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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

January 2007: 

Federal Disability Assistance: 

Stronger Federal Oversight Could Help Assure Multiple Programs' 
Accountability: 

GAO-07-236: 

GAO Highlights: 

Highlights of GAO-07-236, a report to congressional requesters 

Why GAO Did This Study: 

Congress has created 20 federal employment-related programs that are 
aimed at helping people with disabilities obtain jobs. Little is known 
about the effectiveness and the management of some of these programs. 
GAO was asked to review four of these programs; the Department of 
Education (Education) oversees three—Projects with Industry (PWI), 
Supported Employment State Grants, and Randolph-Sheppard. An 
independent federal agency, the Committee for Purchase, oversees the 
fourth, Javits-Wagner-O’Day (JWOD). Specifically, GAO assessed the 
extent to which (1) performance goals and measures have been 
established for these programs and (2) the agencies responsible have 
established adequate oversight procedures. We reviewed program planning 
and performance information, interviewed agency officials, and visited 
each of the four programs in four states. 

What GAO Found: 

Three of the four programs have federal performance goals. No federal 
performance goals or measures currently exist for the Randolph-Sheppard 
program, which provides opportunities for individuals who are blind to 
operate vending facilities on federal properties. Without goals, it is 
difficult to assess the program’s performance, but Education officials 
told GAO they are developing them. Education has a goal and a measure 
for the Supported Employment State Grants program—a federal grant 
program that provides job coaching and other support to help 
individuals with severe disabilities secure jobs. The goal indirectly 
measures the program’s performance because grant funds are mixed with 
other funding sources to provide supported employment services. 
Education has also developed one goal for the PWI program--a federal 
grant program that helps individuals with disabilities obtain 
competitive employment--that is consistent with the mission of the 
program. The goal is to create and expand job opportunities for 
individuals with disabilities in the competitive labor market by 
engaging business and industry, and one of the measures tracks the 
percentage of individuals placed in employment in work settings making 
at least minimum wage. The Committee for Purchase, which oversees the 
JWOD program—a program that helps to create jobs through the federal 
property management and procurement systems—first developed federal 
goals and measures for its fiscal year 2005-2007 strategic plan and has 
since revised them. The revised measures still have limitations, such 
as not being clearly defined or being difficult to measure. 

Education’s and the Committee for Purchase’s oversight of the four 
programs has been uneven. Education has established procedures, such as 
on-site reviews, for the PWI and Supported Employment State Grants 
programs that, if consistently followed, would provide reasonable 
assurance that the programs are in compliance with applicable laws and 
regulations. However, Education conducts limited oversight of the 
Randolph-Sheppard program. For example, Education does not routinely 
analyze or report the data it collects from states and has provided 
little guidance to ensure states comply with laws or consistently 
interpret program requirements. One area in which Education has not 
provided sufficient guidance is the circumstances under which federal 
agencies may charge fees to licensed vendors operating vending 
facilities on their properties. As a result, vendors in some locations 
were paying commissions or fees but those in other locations were not. 
Finally, the Committee for Purchase delegates most of its oversight 
responsibilities to two central nonprofit agencies that also represent 
the interests of the JWOD nonprofit agencies they oversee. This 
arrangement, as well as the fact that they receive a percentage of the 
total value of the contracts from the JWOD nonprofit agencies, raises 
questions about their independence and gives them little incentive to 
identify instances of noncompliance that could result in the JWOD 
nonprofit agency losing its federal contract. 

