US Law Favoring Vendors With Disabled Staff Tested by E-Commerce

When a doctor first told Barry Jones he had glaucoma, he knew his decades of driving 18-wheelers would soon be behind him. He also got scared.

“I’m like, Who wants to hire somebody that’s visually impaired?” Jones, 61, said in an interview.

His local Veterans Affairs center pointed him to a job operating a die-cutting machine at Chicago Lighthouse Industries, where blind and visually impaired people manufacture wall clocks, calendars, and other items.

There, Jones and his 33 coworkers assemble and package up to 1,500 clocks a day at a bustling West Side factory, thanks in part to a little-known law that requires government agencies to buy from firms where people with disabilities handle at least 75% of the production work.

A new lawsuit alleges the government is shirking its responsibility under that law, threatening the livelihood of more than 5,000 people like Jones.

It’s the fourth claim of its kind in the last three years, and highlights what could become a deeper challenge: how the executive branch drags procurement into the 21st century while maintaining a longstanding tradition of using federal contracts to aid marginalized groups—one that some say can cause as much harm as good.

Josh Axelrod / Bloomberg Government

Barry Jones works on a clock at Chicago Lighthouse Industries

“I’m not trying to vilify our forefathers in the disability space, but from my perspective, to maintain these models today is trying to hold on to a model that is just antiquated and really out of touch with the rest of the disability community,” said Cyrus Huncharek, director of policy and advocacy at the not-for-profit National Down Syndrome Congress.

Prior to industrialization, Americans with disabilities had better job prospects in a country where farming was the dominant industry. But with the advent of the factory system, they were “driven out of the labor market,” according to Mike Rembis, director of the Center for Disability Studies at the University of Buffalo.

As more and more World War I veterans came home with disabilities, calls for their inclusion and employment gained steam.

That led in 1938 to the Wagner-O’Day Act, one of a raft of New Deal programs enacted to jump-start the economy and put people back to work. The act, sponsored by two New York Democrats, Sen. Robert Wagner and Rep. Caroline Love Goodwin O’Day, primarily focused on protections for blind or visually impaired laborers.

In 1971, Sen. Jacob Javits of New York pushed to expand the law to include people with severe disabilities, and the government authorized full-time staff for what would become the AbilityOne Commission, an agency to oversee the law’s implementation. As of last fiscal year, the commission had 30 full-time employees, a budget of more than $11 million, and plans to grow.

The renamed Javits-Wagner-O’Day Act requires government agencies to buy anything found on a special procurement list from approved vendors, sidestepping a key aspect of the federal contracting system: open market competition. Today, the list contains more than 18,000 products, from ballpoint pens to barricade tape to catheters.

The law supporting it is among several requirements and goals to funnel contracting dollars to economically or socially disadvantaged groups. A percentage of all federal contracts are reserved for small businesses owned by women, service-disabled veterans, and Black, Native, Asian Pacific, and Asian Americans, as well as businesses located within economically depressed zip codes.

Those set-asides have long faced “heavy scrutiny” from lawmakers or from firms eager to divert contracts to the private sector, according to Ben Brunjes, a policy fellow at the Small Business Administration.

But the AbilityOne program has also drawn fire from an unexpected corner: advocates for workers with disabilities who say it furthers a segregated and exploitative system. The National Council on Disability, an independent agency that makes recommendations to Congress and the president on behalf of people with disabilities, advocated in 2020 for the phaseout of the program.

In its place, the council recommended additional training on how to recruit employees with disabilities and a revamped procurement model, requiring most federal contractors to employ a minimum percentage of people with disabilities.

“No matter how you slice it or how good your intentions may be, this is a program that was created decades and decades and decades ago under the operating assumption that these folks with significant disabilities and people who are blind could not work in the private or mainstream economy,” said Huncharek, who worked at a nonprofit that helped shape the proposal.

Josh Axelrod / Bloomberg Government

Labels placed on products manufactured as part of the AbilityOne program.

Congress didn’t adopt the recommendations, but last year the Biden administration rejected prevailing labor standards that had allowed AbilityOne contractors to pay workers with disabilities less than minimum wage.

The National Federation of the Blind, the country’s oldest organization of blind Americans, has called the law that governs AbilityOne “well-intentioned but obsolete,” arguing in 2019 that it does not prepare workers with the digital skills needed for a modern workplace and runs counter to notions of integration, siloing workers with disabilities into separate shops.

The nonprofit has advocated instead for legislative proposals that would create tax credits for employers to hire and retain workers with disabilities, phase out sub-minimum wages, and support integrated workplace models. Those bills never gained traction in Congress.

