriate and costeffective. For example, the Commission relies heavily on CNA 

recommendations regarding which affiliate should provide an AbilityOne 

project. However, the Commission has not reviewed the controls the 

CNAs have in place to help ensure that the information the CNAs provide 

in support of these recommendations is accurate, complete, and not 

influenced by conflicts of interest.

 

29 See GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G

(Washington, D.C.: Aug. 2001), p. 5.

30 See OMB circular A-123 at: http://www.whitehouse.gov/omb/circulars_a123_rev. 

Overseeing CNA Internal 

Controls
 

Page 17 GAO-13-457 Review of the AbilityOne Program 

know where there are weaknesses in any CNA internal controls and 

ensure that CNA plans to address them are adequate and implemented in 

a timely manner. Similarly, the Commission does not generally review 

information about allegations of misconduct or potential internal control 

violations collected by the CNAs. Such reviews are important, given that 

the Commission runs this program through which about $2.9 billion in 

federal contracting flowed in fiscal year 2012. However, the CNAs do not 

routinely provide to the Commission information on alleged misconduct or 

internal control violations at either CNA or their affiliates, with a few 

exceptions. The primary exception is when the allegation is related to the 

functions for which the Commission is specifically responsible, such as 

the requirement that at least 75 percent of an affiliate’s direct labor is 

performed by people who are blind or have severe disabilities. In this 

situation, the CNAs will report the allegation to the Commission. 

Commission officials have cited their limited authority and limited staff 

resources, in comparison to the much larger CNAs, as reasons why it is 

not able to fully review the CNAs’ internal control activities.

As we previously discussed, the Commission lacks sufficient authority 

and procedures to help ensure the effectiveness, efficiency, and integrity 

of CNA operations. One option to address this situation would be for the 

Commission to enter into a written agreement with each CNA that 

specifies key expectations for the CNA and mechanisms for the 

Commission to oversee their implementation. No such agreement is 

currently in place. An agreement of this kind could enhance program 

oversight and accountability by providing more specificity about the 

responsibilities, processes, and relevant consequences to which the 

parties have agreed. However, it is possible that an agreement might not 

be reached since the Commission cannot compel the CNAs to enter into 

agreements and the CNAs may have little motivation to enter into an 

agreement that may limit their autonomy. Therefore, the Commission 

would need to deal with such a possibility. The Commission’s primary 

source of leverage with regard to the CNAs is its ability to replace current 

CNAs with other agencies. In the event that the Commission could not 

reach agreement with a CNA on the provisions needed to provide an 

appropriate level of oversight and accountability for the AbilityOne 

program, then the Commission may need to take steps to designate a 

CNA that is willing to enter into such an agreement. The Commission 

could also seek legislation that would require such an agreement to be a 

prerequisite for being designated as a CNA.

Enhancing Federal 

Oversight and Control of 

the AbilityOne Program
 

Page 18 GAO-13-457 Review of the AbilityOne Program 

Commission officials told us that they would need additional resources to 

establish and oversee written agreements with CNAs and that one 

alternative for funding could be to redirect receipt of a portion of the fees 

collected by the CNAs to the Commission. If this alternative were

considered, additional controls over program funding would be needed to 

prevent a potential conflict of interest for the Commission—namely that 

the Commission could influence its funding level by increasing the 

maximum fee amount the CNAs could charge their affiliates. Such 

controls could include Congress mandating a maximum amount of 

funding the Commission could obtain from the fees or changes to how the 

Commission sets the fees.

Another option to improve federal oversight of the program—including 

reviewing CNA internal control activities and compliance with program 

rules and regulations—would be to create an independent inspector 

general (IG) with the authority to audit and investigate the Commission 

and the CNAs. An IG could follow up, as needed, on allegations of 

misconduct or internal control violations. It could also identify ways to 

improve the efficiency and effectiveness of the CNAs’ internal controls. 

Additionally, it could identify broader issues that could arise within the 

program, such as affiliate noncompliance with program requirements and 

oversight of the AbilityOne Commission itself.31 Although IG findings and 

recommendations could be used to help persuade CNAs to address a 

problem, AbilityOne officials believe that they would also need a 

mechanism that would give them the ability to implement any 

recommended IG changes, such as the written agreements described 

above.

 

31 For an example of noncompliance by AbilityOne Program affiliates, see GAO-07-236. 
 

Page 19 GAO-13-457 Review of the AbilityOne Program 

The Commission relies on CNA recommendations when determining 

which projects are added to the AbilityOne Procurement List and when 

assigning affiliates to provide them. However, some affiliates have 

expressed concerns that CNA assignment decisions may not be 

sufficiently transparent or equitable. In response to these concerns, the 

AbilityOne Commission issued a policy on how CNAs should assign 

projects. While a step in the right direction, this policy may be ineffective 

in several ways. 

Federal law gives the AbilityOne Commission the authority to add projects 

to the AbilityOne Program Procurement List and federal regulations give 

the Commission the authority to approve which agencies affiliated with 

the program can provide the projects. In so doing, the Commission relies 

heavily on recommendations from the CNAs. Specifically, it takes five 

steps to add a project to the Procurement List (see fig. 4). 