What GAO Recommends: 

GAO recommends that Education establish goals for the Randolph-Sheppard 
program and strengthen program monitoring and guidance. GAO also 
recommends that the Committee for Purchase ensure JWOD goals and 
measures are clear and measurable and strengthen its procedures for 
overseeing the JWOD nonprofit agencies. In their comments, Education 
and the Committee for Purchase generally agreed with GAO’s 
recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-236]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Robert E. Robertson at 
(202) 512-7215 or robertsonr@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Three of the Four Programs Have Established Goals and Measures: 

Uneven Federal Oversight Provides Little Assurance of Accountability 
for Two Programs: 

Conclusions: 

Recommendations: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Performance Goals and Measures for the Javits-Wagner-O'Day 
(JWOD) Program: 

Appendix III: Comments from the Department of Education: 

Appendix IV: Comments from the Committee for Purchase from People Who 
Are Blind or Severely Disabled: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Federal and State Funds, Other Funding Sources, Total Funds, 
and Funds per Vendor for Four State Randolph-Sheppard Programs in 
Fiscal Year 2005: 

Table 2: Supported Employment State Grants Program Goal and Actual 
Performance, Fiscal Years 2003 through 2005: 

Table 3: PWI Performance Goal and Actual Performance, Fiscal Years 2003 
through 2005: 

Table 4: JWOD Performance Goals and Examples of Performance Measures, 
Fiscal Years 2007-2009: 

Table 5: JWOD Performance Goals and Measures: 

Figure: 

Figure 1: Number of Vendors in Program, Fiscal Years 2001-2005: 

Abbreviations: 

BAC: Business Advisory Councils: 
ETS: Committee for Purchase's Essentially The Same: 
GPRA: Government Performance and Results Act of 1993: 
JWOD: Javits- Wagner-O'Day: 
NCED: National Center for the Employment of the Disabled: 
NIB: National Industries for the Blind: 
NISH: National Industries for the Severely Handicapped: 
PWI: Projects with Industry: 
RSA: Rehabilitation Services Administration: 
SLA: State Licensing Agency: 
VR: Vocational Rehabilitation: 

United States Government Accountability Office: 
Washington, DC 20548: 

January 26, 2007: 

The Honorable Edward M. Kennedy: 
Chairman: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Henry A. Waxman: 
Chairman: 
Committee on Oversight and Government Reform: 
House of Representatives: 

The employment rate for working-age people with disabilities is about 
half of the employment rate for working-age people without 
disabilities.[Footnote 1] In fiscal year 2003, at least $2.4 billion 
was spent on 20 federal programs that are aimed to improve employment 
opportunities for people who have disabilities, but little is known 
about how effectively some of these programs are achieving their 
intended outcomes. You asked us to review four of these programs: 
Projects with Industry (PWI), Supported Employment State Grants, 
Randolph-Sheppard Vending Facility Program (hereafter known as Randolph-
Sheppard), and Javits-Wagner-O'Day (JWOD). PWI and Supported Employment 
State Grants are federal grant programs that fund services that help 
individuals with disabilities to obtain competitive employment. The 
other two programs, Randolph-Sheppard and JWOD, help create jobs for 
individuals with disabilities through the federal property management 
and procurement systems. Randolph-Sheppard licenses people who are 
blind to operate vending facilities on federal or other properties, and 
JWOD gives preference to nonprofit agencies who employ people with 
disabilities to produce goods and services for the federal government. 

The Department of Education (Education) is responsible for 
administering the Projects with Industry, Supported Employment State 
Grants, and Randolph-Sheppard programs. By law, Randolph-Sheppard is a 
state-operated program with limited federal responsibilities. The 
Committee for Purchase from People Who Are Blind or Severely Disabled 
(Committee for Purchase), a small independent federal agency, is 
responsible for administering the JWOD program. The Committee for 
Purchase utilizes two central nonprofit agencies--National Industries 
for the Blind (NIB) and NISH[Footnote 2]--to help carry out its 
responsibilities. 

You asked us to determine to what extent (1) performance goals and 
measures have been established for these programs and (2) the agencies 
responsible for these programs have established adequate procedures for 
overseeing program implementation and assuring laws and regulations are 
followed. 