Because the Javits-Wagner-O’Day Act has been around for so long, it’s created a broad network of vendors, workers, and vocal supporters.

Simone Cook, senior vice president of operations at Chicago Lighthouse, said she didn’t think the law could be weakened. “We won’t allow that to happen,” Cook told Bloomberg Government.

The lawsuit filed last month has its roots in the 2018 defense authorization law, which called for the General Services Administration, the government’s chief procurement arm, to create digital portals for agencies to shop for goods. GSA tapped Amazon, Overstock, and Fisher Scientific for a pilot program that began in 2020.

The portals operate much the same way for federal employees as Amazon does for any consumer poring through pages of similar products.

A key difference, though, is if an item the contracting officer seeks is on the procurement list, they are required to purchase AbilityOne products, regardless of the price of commercial alternatives deemed “essentially the same.”

During the e-commerce platform pilot, the portals displayed “essentially the same” commercial items if a user didn’t select the AbilityOne filter.

Agencies bought about 10 prohibited “essentially the same” products for every single AbilityOne product during three months of the pilot program, according to GSA data cited in the lawsuit.

“I have no idea how GSA got away with it,” said Meghan Douris, a lawyer at Seyfarth Shaw LLC who has represented AbilityOne vendors in court.

Now that GSA is readying a full launch of its e-commerce program, it issued a request for proposals in December for contracts that could last up to five years. The solicitation offered platforms the option to either “mark or restrict” commercial alternatives or just simply “identify, highlight, and promote” AbilityOne products.

The lawsuit contends that language wouldn’t give AbilityOne products preference in the shopping portals, thus violating the law.

The lead plaintiff is the National Industries for the Blind, which helps the AbilityOne Commission disburse contracts to NIB’s almost 100 partner firms across the country, including Chicago Lighthouse Industries. They and their co-plaintiffs want the Court of Federal Claims, where contracting disputes are heard, to order GSA to cancel the bid.

“When they came out with the draft RFP for this, we again saw that the language in there was not one that was really acceptable,” Kevin Lynch, president and chief executive officer of NIB, said.

In a move to resolve the dispute, GSA has asked potential bidders to acknowledge if it would be feasible to introduce a block-and-substitute feature where “essentially the same” products would be hidden and replaced with AbilityOne products.

The portals already employ similar technology to uphold other contracting mandates, such as a ban on products from certain foreign companies. And GSA’s last e-commerce system, which the new portals are replacing, had been using a block-and-substitute feature for AbilityOne products.

GSA did not respond to multiple requests for comment from Bloomberg Government. In a letter to NIB last December, the agency said the program “relies on ongoing education, training, and enforcement by agencies,” for compliance with the law, according to the lawsuit.

Judge David A. Tapp, who is presiding over the case, ordered the parties to let him know by March 23 if they can resolve the issue without litigation. If both sides can’t come to an agreement, the judge could force GSA to upend its e-commerce plans.

Three cases in the last three years have all bolstered the mandate, handing major victories to firms that employ workers with disabilities.

In one brought by Goodwill Industries of South Florida, the government tried to argue that the law provided leeway in buying some of its army uniform pieces from a commercial vendor. But the court disagreed, ruling that Goodwill “would be irreparably harmed” by the government’s attempt to “unilaterally carve out” exceptions to the law.

In a related case, a judge dismissed as “paper-thin” the government’s assertion that it should be allowed to introduce price competition for a Fort Meade base operations contract. And this month, the court ruled that yet another AbilityOne vendor, Sekri, deserved 100% of a ballistic vest parts contract, not the 50% the Defense Logistics Agency first attempted to give it.

NIB notes that it and its partner vendors employed more than 5,000 blind workers last fiscal year and paid more than $119 million in wages and benefits. The average hourly wage for an NIB-associated laborer is $13.49, according to the organization.

“If we don’t have the orders to support that employment, it’s just like any other industry: We have to furlough or lay off employees,” Ken Fernald, president and CEO of Association for Vision Rehabilitation and Employment, a co-plaintiff and NIB partner vendor, said.

Even if their case is resolved, it’s unlikely to be the last of its kind at the Court of Federal Claims.

“We’re going to see more protests coming down the line because AbilityOne vendors are getting smarter about dealing with the federal procurement process and they’re also now getting this body of case law,” said Jayna Rust, a partner at Thompson Coburn LLP who said she’s noticed an uptick in cases. “It’s only going to incentivize more efforts by them to have the government do what Congress has mandated.”

To contact the reporter on this story: Josh Axelrod in Washington at jaxelrod@bloombergindustry.com

To contact the editor responsible for this story: John P. Martin at jmartin1@bloombergindustry.com and
Amanda H. Allen at aallen@bloombergindustry.com