The Commission 

Relies on CNAs to 

Recommend Projects 

for the Program, but 

Has Not Resolved 

Concerns about How 

CNAs Assign Projects 

to Affiliates

CNAs Assign Affiliates to 

Develop Potential Projects 

and Recommend Projects 

for Review to the 

Commission
 

Page 20 GAO-13-457 Review of the AbilityOne Program 

Figure 4: Major Steps in Adding Projects to the AbilityOne Procurement List
 

Page 21 GAO-13-457 Review of the AbilityOne Program 

Under the first step of the Procurement List addition process, the CNAs 

assign one of their affiliated agencies to develop a business opportunity 

that potentially may become an AbilityOne project, in accordance with 

their own procedures. The Commission does not provide input into which 

affiliate is assigned at this stage. In step 2, the CNAs recommend that the 

Commission add the potential project to the Procurement List using a 

standard project addition package. The affiliate that the CNA assigns to 

develop the potential project is typically the affiliate that the CNA 

recommends to the Commission to provide the project in this package. In 

step 3, Commission staff review CNA addition packages to determine 

whether the project is suitable for the AbilityOne Program, using the 

criteria in the sidebar. According to Commission staff, they do not 

determine: a) whether another affiliate would be better positioned to 

provide the project or b) if the CNAs followed appropriate processes in 

selecting the affiliate. In step 4, Commission members vote on whether to 

add staff-recommended projects to the Procurement List, using the same 

four criteria that staff used to evaluate the project. They also vote on 

whether the CNA-recommended affiliate should be designated to provide 

the project. According to Commission staff, members vote to add the vast 

majority of projects staff put forward for addition to the Procurement List.

GAO has identified key elements that public procurement systems should 

have to ensure that they are efficient and accountable. Two of these,

which the Commission has also acknowledged in policy as being 

important in the AbilityOne Program, are: 32

• transparency, which includes having written procedures that are easily 

understandable by all; and

• equity, which includes maintaining impartiality, avoiding conflict of 

interest and preferential treatment, and dealing fairly and in good faith 

with all parties.33

 

32 See U.S. AbilityOne Commission, Policy 51.301, “Selection of Nonprofit Agencies for 

Project Assignment and Order Allocation,” (Arlington, VA: May 30, 2012). This policy 

applies to both the assignment of projects to affiliates at the business development stage 

and allocation of projects among affiliates that are added to the Procurement List.

33 GAO, District of Columbia: Procurement System Needs Major Reform, GAO-07-159

(Washington, D.C.: Jan. 19, 2007). This report refers to this element as integrity. The 

explanation given for integrity in this report matches how we explained equity during the 

course of our work. Specifically, we defined equity as being free from bias or favoritism. 

The Processes CNAs Use 

to Assign Projects Are Not 

Fully Transparent and 

Some Affiliates View Them 

as Inequitable
 

Page 22 GAO-13-457 Review of the AbilityOne Program 

The processes the CNAs use to make assignment decisions allow them 

to exercise discretion when determining which affiliate to assign to a

project and such discretion can limit transparency and equity. A 

Commission official told us that such discretion is essential to balancing 

the core mission of this program—providing employment opportunities for 

people who are blind or have severe disabilities—with providing quality 

projects to federal agencies in a timely and economical manner. 

AbilityOne officials also told us that their involvement in determining which 

affiliate should provide a project is limited. The reasons they gave for 

relying so heavily on CNA recommendations include (1) historically, 

project assignment has always been a CNA responsibility, and (2) it is the 

CNAs that have the necessary expertise to assess which affiliates are 

best suited to providing specific projects.

Although both NISH and NIB have written procedures for assigning 

affiliates to projects, some affiliates told us that they do not always find 

the CNAs’ assignment processes transparent. Both CNAs have basic 

eligibility criteria that all affiliates must meet or they will be disqualified 

from pursuing a potential project. NISH has 16 additional criteria that it 

uses when making assignment decisions among qualifying affiliates and 

NIB has 7 (see sidebar). Both NISH and NIB also provide feedback to 

affiliates that were not awarded a project, upon request.

NISH officials explained that not all of its criteria are relevant when 

determining which affiliate should be assigned a project and that each 

project notification lists those criteria that will be used. NIB officials 

explained that due to the general nature of their criteria, most are 

applicable to assignment decisions. Nevertheless, some NISH and NIB 

affiliates told us that they do not always understand how the CNAs apply 

the assignment criteria on a project-by-project basis and, as a result, do 

not understand how their proposals are being judged. One affiliate 

explained, for example, that sometimes his CNA views geographic 

proximity to a project’s worksite as more important than prior experience 

in a relevant line of business when evaluating affiliate proposals and 

sometimes they do the opposite. However, because the CNA does not tell 

the affiliates up front which criteria will be weighted as more important, 

affiliates do not know what elements to emphasize in their proposals and 

can be confused as to why one affiliate was assigned a project over 

another affiliate.

Moreover, some affiliates have questioned the overall integrity of the 

CNAs’ assignment processes. Several affiliates we spoke with stated that 

they feel the system is biased in that assignment decisions tend to favor 
 

Page 23 GAO-13-457 Review of the AbilityOne Program 

larger affiliates, affiliates that are or were on one of the CNAs’ boards of 

directors, or are a member of a particular affiliate sub-group. In addition, 

NISH assignment decisions are made by a regional executive director in 

each of its six regions and some affiliates questioned whether these 

individuals apply NISH assignment criteria consistently.

Affiliates have also said that when NIB identifies a potential project for 

development, NIB does not routinely notify all affiliates. Instead, NIB 

usually notifies only those that they think may be interested in, and 

capable of, developing it. During our focus groups with affiliates, several 

mentioned that this practice can make it difficult for them to be considered 

for a different or new line of business. NISH, on the other hand, routinely 

notifies all affiliates of potential projects through its website and such 

notification is a requirement in NISH assignment procedures.

The Commission’s May 2012 policy, according to Commission officials, 

sought to articulate a minimum set of broad principles that CNA 

assignment policies and procedures should incorporate—some of which 

relate to the elements of transparency and equity discussed above. This 

was the first time that the Commission had issued a written policy to 

guide CNA project assignment decisions, although the CNAs have had

their own written procedures for years. Commission officials told us that 

they issued this written policy for two reasons. First, in the event that an 

affiliate filed suit in court over an assignment decision, as occurred in 

2010, the Commission wanted to be able to point to a written policy that 

described how they expect CNAs to make assignment decisions.34

 

34 An affiliate filed an appeal with the United States Court of Federal Claims challenging a 

contract award to another affiliate on several grounds. See Bona Fide Conglomerate v. 