To determine the extent to which performance goals have been 
established for these programs, we conducted a review of program laws, 
guidance, and performance documents.[Footnote 3] To obtain additional 
information about the performance goals and measures and determine the 
extent that the agencies responsible for these programs have 
established adequate procedures for overseeing program implementation 
and assuring that laws and regulations are followed, we reviewed agency 
policies and guidance, and interviewed agency officials at Education 
and the Committee for Purchase. We also met with officials of the two 
central nonprofit agencies (NIB and NISH) that assist the Committee for 
Purchase in performing its oversight responsibilities for JWOD. To 
supplement the overall program information, we reviewed each of these 
programs at the local level in four states--Arizona, Kansas, New York, 
and North Carolina--and analyzed documentation (e.g., program guidance, 
monitoring protocols, etc.) to ascertain how these programs were 
administered and monitored. We selected these four states based on 
factors such as whether they had all four programs operating in the 
state, geographic diversity, and whether the states' Vocational 
Rehabilitation (VR) programs had a separate blind program (about half 
of all states have two agencies; one for the general VR program and one 
for the blind program).[Footnote 4] We visited a total of 4 PWI 
projects, 4 Supported Employment State Grants recipients, 7 Randolph- 
Sheppard vendors, and 13 JWOD nonprofit agencies. We reviewed available 
audit reports on the state-operated Randolph-Sheppard program for the 
states we visited and for other states. We also reviewed other 
available audit reports for JWOD nonprofit agencies and PWI grantees. 
Finally, we interviewed officials of agencies engaged in disability 
research and advocacy at the national level including the Council of 
State Administrators of Vocational Rehabilitation, National Council on 
Disability, and the National Council of State Agencies for the Blind. 
(App. I contains a more detailed discussion of our scope and 
methodology.) We conducted our work between March 2006 and December 
2006 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

Three of the four programs we reviewed had federal goals. Currently, no 
formal federal performance goals exist for the Randolph-Sheppard 
program, but two of the four states we visited had established their 
own performance goals, such as increasing the number of participating 
licensed vendors and vending facilities. Education officials told us 
they are developing federal goals and should complete them by April 
2007. Education has a goal for the Supported Employment State Grants 
program, which is for individuals who have significant disabilities to 
achieve high quality employment, but it cannot fully assess this 
program's performance because these grant funds are mixed with other 
funding sources to provide supported employment services; which is 
common in such situations. The Projects with Industry program has a 
performance goal that is consistent with the mission of the program. 
The program's goal is to create and expand job opportunities for 
individuals with disabilities in the competitive labor market by 
engaging business and industry. The program has had mixed success in 
meeting its targets for this goal. For example, the program did not 
meet one target with regard to the percentage of individuals served who 
were placed into competitive employment between fiscal years 2003 and 
2005. However, it consistently exceeded its target for the average 
increase in weekly earnings during the same period. For the JWOD 
program, the Committee for Purchase first developed performance goals 
and measures as part of its fiscal year 2005-2007 strategic plan, but 
did not include a key component--performance targets--necessary for 
assessing performance. The Committee for Purchase has since revised its 
performance management system and established some performance targets, 
but cannot yet report progress toward its goals. Measures under the 
revised system have some limitations, such as not being clearly defined 
or being difficult to measure. 

Education and the Committee for Purchase's oversight for the programs 
they are responsible for has been uneven. Education has established 
procedures for the PWI and the Supported Employment State Grants 
programs that, if consistently followed, should provide reasonable 
assurance that the programs are in compliance with applicable laws and 
regulations. For example, Education told us they conduct quarterly 
monitoring calls with all PWI grantees, require grantees to submit 
annual reports on project activities and performance, and conduct some 
on-site reviews. Oversight of the Supported Employment State Grants 
program is accomplished as part of the ongoing monitoring of state 
Vocational Rehabilitation programs and includes examining state VR 
program plans and required data reports. In the four states visited, we 
found that each of these states had its own accountability procedures 
for ensuring that VR grant funds, including Supported Employment State 
Grants funds, were being used in accordance with federal laws and 
regulations. Concerning the Randolph-Sheppard program, however, 
Education relies heavily on self-reported data for its monitoring and 
does not routinely analyze or report the data it collects. The agency 
has also provided little guidance to states to ensure compliance with 
laws or consistent interpretation of program requirements. For example, 
Education has not provided clear guidance or policies regarding when 
federal agencies may charge commissions or fees to licensed vendors as 
a condition of operating a vending machine on federal property. We 
found that licensed vendors are paying commissions or fees in some 
locations but not in others and the federal agency had not obtained 
approval from Education. With regard to JWOD, the Committee for 
Purchase does perform some compliance monitoring for its participating 
nonprofit agencies. However, the majority of the compliance visits are 
performed by the two central nonprofit agencies that must also 
represent the interests of the JWOD nonprofit agencies they oversee. 
This arrangement, as well as the fact that they receive a percentage of 
the total value of contracts from the JWOD nonprofit agencies, raises 
questions about their independence and gives them little incentive to 
identify instances of noncompliance that could result in the member 
JWOD nonprofit losing its contract. 

