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Agencies Cannot Circumvent AbilityOne by Bundling, GAO Confirms

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Koprince Law LLC

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The FAR mandates that agencies use the AbilityOne program to award contracts for items on the AbilityOne procurement list to qualified nonprofits. The purpose of the program is to increase employment and training opportunities for persons who are blind or have other severe disabilities.

With rare exceptions, when an item is on the AbilityOne procurement list, an agency has no choice–it must purchase through AbilityOne, even where the AbilityOne items are included in the procurement of larger services.  The GAO recently sustained a protest where the GSA awarded a courthouse lease without requiring that the associated custodial services be procured from an AbilityOne nonprofit.

In Goodwill Industries of the Valleys, B-415137 (November 29, 2017), GAO considered whether GSA must use the AbilityOne mandatory source for the custodial service requirements at a courthouse in Charlottesville, Virginia.

The courthouse’s custodial services had been added to the AbilityOne procurement list in 2004. Since that time, Goodwill Industries of the Valleys, or a predecessor AbilityOne nonprofit, had performed the services. The courthouse was owned by VVP, LLC, which had leased the building to GSA for several years. During that time, GSA had separately contracted with Goodwill for the custodial services.

In 2016, Goodwill learned that GSA intended to issue a new, “full service” lease to VVP, which would include the custodial services. Goodwill filed a GAO bid protest, contending that the inclusion of the custodial services in VVP’s lease violated the Javits-Wagner-O’Day Act (JWOD Act) and the AbilityOne program because Goodwill is the mandatory source of custodial services in the courthouse.

The AbilityOne program implements the JWOD Act, whose goal is to “‘increase employment and training opportunities for persons who are blind or have other severe disabilities’ through authorization of the noncompetitive acquisition of specified products and services from qualified nonprofit agencies (NPAs) that employ persons with such disabilities.”  The U.S. AbilityOne Commission maintains the procurement list for required purchases under the JWOD Act.

The JWOD Act states that agencies “shall procure” products and services from an NPA if the product or service is on the list. The list, published in the Federal Register, provides the specific services (in this case, custodial services at the Charlottesville courthouse) and a specific NPA to provide them (in this case, Goodwill).

At GAO, GSA tried a number of arguments to overcome the fact that it had not complied with AbilityOne requirements.

Among those arguments, it contended that only the AbilityOne commission can investigate and address violations of the AbilityOne program under a regulation stating that “violations of the JWOD Act or these regulations . . . shall be investigated by the [AbilityOne Commission].”  GAO disagreed, noting that its bid protest jurisdiction, as found in the Competition in Contracting Act, allows for GAO to decide any “alleged violation of a procurement statute or regulation.”

GSA also asserted that the AbilityOne rules don’t apply to real property leases. GAO answered that a real property lease is a contract, so the procurement statutes, including AbilityOne rules, still apply. Additionally, “the plain language of the JWOD Act and its implementing regulations provides no exception for leases.” Rather, “the language of the Act broadly applies to all procurements that are conducted by ‘an entity of the Federal Government'”, with the only statutory exception “being applicable to acquisitions from Federal Prison Industries, Inc.”

GAO wrote that: (1) the custodial services were on the AbilityOne Commission’s procurement list; (2) the JWOD Act requires purchasing from the designated organization if the service is on the list; and (3) Goodwill was the organization on the list.

GAO then explained that bundling AbilityOne products or services into a larger procurement does not allow an agency to evade the mandatory AbilityOne requirements:

[T]he Act and its implementing regulations expressly provide that, when services on the AbilityOne procurement list are included in the procurement of larger services, the contracting activity “shall require” the contractor for the larger services to procure the AbilityOne services from the organization designated by the AbilityOne Commission. In short, GSA is leasing a building that requires custodial services and, rather than procuring those services through the mandatory source that has been designated pursuant to the JWOD Act (or directing the lessor to do so), GSA has bundled the janitorial services into the lease without regard to the Act.

GAO sustained the protest and recommended that GSA contract the custodial services separately with Goodwill or direct VVP to subcontract with Goodwill for the custodial services. GAO also ordered GSA to reimburse Goodwill’s costs in bringing the protest.

As the Goodwill Industries decision demonstrates, the AbilityOne preferences are powerful. Agencies cannot evade them by bundling goods or services on the AbilityOne procurement list into larger acquisitions.


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