United States, 96 Fed. Cl. 233 (2010). The court ultimately dismissed the claim because 

the AbilityOne Commission took corrective action by setting aside the award and pursuing 

a new source selection process. 

Second, they felt that having a written policy was important, given 

complaints levied by some affiliates that CNA assignment decisions 

sometimes lacked transparency and appeared biased. A Commission 

official acknowledged that the principles articulated in its assignment 

policy generally aligned with the CNAs’ written procedures. As a result, 

the Commission did not expect that the CNAs would need to make 

substantial changes in their assignment processes.

Limited Transparency and 

Perceived Inequities in 

Project Distribution May 

Not Be Resolved by the 

Commission’s Most 

Recent Efforts
 

Page 24 GAO-13-457 Review of the AbilityOne Program 

Our review of the Commission’s policy shows that although it describes 

some desired outcomes regarding CNA assignment decisions, it does 

little to indicate how these outcomes can be achieved. For example:

• The policy states that CNAs should develop processes to assure that 

projects are distributed among affiliates that result in fair, equitable, 

and transparent distribution, taking into account the unique mission 

and objectives of the program. It does not explore how such 

distribution should be achieved, or define what is meant by fair, 

equitable, and transparent.

• To maintain CNA discretion in determining certain criteria to use when 

making decisions, the policy allows decisions to be at least partially 

based on special considerations in certain circumstances. The policy 

gives examples of special considerations, such as providing jobs to 

wounded warriors or using environmentally friendly supplies, but it 

does not limit the CNAs to them. The policy also does not define or 

provide any examples of the circumstances in which the special 

considerations may be applied, which limits transparency. The policy 

also lacks transparency because it does not require that the CNAs 

routinely disclose to affiliates applying for projects how and why 

special considerations were used in making assignment decisions. 

Instead, it says that upon the Commission’s request, CNAs must 

certify that an assignment complies with all applicable policies and 

procedures and include documentation about any special 

circumstances in the project addition package submitted to the 

Commission.

The policy also contains three types of enforcement mechanisms, another 

key internal control intended to ensure that program directives are 

followed, but they are not well—formulated. 35

• The policy requires that the Commission review CNA assignment 

processes at least once every 3 years to determine whether these 

processes are aligned with the principles outlined in its policy. 

However, because some of the principles contained in this policy are 

vague, the Commission may have difficulty determining the extent to 

which CNA procedures are aligned with them. Although the policy 

Specifically:

 

35 One internal control standard is control activities. Internal control activities are the 

policies, procedures, techniques, and mechanisms that help ensure that management’s 

directives to mitigate risks identified during the risk assessment process are carried out. 

See GAO-01-1008G, p. 33.
 

Page 25 GAO-13-457 Review of the AbilityOne Program 

states that these reviews would begin in 2012, as of February 2013 

the Commission had not developed review procedures or conducted 

any reviews.

• The policy requires that CNAs document any special considerations 

that figure into an assignment decision and provide such 

documentation to the Commission upon request. It does not, however, 

specify what the documentation should entail. For example, it does 

not require the CNA to document why or how a particular 

consideration was used in an assignment decision. Such information 

would be critical to assessing whether the assignment decision was 

impartial and free from bias.

• The policy requires that CNAs have written appeal processes in place 

and both CNAs had such written procedures before to the 

Commission issued its policy. The policy also requires that the 

AbilityOne Commission develop its own separate written appeals 

policy and procedures, which would allow for a second level of 

appeal. At the time of our review the Commission did not have a 

timeline for developing this policy.

The AbilityOne Commission has not determined how the assignment of 

projects among affiliates has affected the creation of employment 

opportunities for people who are blind or have severe disabilities and, 

according to Commission officials, has not done so at least in part 

because of limited resources. Such an assessment is important to 

conduct for two reasons. First, identifying risks that may affect the 

capacity of an agency to meet its mission—in this case the creation of 

jobs for people who are blind or have severe disabilities—is an important 

internal control.36

AbilityOne and CNA officials told us that there is no clear research to 

indicate whether the current distribution of projects among affiliates 

Because the Commission has not determined if or how 

the current assignment of projects affects its mission, it does not know

whether the way projects are currently distributed among affiliates poses 

a risk to achieving the program’s mission and, if so, the extent of this risk. 

Second, according to an AbilityOne official, the relationship between the 

distribution of projects and job creation for people who are blind or have 

severe disabilities has been an ongoing debate among affiliates, CNAs, 

and the Commission for years.

 

36 See GAO-01-1008G, p. 23.

The Commission Does 

Not Track How the 

Program’s Distribution of 

Projects Affects Job 

Creation for Its Target 

Population 
 

Page 26 GAO-13-457 Review of the AbilityOne Program 

affects the amount of employment opportunities created for people who 

are blind or have severe disabilities. On the one hand, AbilityOne and 

CNA officials said that the program could benefit from spreading projects 

widely among its affiliates. Under this scenario, the program would not be 

as reliant on the capabilities of a few affiliates to hire people who are blind 

or have severe disabilities. Such a broad bench of affiliates may reduce 

the possibility of the program losing a federal customer if a producing 

affiliate becomes unable to provide a project because the project could be 

transferred to another affiliate within the program that had similar or 

potentially similar capabilities and capacity. On the other hand, 

Commission and CNA officials also said there could be benefits from a 

completely different distribution that assigned relatively more projects to 

some of the largest affiliates. Larger affiliates typically have more 

experience and their size creates economies of scale necessary to 

provide large projects, such as computer destruction or contract closeout 

services for an entire federal agency or program within an agency.

