A new Final Rule will introduce the support of price competition in AbilityOne Program contracts. The Committee for Purchase from People Who Are Blind or Severely Disabled, which operates as the U.S. AbilityOne Commission, published a Final Rule in late March clarifying the Commission’s authority to consider different pricing methodologies. The rule went into effect on April 22, 2024. Since the Program’s inception in the 1930s, price hasn’t been a major factor in awards, unlike the rest of the government contracting world. Let’s talk about this new legislation and how it impacts government contractors.
What is the AbilityOne Program?
Before we launch into the Final Rule, we’ll briefly define the AbilityOne Program and its importance in procurement.
The AbilityOne Program (formerly known as the Javits-Wagner-O’Day Act) is one of the nation’s largest employers for people who are blind or have significant disabilities. Through this program, the government can acquire fair market-priced U.S. manufactured products and services.
The AbilityOne Program employs nearly 37,000 people who are blind or have significant disabilities, including 2,500 veterans. Representing over 40 government agencies and operating at more than 150 military base supply centers, this program is an integral part of the procurement process. Not only because of its large presence, but because government agencies are required to purchase offerings through AbilityOne. Government contractors who aren’t AbilityOne must also be aware of what they’re planning to offer, because they cannot sell Essentially the Same Products as AbilityOne contractors.
So why are we looking to change such a far-reaching program? As one of the largest AbilityOne customers, the Department of Defense (DoD) took a closer look at the way the AbilityOne Program explores opportunities for competition among qualified Non-Profit Agencies (NPAs), and how they can modernize their approach to procurement. This led to a panel established in the 2017 National Defense Authorization Act (NDAA), and now, a Final Rule today. Let’s dive into this final rule.
Breaking Down the Final Rule Supporting Competition in the AbilityOne Program
Before the Final Rule, a federal agency would bring a contract opportunity to qualified Central Non-Profit Agencies (CNAs). The CNAs would respond to this opportunity with their bids based on past performance and technical capabilities, not price. Once the chosen NPA designated a supplier, the NPA and government would negotiate a fair price with the AbilityOne Program. This process will change with the new legislation.
The Final Rule will allow the Commission to consider different pricing methodologies in the procurement decision and establish the initial Fair Market Price (FMP) for Procurement List (PL) additions and changes to the FMP.
With this rule, competition inclusive of price can be requested for new and existing defense contracts over $50 million and civilian contracts over $10 million. However, competition can only be requested by a senior official or in the DoD, a flag or general officer. The AbiltiyOne Commission ultimately has final authority. Other factors and subfactors such as technical capability, past performance, and training are also going to be weighed along with price.
In addition to pricing competition, this new Final Rule introduces two more changes to the way the AbilityOne Program operates. The Final Rule will permit a CNA to distribute certain high-dollar services orders on a competitive basis to the authorized nonprofit agency (NPA) after considering price and non-price factors. And lastly, the Final Rule clarifies the AbilityOne Commission’s authority to authorize and deauthorize NPAs as mandatory sources.
Why was this AbilityOne Final Rule Created?
As we mentioned above, the NDAA created a panel in 2017 to identify opportunities and vulnerabilities in DoD contracting within the AbilityOne Program. The idea was to recommend improvements in the oversight, accountability, and integrity of the program. The panel was specifically directed to make recommendations on how employment opportunities could be increased for individuals who are blind or have significant disabilities, and explore opportunities for competition among qualified NPAs.
The panel completed some pilot tests to work on competitive selection of NPAs to increase equitable selection. Although there were some set-backs, the Commission agreed that including price as a factor, paired with a “customer focused” NPA selection, was beneficial for both the federal customer and the Program.
Concerns About the AbilityOne Final Rule
Naturally, there are some concerns about this change. Some nonprofits said a major benefit of the previous program structure was once a contract is on the procurement list, there was no re-competing, just a price change every 5 years. Other contractors currently in the program worry that this new rule will overpower the main program goal of helping individuals who are blind or have significant disabilities.
There are still other factors in this new procurement process that must be evaluated before competition is considered, so only time will tell how fully price will be weighed once the guidance for implementation of this Final Rule is released.
Are You Staying Updated on Government Regulations?
As a government contractor, you may find it overwhelming to stay on top of all the changes related to your contract, whether it’s a regulation change or a program update. You’re understandably busy worrying about contract maintenance as well as finding and winning opportunities for your company.
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