Federal disability employment program faced widespread compliance problems, whistleblower investigation finds

A federal agency that oversees a program intended to increase job opportunities for employees with disabilities may not be doing enough to ensure that its government contracts are supporting such workers, an investigation prompted by a whistleblower complaint found. 

Additionally, the Office of Special Counsel, which protects whistleblowers, in a letter to the president last week criticized the agency’s response to the investigation, arguing that officials have neglected to take appropriate actions. 

Through the AbilityOne program, federal agencies contract with nonprofits that employ workers with disabilities. The initiative supports jobs for 41,000 individuals and provided more than $4.7 billion in products and services to the federal government in fiscal 2025, according to its website. For example, all disposable gloves for the Transportation Security Agency come from organizations that participate in the program. 

Nonprofits are eligible for AbilityOne if at least 75% of their “total direct labor hours” are performed by workers who are blind or have “significant disabilities.” The Bureau of Labor Statistics reported that in 2025 the employment rate for people with a disability was 22.8% compared with 65.2% for those without a disability. 

A compliance specialist at the AbilityOne Commission, however, submitted a complaint to the OSC alleging that more than 50 participating nonprofits in a sample of 120 still received millions in contracts even though they failed to meet a program requirement during their last review. 

This prompted an investigation by the AbilityOne inspector general that found:

• In fiscal 2022, 87% of participating nonprofits were out of compliance with at least one program requirement. 
• There were 50 nonprofits that failed every compliance review between fiscal 2013 and 2022. 
• The agency did not act on a 2017 complaint by employees at Arbor Products, Inc., which alleged that the organization during an onsite visit “had deceived compliance inspectors into believing that blind or disabled employees were performing all direct labor,” until 2022. At that time, the entity became delinquent in paying program fees, lost its nonprofit status and was kicked out of the program. 

Based on the investigation, however, AbilityOne reported that the whistleblower’s allegations were not substantiated and that no violations of law, rule or regulation occurred — perplexing OSC officials. 

“AbilityOne exists to create real jobs for people who are blind or have significant disabilities. 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,” said Special Counsel Charles Baldis in a statement. “The Commission documented serious weaknesses and then declined to substantiate the whistleblower’s allegations to that effect. That conclusion is not reasonable.”

OSC officials noted that AbilityOne is overhauling its compliance practices and procedures, but they also cautioned that the agency does not appear to have made progress on two IG recommendations: to establish a training program for Commission employees on performing compliance reviews with annual refreshers and to improve the method for verifying the continued nonprofit status of program participants beyond annual self-certification. 

Officials from the AbilityOne Commission in a press release last week disputed OSC’s characterizations.  

“The Commission determined that the issues identified reflected systemic challenges and historical inconsistencies in a large, decentralized program — not intentional disregard of statutory mandates,” they wrote. “Many of the compliance concerns cited by OSC occurred during periods of operational disruption, including the pandemic, during which temporary flexibilities were granted in good faith and in consultation with relevant stakeholders. It is important to emphasize that recognizing areas for improvement does not equate to finding gross mismanagement, gross waste or statutory violations.”

Regarding the IG recommendations, the officials pointed to a congressionally mandated oversight panel that previously reported that AbilityOne’s workforce is appropriately trained but that the underlying issue is there aren’t enough staffers. They also contended that the agency “has historically followed standard federal practice in accepting IRS determinations and [self-certifications] from participating nonprofit agencies.”