We analyzed fiscal year 2012 program data and found that while the 

largest affiliates represent a minority of the AbilityOne affiliates, they hold 

the majority of projects. Figure 5 shows that the largest 114 affiliates (20 

percent) that provided projects as of the end of fiscal year 2012 had 56 

percent of the projects and 79 percent of the sales dollars.37

 

37 Distribution results vary if different–sized sale categories are used; however, the trend 

continues to be that the largest affiliates hold the majority of projects. 
 

Page 27 GAO-13-457 Review of the AbilityOne Program 

Figure 5: Distribution of Projects among Different-Sized Affiliates

a Size categories are based on total affiliate sales, which are AbilityOne plus non-AbilityOne sales. 

Median total sales for small affiliates was $996 thousand and ranged from $8 thousand to $3.38 

million; median total sales for mid-size affiliates was $5.8 million and ranged from $3.4 million to 

$9.87 million; and median total sales for large affiliates was $18.2 million and ranged from $9.9 to 

$248.2 million.

We also analyzed the distribution of projects among NIB and NISH 

affiliates separately. The largest 13 NIB affiliates (20 percent) held 46 

percent of AbilityOne projects and 53 percent of AbilityOne sales. The 

largest 100 NISH affiliates (20 percent) held 50 percent of AbilityOne 

projects and 80 percent of AbilityOne sales.

Program officials from all levels, as well as some of the affiliates 

themselves, told us that small and mid-size affiliates may struggle to 

compete for AbilityOne projects for a variety of reasons. For example, 

they told us that small affiliates cannot devote as many resources to 

business development or may only have the capacity to compete for 

projects in their local area. Affiliates also said that CNAs may not select 

them because of a perceived lack of work experience in a new line of 

business. Indeed, one affiliate told us it provides janitorial services and, 

despite efforts to expand into other businesses, it could not persuade its 

CNA to consider it for anything other than janitorial contracts. AbilityOne 

and CNA officials told us that while they try to give opportunities to 
 

Page 28 GAO-13-457 Review of the AbilityOne Program 

smaller, less experienced firms, opportunities for smaller affiliates may be 

reduced when other factors are taken into account, such as a federal 

customer’s preference for a larger, more experienced contractor.

While the AbilityOne Commission is ultimately responsible for determining 

the fair market price of projects in the program, it permits the CNAs, 

affiliates, and federal customers to negotiate pricing and recommend a 

fair market price for each project.38 Commission guidance defines a fair 

market price as the price agreed upon by a buyer and seller, with neither 

under any compulsion to buy or sell and both having reasonable 

knowledge of relevant facts.39

The process for determining the price of a project begins when an affiliate 

and federal customer are developing a potential project for the program 

and ends when that project is added to the Procurement List (see fig. 6). 

In addition, the Commission recognizes 

that providing jobs to people who are blind or have severe disabilities may 

necessitate employing a less than fully productive workforce, which could 

raise an affiliate’s costs. As a result, according to Commission staff, a 

project’s price under the AbilityOne Program is not necessarily the lowest 

possible price, but it also isn’t the highest possible price. Commission 

guidance holds that the fair market price should include the CNA fee.

 

38See 41 U.S.C. § 8503(b) and 41 C.F.R. § 51-2.7(a). 

39 AbilityOne Commission, Procurement Guide (Arlington, VA.: May 21, 2012), p. 18.

The AbilityOne 

Commission Has 

Final Approval of 

Project Prices, but 

Procedures Could 

Be Strengthened

The Commission’s Review 

and Approval of Price 

Recommendations for 

New Projects Lacks 

Transparency
 

Page 29 GAO-13-457 Review of the AbilityOne Program 

Figure 6: AbilityOne Commission’s Pricing Review Process for Projects Proposed as Additions to the Procurement List
 

Page 30 GAO-13-457 Review of the AbilityOne Program 

Commission staff review the CNA pricing package in step 3 of the 

process. This review is a key control intended to ensure a fair market 

price. Between January 1, 2012 and December 10, 2012, the 

Commission received 336 new packages for price review. As shown in 

figure 7, staff recommended 78 to Commission members for final 

approval (23 percent). Staff rejected the pricing proposed in the other 258 

pricing packages (77 percent), primarily because of insufficient 

documentation, but in some instances because they found the price too 

high. The CNAs and affiliates have the option of revising and resubmitting 

the rejected packages. After working with the CNAs, affiliates, and 

customers, as necessary, to produce better documentation or a revised 

price, staff recommended that Commission members approve the revised 

packages of 116 proposals. For the last several years, the Commission 

has approved all pricing packages the staff have recommended because 

they agreed with their staffs’ recommendations.

Figure 7: Staff Decisions on the 336 New Pricing Packages, Jan. 1, 2012 – Dec. 10, 

2012

Commission staff told us that they consider various factors when 

reviewing recommended prices, such as whether negotiations between 

the federal customer and affiliate are sufficiently documented. Staff also 

told us that they conduct research to determine whether the 

recommended price in a project addition package conforms with the 

pricing for similar goods and services available from public sources, and if 

not, whether the project addition package contains a sufficient 

explanation for these differences. Commission staff also told us that they 

conduct these reviews in accordance with written policies and 

procedures, but acknowledged that these instructions are not sufficiently 

explicit and transparent. Such limitations can make it difficult for the CNAs

and affiliates to understand how and why decisions are made. CNA 

managers and some affiliates told us, for example, that they sometimes 
 

Page 31 GAO-13-457 Review of the AbilityOne Program 

do not understand the Commission’s price reviewing procedures and by 

extension, its reasons for rejecting prices. This lack of understanding 

about Commission reviews of recommended prices may partially explain 

the relatively high rejection rate of initial packages (see fig. 7). More 

explicit and transparent written policies and procedures on pricing reviews 

might include, for example, a checklist of what Commission staff should 

look for when assessing prices and a list of red flags that could indicate 

when recommended prices might be too high. Clearly-communicated 

price review procedures, including a discussion about the protocols the 

Commission uses to review pricing packages, could result in betterprepared pricing packages and therefore fewer rejections and less 

rework.

