Articles

Client Alert: The Quiet Storm

How Federal Contractors Will Be Impacted By Opposing Views On Statutory Affirmative Action Requirements Regarding Individuals With Disabilities

The new Administration’s recent Executive Order making DEI programs in Federal agencies illegal as to race, gender and sexual orientation very notably did not mention eliminating affirmative action requirements for individuals with disabilities. The reason is probably because affirmative action plans for individuals with disabilities are statutory in nature and, thus, cannot be eliminated by an executive order. Specifically, Section 503 of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.) requires Federal contractors with contracts valued at over $50,000 to adopt affirmative action plans to recruit, hire, promote, and retain employees with disabilities.[i]

The way the Administration chooses to deal with this dilemma could not come at a more opportune time. Currently, there are strong opposing views among policymakers within the disability community on the best way to expand employment opportunities for people with disabilities within the Federal contracting workforce.

A growing number of advocates argue that the present system of providing employment opportunities for people with disabilities through the current Federal procurement laws amounts to nothing more than keeping them in segregated employment settings which fails to sufficiently incentivize Federal contractors to promote people with disabilities into supervisory and managerial positions. Whichever position the Administration chooses to support will have a significantly different impact on Federal contractors, particularly as to the level and type of future job opportunities they will be required to provide to people with disabilities.

Traditional View: Continue with the AbilityOne Program

On one side of the argument, there are policymakers who prefer to continue with the status quo, which is guided by the Javits-Wagner-O’Day (“JWOD”) Act of 1938. (41 U.S.C. 46-48c) That Act established the Committee for Purchase from People Who Are Blind or Severely Disabled as an independent Federal agency and authorized that entity to administer a program called “AbilityOne” which operates as the U.S. AbilityOne Commission®. Nonprofit agencies designated by the Commission are mandatory sources of supply for all entities of the U.S. Government for commodities and services.

The U.S. AbilityOne Commission maintains a “Procurement List” of products and services that have been placed in the AbilityOne Program, and Federal agencies must purchase supplies or services on the Procurement List at prices established by the U.S. AbilityOne Commission from designated nonprofit agencies as long as those supplies and services are available within the period required.

The JWOD Act requires that at least 75 percent of a participating nonprofit agency’s total direct labor hours must be performed by persons who are blind or have significant disabilities. AbilityOne is a priority program in Federal procurement, second only to the Federal Prison Industries (FPI) Program. In FY 2023 AbilityOne employed about 37,000 people who are blind or who have other significant disabilities through 429 nonprofit agencies affiliated with Ability One.

Impact on Federal Contractors

In March 2014, the Department of Labor adopted additional regulations that established an aspirational workforce utilization goal for people with disabilities to make up seven percent of the federal contractor workforce. 41 C.F.R. 60. In addition, Federal law allows the Department of Defense (DoD) prime contractors to receive credit toward their small business subcontracting goals if they subcontract with nonprofit agencies participating in the AbilityOne Program. See 10 USC 2410d. Also, some Federal agencies state in their contract solicitations that prime contractors will get a higher rating on their proposals if they utilize AbilityOne nonprofit agencies as subcontractors in non-traditional Procurement List roles.

Opposing View: National Council on Disability - “Phase Out the AbilityOne Program”

Meanwhile, the National Council on Disability (NCD) recommends that the AbilityOne Program be phased out. NCD is an independent federal agency of the U.S. Government that was established to provide recommendations to the President and Congress to enhance the quality of life for all Americans with disabilities and their families. NCD forcefully argues that the AbilityOne Program is outdated and no longer comports with a federal policy that prioritizes competitive integrated employment. In support of that point, NCD argues that the AbilityOne Program serves to concentrate workers with disabilities in segregated settings with nonprofit Federal contractors and statutory limits their upward mobility into supervisory and managerial positions.

Rather than focus on the JWOD Act, NCD stresses the enforcement and the strengthening of Section 503 of the Rehabilitation Act as a better alternative to enhance the plight of individuals with disabilities. First, Section 503 requires affirmative action plans that encourage the hiring of people with disabilities into integrated settings and advancing people with disabilities into leadership roles. In addition, Section 503 sets goals for people with disabilities to work across more than 45,000 federal contractors as opposed to the 429 nonprofit agency employers covered under the AbilityOne program.

Most importantly, in FY 2023, the number of AbilityOne employees, through its non-profit agencies, was about 37,000 people. However, NCD points out that in 2013, the Office of Federal Contract Compliance (OFCCP) estimated that strengthening Section 503 would lead to about 594,580 people with disabilities working for Federal contractors.

Thus, in a 2020 Report, the NCD recommended that the AbilityOne Program be phased out over a period of eight (8) years and that Congress should do so while at the same time modernizing the requirement under Section 503 that Federal contractors with contracts valued at over $200,000 hire people with significant disabilities, or who are blind, at competitive wages and at a certain minimum percentage of their workforce.

Other major recommendations made by NCD in its Report were that OFCCP should develop additional procedures beyond the compliance review process to better ensure compliance with the Section 503 written affirmative action requirements and that OFCCP should hire and train additional compliance officers to increase the number of compliance reviews conducted under Section 503.7.

Impact On Federal Contractors

Under the NCD recommendations, Federal contractors would have to develop affirmative action plans that encourage the hiring of people with disabilities into integrated settings and hiring them into positions that would include leadership roles. This would apply to all Federal contractors with contracts valued at over $200,000.

Federal contractors would be the main vehicle for integrating disabled people into the Government contracting workforce and, if the NCD recommendations are accepted, such contractors would be subject to more stringent compliance reviews with more compliance officers to conduct them.

However, these same contractors, pursuant to recent executive orders issued by the new Administration, would no longer be responsible for conducting compliance reviews based on race, gender, or sexual orientation.
 
How Will Congress And The Administration Manage This Issue?

The unknown factor here is where Congress and the Administration will come down on either of these positions. Advocates in the AbilityOne and NCD camps are in the process of educating Members of Congress (on both sides of the aisle) and the Administration about their respective positions. For the past five years, this brewing battle has been under the mainstream radar as other national issues have taken front and center. Although it is anyone’s guess as to how this issue will ultimately be resolved, Federal contractors should keep a guarded eye on the progress of this issue as it develops.