The U.S. Office of Special Counsel (OSC) today informed the President that the U.S. AbilityOne Commission’s findings from its investigation into whistleblower allegations of widespread noncompliance by the Commission’s contract recipients do not appear reasonable. The Commission’s own review documented high rates of contractor noncompliance, gaps in policy and recordkeeping, and delayed action on serious complaints, yet it concluded that the allegations were unsubstantiated. OSC finds that determination unreasonable.
In FY 2025, the AbilityOne Program oversaw more than $4.7 billion in products and services, supported through federal purchases from qualified nonprofit agencies. These taxpayer-funded contracts supported approximately 41,000 jobs for individuals who are blind or have significant disabilities. To participate in the program, nonprofits must meet statutory and regulatory requirements, including ensuring that individuals with qualifying disabilities perform at least 75 percent of all direct labor hours used to complete their contracts.
The whistleblower, a Compliance Specialist at the AbilityOne Commission, reported that nonprofit agencies continued receiving AbilityOne contracts despite persistent noncompliance with these statutory and regulatory requirements. The whistleblower also alleged that the Commission lacked sufficient policies and procedures to identify and respond to violations and was failing to address longstanding deficiencies.
The Commission’s investigation revealed significant deficiencies in the AbilityOne compliance program including gaps and weaknesses in the program’s policies, inconsistent and nontransparent application of those policies, and insufficient recordkeeping amid high rates of compliance failures.
The findings demonstrate that noncompliance and uneven oversight affected the AbilityOne Program for years. The investigation looked at FY 2013–2022 and found 50 nonprofits that failed every review for a decade. In FY 2022, 87 percent of participating nonprofits had at least one adverse compliance finding. The investigation also verified the Commission’s report to Congress of 86 percent compliance with direct-labor requirements for FY 2020, but it found enforcement “inconsistent, nontransparent, and unevenly applied,” including pandemic waivers granted for years that predated the pandemic. Recordkeeping of failure notices and corrective actions was deficient.
In one case, employees of Arbor Products, Inc. alleged in 2017 that the nonprofit had concealed use of nondisabled workers during an on-site inspection. The Commission did not act on the complaint until 2022. Only after the nonprofit fell behind on program fees did a heightened review find that the IRS had revoked its 501(c)(3) status. The Commission later deauthorized it. The investigation recommended that the Commission assess whether that delay was reasonable; the Commission did not.
The agency's investigative report also did not tally the amount of contract work that went to noncompliant nonprofits, leaving the fiscal impact unclear.
Despite the deficiencies it documented, the Commission determined the allegations were not substantiated. It focused on whether a statute or rule was violated and did not assess whether the same facts met the threshold for gross mismanagement or a gross waste of funds. It also concluded that no legal violations occurred despite evidence that noncompliant nonprofits continued to receive contracts and that waivers were granted improperly.
The Commission did adopt new compliance policies and is in the process of updating its electronic database to better capture relevant data. However, it has not completed a formal training program for compliance reviews; it has not put in place a method to verify nonprofit status beyond self-certification; and it deleted instructions for direct submission from its employee-complaint policy.
“AbilityOne exists to create real jobs for people who are blind or have significant disabilities,” said Special Counsel Charles Baldis. “When large numbers of contractors fail basic program rules for years and the compliance system cannot show those failures were fixed, that is not a paperwork problem. The Commission documented serious weaknesses and then declined to substantiate the whistleblower’s allegations to that effect. That conclusion is not reasonable. It is gratifying that the whistleblower’s disclosure has prompted a needed overhaul, but that work is not finished.”