According to AbilityOne policy, all projects that extend beyond a single 

contract period must include a mechanism for adjusting the price. All 

parties involved—the affiliate, the federal customer, the CNAs, and the 

Commission—must agree on the mechanism. According to CNA officials, 

periodic negotiations between the affiliate and the customer are the most 

common price revision mechanism.40 If a price revision conforms to the 

originally approved mechanism, the affiliate and customer implement the 

revision without seeking Commission approval or submitting 

documentation of the revision to the Commission. However, if the change 

in price does not conform to the originally approved mechanism, 

Commission policy directs affiliates to prepare a price revision request 

package, which the CNA submits to the Commission for staff approval.41

Between January 1, 2012, and December 10, 2012, Commission staff 

reviewed 569 packages for non-conforming price revisions (see fig. 8). 

Commission staff initially approved 216 of these packages (38 percent) 

and, after a subsequent review, approved an additional 157. Commission 

staff rejected 196 of the price revision packages, none of which had been 

 

40 Allowable price change mechanisms for products include (1) conducting a new round of 

market research and negotiating a new price; (2) a price index related to the major raw 

material or the end product; (3) an adjustment based on price changes published 

quarterly; and (4) market surveys comparing AbilityOne retail prices to commercial retail 

prices for similar commercial products.

41 Common reasons for nonconforming price revisions are a change in the scope of work 

of a project, such as adding new equipment or a new facility to be served, or 

unanticipated, rapid changes in the price of raw materials.

The Commission’s Pricing 

Revision Process Has Not

Ensured Approval of All 

Price Revisions
 

Page 32 GAO-13-457 Review of the AbilityOne Program 

resubmitted at the time of our review. Commission staff told us that they 

might reject a price revision for a variety of reasons. Staff might see an 

anomaly in the request, such as a price that is increasing much faster 

than either (1) the original terms of the contract specified for future year 

price changes or (2) research indicates that it should be changing. 

Affiliates and their federal customers have the option to resubmit their 

requests with additional information or clarifications.

Figure 8: Staff Decisions on the 569 Price Revision Packages, Jan. 1, 2012 – Dec. 

10, 2012

Commission staff and CNA officials reported that they do not have 

procedures in place to ensure that affiliates comply with the policy that 

affiliates report to the Commission, through their CNA, any price revisions 

that do not conform with approved contract pricing mechanisms. If the 

Commission becomes aware of unreported price revisions, staff told us 

that they contact the affiliate and federal customer to attempt to resolve 

the situation, typically by asking for an immediate price revision package. 

Commission staff told us that unreported price revisions are a recurring 

problem, and provided us with three examples of price increases that 

should have been reported between 2 months and 19 years ago. 

Although they were not able to estimate the number of times such 

unreported increases occurred, they said that its recurring nature causes 

them concern. CNAs collect information on current prices, but the 

Commission does not require them to submit this information to the 

Commission. If the Commission had this information, it could 

electronically compare the current prices to the data it maintains on the 

approved prices and thus have assurances that controls were met. 

Failure to submit price revision requests to the Commission before raising 

prices (1) negates the Commission’s internal controls that ensure that 

affiliates are charging fair market prices and (2) means that the 

Commission does not have accurate data regarding the prices that are 

actually being used within the program.
 

Page 33 GAO-13-457 Review of the AbilityOne Program 

The AbilityOne Program is one of many federal programs designed to 

help people with disabilities find employment. It is the single largest 

source of employment for the blind and others with severe disabilities. 

This program’s unique public-private structure was set up more than 

seven decades ago when federal purchasing was simpler and much 

smaller in scale. Today, billions of federal procurement dollars flow 

through the program every year and tens of thousands of people who are 

blind or have severe disabilities are employed through it.

The Commission’s oversight of the CNAs is hampered by limitations in its 

monitoring procedures and in its authority over their operations. 

Developing a written agreement between the Commission and each CNA 

that specifies key expectations for the CNAs and oversight mechanisms 

could improve program accountability. It would be important to work to 

achieve an agreement within a reasonable period of time, such as 18 

months. In the event that an agreement cannot be reached, it is important 

to identify in advance appropriate next steps for program changes by the 

Commission to establish adequate oversight and accountability for the 

AbilityOne program.

In addition, there are specific areas where the Commission needs to 

establish adequate oversight procedures to better help ensure program 

integrity, transparency, and effectiveness. These include:

• obtaining reports from CNAs on alleged misconduct and internal 

control violations to ensure that any appropriate corrective actions are 

taken,

• overseeing CNA procedures for assigning projects to affiliates to help 

ensure transparency and equity,

• developing more explicit and transparent written protocols for pricing 

reviews, and

• reviewing pricing packages to ensure fair market value.

Finally, the AbilityOne program does not have an independent IG. Without 

an independent IG, this major procurement program lacks an office to 

independently audit and investigate waste, fraud, and abuse and to make 

recommendations for enhancing program integrity and operations.

To enhance program effectiveness, efficiency, and integrity in the 

AbilityOne Program, Congress may wish to consider establishing an 

independent inspector general for the program with the authority to audit 

and investigate the Commission and the CNAs.

Conclusions 

Matter for 

Congressional 

Consideration 
 

Page 34 GAO-13-457 Review of the AbilityOne Program 

To promote greater accountability for program effectiveness, efficiency, 

and integrity, the Chairperson of the U.S. AbilityOne Commission should 

direct the AbilityOne Commission to enter into a written agreement with 

each CNA within reasonable established time frames, such as within 18 

months. The agreements should establish key expectations for each CNA 

and mechanisms for the Commission to oversee their implementation and 

could cover, among other things:

• expenditures of funds,

• performance goals and targets,

• governance standards and other internal controls to prevent fraud, 

waste, and abuse,

• access to data and records,

• consequences for not meeting expectations, and

• provisions for updating the agreement.

If the Commission is unable to enter into such a written agreement with 

either CNA, the Commission should take steps to designate a CNA that is 

willing to enter into such an agreement or seek legislation that would 

require such an agreement as a prerequisite to designation as a CNA.

To further improve oversight and transparency in the AbilityOne Program, 

the Chairperson of the U.S. AbilityOne Commission should:

• Routinely obtain from the CNAs any audits and reports of alleged 

misconduct or other internal controls violations, and information on 

corrective actions taken by the CNAs.

• Take additional action to better ensure that the CNAs’ processes of 

assigning projects to affiliated agencies result in a transparent and 

equitable distribution. Such action could include one or more of the 

following:

• further developing its policy to specify procedures CNAs should 

follow to ensure equity and transparency in project assignment 

decisions,

• developing protocols for how the Commission will review CNA 

project assignment procedures to ensure their alignment with the 

Commission’s policy, or

• performing a study to determine if and how the distribution of 

projects among affiliates affects the number of jobs for people who 

are blind or have severe disabilities.

• Develop more explicit and transparent written procedures for how 

Commission staff review pricing packages and clearly communicate 

these procedures to affiliates and the CNAs. Such communication 

Recommendations for 

Executive Action
 

Page 35 GAO-13-457 Review of the AbilityOne Program 

might also highlight the most common reasons that pricing packages 

are rejected by Commission staff.

• Require the CNAs to provide current pricing information to enable the 

Commission to better identify instances when current prices differ 

from approved prices.

We provided a draft of this report to the AbilityOne Commission, NIB, and

NISH for review and comment. The Commission’s comments are 

reproduced in appendix II, NIB’s comments are reproduced in appendix 

III, and NISH’s comments are reproduced in appendix IV. Technical 

comments from all three agencies were incorporated as appropriate.

In their written comments, the Commission and the two CNAs agreed with 

our matter for Congressional consideration and recommendations for 

executive action. They also provided additional information and disagreed 

with several findings. We subsequently modified the report in a few 

places to provide further clarification.

With regard to our matter for Congressional consideration about 

establishing an independent Inspector General (IG) for the program, the 

Commission concurred that there are benefits to having an independent 

entity conduct audits where needed. The Commission added that in its 

view, the creation of an IG would have to be budget neutral given the 

already scarce program funding for the Commission.

The Commission concurred with our recommendation to enter into a 

written agreement with each CNA and added that it will pursue these 

agreements once it has updated and enhanced its regulations to describe 

its authority and oversight with respect to the CNAs. The Commission 

added that it anticipates completing the written agreements in 18 to 24 

months. 

The Commission concurred with our recommendation to routinely obtain 

from the CNAs any audits and reports of alleged misconduct or other 

internal control violations, and information on corrective actions taken by 

the CNAs. The Commission added that it will establish or enhance and 

disseminate policies and procedures regarding CNA oversight and 

internal controls and anticipates that this will be completed in fiscal year 

2014.

While NIB agreed with our recommendations to the Commission, NIB 

disagreed with our finding that the Commission has limited control over 

CNA spending. NIB highlighted several tools which it believes show that 

Agency and CNA 

Comments and Our 

Evaluation 
 

Page 36 GAO-13-457 Review of the AbilityOne Program 

the Commission’s controls are sufficient, such as the Commission’s ability 

to set fee limits for the CNAs and provide guidance for, and review of, 

CNA budgets and performance. The report discusses these tools and 

presents evidence as to why we believe they are not sufficient for the 

Commission to oversee CNA spending. Both CNAs cited other controls 

that contribute to the oversight of their budgets. We cited examples of 

these other controls in the report, including IRS reporting requirements for 

nonprofit agencies and such CNA internal controls as undergoing annual 

independent financial audits. However, IRS and CNA internal controls 

cannot replace Commission oversight because the Commission is the 

entity that is most knowledgeable about the program’s regulations and is 

ultimately responsible for ensuring compliance with these regulations and 

for the stewardship of the program. 

The Commission and the two CNAs commented on CNA reserve levels. 

The Commission provided some additional clarification on its written 

guidance for reserves and actions taken, which we incorporated into the 

report. NISH disagreed with the statement that the CNAs have been 

accumulating reserve funds. However, our analysis of certified financial 

statements for NISH and NIB shows that (1) the annual reserves for NISH 

for fiscal years 2008 to 2012, as well as its reserve projection for fiscal 

year 2013, continued to grow and (2) NIB’s reserves declined slightly in 

2011and 2013 (see fig. 3). NISH also disagreed with the statement that 

the CNAs have not provided the Commission with financial analyses that 

support their levels of reserves and reserve policies. However, the 

statement in the report to which NISH refers actually focuses on actions 

of the Commission and we have clarified this in the report. This statement 

indicates that the Commission has not developed guidance about what 

the CNAs should consider when setting reserve policies nor determined 

what financial information the CNAs should provide to it to fully support 

their reserve levels. NISH and NIB cited the criteria they took to establish 

their reserve policies and levels in their comments. 

NISH disagreed with the Commission’s position that the Commission 

lacks the authority to require and enforce program improvements. During 

the course of our work, Commission officials noted that the Commission 

has very little explicit authority to regulate the CNAs and, as a result of 

this lack of authority, said they have not taken additional action to expand 

the Commission’s oversight in ways that may be beneficial to the 

program. They said that, without additional oversight tools, they have few 

ways to enforce regulations. For example, although they could remove a 

CNA as an administrator of the program for noncompliance or 

significantly reduce its fees, such approaches could be highly disruptive 

to the program and the people it serves. Thus, depending on the 
 

Page 37 GAO-13-457 Review of the AbilityOne Program 

infraction in question, they could be reluctant to use them. Because an 

agency’s interpretation of its regulatory authority under the laws it is 

charged with administering is generally to be afforded deference, we 

did not make any changes to our report. However, we note that it may 

be beneficial for the Commission to engage with NISH on this issue as 

it takes steps to implement our recommendations, particularly the one 

focusing on entering into written agreements.

NIB disagreed with our finding that the Commission has limited oversight 

and control over areas such as CNA performance, governance, and 

internal controls. NIB’s comments on this topic generally provided 

additional information about NIB’s governance structure and controls and 

did not directly address the Commission’s level of authority and control. 

However, in response to NIB’s comments, along with additional 

clarification from a NIB official, we revised the report to make clear that 

NIB does not allow board members who are executives or employees of a 

NIB affiliate to serve as a Board officer, but those individuals can serve on 

the Board. 

The Commission agreed with our recommendation that it take additional 

action to ensure that CNAs’ processes of assigning projects to affiliated 

agencies result in a transparent and equitable distribution. The 

Commission noted that it has already initiated a review of CNA 

assignment policies as part of a larger review of procedures across the 

entire AbilityOne Program and that it will build our recommendations into 

the deliberative process. The Commission added that the target 

completion date for this review and development of procedures is no later 

than June 2014. 

Both CNAs disagreed that their processes for assigning projects to 

affiliates were not transparent. NIB stated that the primary factor it uses 

when making assignment decisions is the potential to positively impact 

employment for people who are blind and NISH stated that it ensures 

transparency through several actions, including posting all notices of 

project opportunities on its website. However, we continue to believe that 

greater transparency is needed for the reasons stated in the report, 

including to address the concerns of some affiliates that: (1) they do not 

understand how the CNAs prioritize the criteria used to evaluate their 

proposals; (2) NISH applies its criteria inconsistently across its regions, 

and (3) NIB does not notify all of its affiliates about potential project 

opportunities it is considering for the program. NISH also stated that it 

disagreed with what it believed to be our assessment that CNA 

assignment processes are biased. We did not, however, state that these 
 

Page 38 GAO-13-457 Review of the AbilityOne Program 

processes are biased; rather, we stated that some affiliates view them as 

biased. Greater transparency can help organizations address concerns of 

bias. NISH also provided additional information about its assignment 

processes that we incorporated in the report as appropriate.

The Commission and NISH provided comments about the distribution of 

projects among affiliates. The Commission noted that it will increase its 

emphasis and attention to mentoring the smaller affiliates so that they can 

more fully participate in the program. The Commission also suggested 

that we note that factors other than an affiliate’s size can influence the 

number of projects affiliates are assigned in the program. We agree, but 

did not make any revisions to the report in this regard because we had 

already discussed such factors in the draft. NISH noted that it assigned 

more projects to its smaller affiliates in fiscal year 2012 than in prior 

years. However, because it is not clear how the distribution of projects 

among affiliates affects the creation of employment opportunities for 

people who are blind or have severe disabilities, it is not currently known 

whether assigning more projects to smaller affiliates is the most effective 

path for the program to pursue.

The Commission suggested that we modify the wording of our finding on 

the extent of the Commission’s knowledge about how project assignment 

affects employment opportunities for its target population. The 

Commission noted that, while it is presented with information on the 

number of employment opportunities a proposed project will generate, it 

does not track the number of overall employment opportunities realized. 

In response, we revised the wording to clarify that the Commission does 

not track how the program’s distribution of projects affects job creation for 

its target population. NIB reiterated several aspects about the process of 

adding projects to the Procurement List. In response to these comments 

we now more explicitly note that the Commission relies on CNA 

recommendations when adding projects to the Procurement List and 

votes on whether to approve CNA-recommended affiliates as project 

providers at the Procurement List addition stage. 

The Commission agreed with our two recommendations for Commission

actions to improve pricing reviews. However, the Commission took 

exception with our statement that Commission staff do not have written 

policies and procedures for reviewing pricing packages. The Commission 

stated that staff do have such written instructions and we confirmed this 

statement and revised the report to incorporate this information. 

Nonetheless, the Commission agreed with our assessment that its pricing 

review procedures are not sufficiently explicit or transparent and that this 

can make it difficult for the CNAs and affiliates to prepare acceptable 
 

Page 39 GAO-13-457 Review of the AbilityOne Program 

pricing packages. The Commission noted, however, that the extent to 

which Commission reviews of pricing packages can be transparent is 

limited by the fact that such reviews are often based upon sensitive 

information that is not releasable to the CNAs or affiliates. We agree, but 

continue to believe that the Commission can increase the transparency of 

its pricing review processes.

As agreed with your offices, we will send copies to the appropriate 

congressional committees, the Chairperson of the U.S. AbilityOne 

Commission, the President and CEO of NISH, the President and CEO of 

NIB, and other interested parties. In addition, this report will be available 

at no charge on the GAO web-site at http://www.gao.gov.

If you or your staff members have any questions regarding this report, 

please contact me at (202) 512-7215 or sherrilla@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. GAO staff who made major 

contributions to this report are listed in appendix V. 

Andrew Sherrill

Director, 

Education, Workforce and Income Security Issues
Appendix I: CNA Operating Expenses for 

Fiscal Year 2012 (in millions)

Page 40 GAO-13-457 Review of the AbilityOne Program 

Table 1: NISH Operating Expenses for Fiscal Year 2012 (in millions)

Type of Expense

a

 NISH costs

Grantsb $2.90

Personnel

Compensation of current officers, directors, trustees, and key employees 2.42

Other salaries and wages 32.45

Pension plan accruals and contributions 2.95

Other employee benefitsc 7.09

Payroll taxes 2.43

Subtotal for Personnel 47.34

Fees for non-employee services 

Management 0.00

Legal 0.98

Accounting 0.18

Lobbying 0.32

Professional fund raising 0.00

Investment management fees 0.16

Other 5.20

Subtotal for non-employee fees 6.84

Advertising and promotion 2.07

Offices expenses 2.11

Information technology 4.31

Occupancy 1.98

Travel 4.47

Conferences, conventions and meetings 1.85

Interest 0.02

Depreciation, depletion, and amortization 1.63

Insurance 0.18

Other expenses 

Bad debt 1.10

Miscellaneous 1.11

Total $77.92

Source: GAO analysis of IRS Form 990 data reported by the CNAs and additional information provided by NISH officials.

a The CNA fiscal year begins on October 1and ends on September 30.

b CNAs provide grants to their affiliates.

c 

d

In response to NISH’s clarification of its operational costs, we removed $31.57 million for 

subcontracting costs that are associated with federal contracts in which NISH was the prime 

Employee benefits include health, dental, life, and disability insurance.

Appendix I: CNA Operating Expenses for 

Fiscal Year 2012 (in millions)
Appendix I: CNA Operating Expenses for 

Fiscal Year 2012 (in millions)

Page 41 GAO-13-457 Review of the AbilityOne Program 

contractor. According to NISH officials, these costs are not required to be reported on the IRS Form 

990 as operational costs and NIB did not do so. 

Table 2: NIB Operating Expenses for Fiscal Year 2012 (in millions)

Type of Expense

a

NIB costs

Grantsb $0.43

Personnel

Compensation of current officers, directors, trustees, and key employees 1.41

Other salaries and wages 13.24

Pension plan accruals and contributions 1.11

Other employee benefitsc 1.38

Payroll taxes $1.04

Subtotal for Personnel 18.18

Fees for non-employee services 

Management 0.00

Legal 0.25

Accounting 0.10

Lobbying 0.00

Professional fund raising 0.00

Investment management fees 0.01

Other 2.18

Subtotal for non-employee fees 2.54

Advertising and promotion 2.73

Offices expenses 0.90

Information technology 0.91

Occupancy 1.23

Travel 1.12

Conferences, conventions and meetings 0.58

Interest 00.0 

Depreciation, depletion, and amortization 1.08

Insurance 0.11

Other expenses (listed by NIB) 

Training 0.50

Service Bureaud 0.49

Dues and Subscriptions 0.49

Inventory obsolescence 0.26

Other 0.60

Total $32.15
Appendix I: CNA Operating Expenses for 

Fiscal Year 2012 (in millions)

Page 42 GAO-13-457 Review of the AbilityOne Program 

Source: GAO analysis of IRS Form 990 data reported by NISH and additional information provided by NIB officials.

a The CNA fiscal year begins on October 1 and ends on September 30. 

b CNAs provide grants to their affiliates.

c 

d NIB’s service bureau costs are for its outsourced data entry and call center.

Employee benefits include health, dental, life, and disability insurance.
Appendix II: Comments from the 

U.S. AbilityOne Commission

Page 43 GAO-13-457 Review of the AbilityOne Program 

Appendix II: Comments from the 

U.S. AbilityOne Commission
Appendix II: Comments from the 

U.S. AbilityOne Commission

Page 44 GAO-13-457 Review of the AbilityOne Program 
Appendix II: Comments from the 

U.S. AbilityOne Commission

Page 45 GAO-13-457 Review of the AbilityOne Program 
Appendix II: Comments from the 

U.S. AbilityOne Commission

Page 46 GAO-13-457 Review of the AbilityOne Program 
Appendix III: Comments from the 

National Industries for the Blind

Page 47 GAO-13-457 Review of the AbilityOne Program 

Appendix III: Comments from the 

National Industries for the Blind 
Appendix III: Comments from the 

National Industries for the Blind

Page 48 GAO-13-457 Review of the AbilityOne Program 
Appendix III: Comments from the 

National Industries for the Blind

Page 49 GAO-13-457 Review of the AbilityOne Program 
Appendix III: Comments from the 

National Industries for the Blind

Page 50 GAO-13-457 Review of the AbilityOne Program 
Appendix IV: Comments from NISH

Page 51 GAO-13-457 Review of the AbilityOne Program 

Appendix IV: Comments from NISH
Appendix IV: Comments from NISH

Page 52 GAO-13-457 Review of the AbilityOne Program 
Appendix IV: Comments from NISH

Page 53 GAO-13-457 Review of the AbilityOne Program 
Appendix IV: Comments from NISH

Page 54 GAO-13-457 Review of the AbilityOne Program 
Appendix V: GAO Contact and Staff 

Acknowledgements

Page 55 GAO-13-457 Review of the AbilityOne Program 

Andrew Sherrill (202) 512-7215 or sherrilla@gao.gov

In addition to the contact named above, Assistant Director Bill Keller, 

Nancy Cosentino, Julie DeVault, Sara Pelton, and Paul Wright made 

significant contributions to this report. Assistance, expertise, and 

guidance were provided by Kurt Burgeson, David Chrisinger, Michele 

Grgich, Alex Galuten, Kristine Hassinger, Steve Lord, Mimi Nguyen, Jerry 

Sandau, William Shear, Walter Vance, Monique Williams, and William 

Woods.

Appendix V: GAO Contact and Staff 

Acknowledgements 

GAO Contact 

Staff 

Acknowledgments 

(131160)
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