We are making recommendations to the Secretary of Education and to the 
Chairperson of the Committee for Purchase aimed at improving 
performance management and oversight of the Randolph-Sheppard and JWOD 
programs, respectively. In its comments on a draft of this report, both 
Education and the Committee for Purchase generally agreed with our 
recommendations and provided information on actions they were taking or 
planning to take to enhance performance management and oversight of 
their respective programs. 

Background: 

Over the years, Congress has established many employment-related 
programs to help people with disabilities obtain jobs. Four of these 
programs, PWI, Supported Employment State Grants, Randolph-Sheppard, 
and JWOD, illustrate several different approaches taken by Congress to 
create more employment opportunities for people with severe 
disabilities--from providing job training and support to enabling 
individuals to run businesses. Congress created two of the four 
programs (PWI and Supported Employment State Grants) in the 1970s and 
the other two (Randolph-Sheppard and JWOD) in the 1930s. 

Projects with Industry: 

PWI was established in 1978,[Footnote 5] and is a discretionary grant 
program that provides financial assistance for up to 5 years to 
organizations to assist individuals with disabilities in obtaining 
competitive employment.[Footnote 6] However, according to Education 
officials, recent grants have been awarded for 3-year periods. Grantees 
of the PWI program include community rehabilitation program providers, 
employers, labor unions, nonprofit agencies or organizations, trade 
associations, and others. The purposes of the PWI program are to (1) 
create and expand job and career opportunities for individuals with 
disabilities in the competitive labor market by engaging private 
industry as partners in the rehabilitation process, (2) identify 
competitive job and career opportunities and the skills needed to 
perform these jobs, (3) create practical settings for job readiness and 
job training programs, and (4) provide job placements and career 
advancements. PWI grantees must establish business advisory councils 
(BAC) comprised of representatives of private industry, organized 
labor, and individuals with disabilities and their representatives, and 
others. BACs are required, among other things, to identify jobs and 
careers available in the community, the skills necessary to perform 
them, and prescribe appropriate training and job placement programs. 
Seventy-nine grantees received about $22 million in fiscal year 2005 
and served more than 10,000 individuals with significant disabilities. 

The Department of Education is responsible for administering and 
overseeing PWI and is required to: 

* Conduct annual on-site compliance reviews--Education's primary means 
of verifying the accuracy of the information grantees submit--of at 
least 15 percent of grant recipients, chosen at random. 

* Submit an annual report to Congress that analyzes the extent to which 
the individual grant recipients have complied with the evaluation 
standards. For example, the project must serve individuals with 
disabilities that impair their capacity to obtain competitive 
employment. In selecting persons to receive services, priority must be 
given to individuals with significant disabilities. 

* Have a performance reporting system that grantees can use to 
routinely submit program data that evaluates the grantees' progress in 
achieving the stated objectives, the effectiveness of the project in 
meeting the purposes of the program, and the effect of the project on 
its participants. 

Supported Employment State Grants: 

Established in 1978,[Footnote 7] the Supported Employment State Grants 
program provides funds to states and is designed to assist states in 
developing collaborative programs with appropriate organizations to 
provide supported employment services to individuals with the most 
severe disabilities who require these services to enter or retain 
competitive employment. Supported Employment State Grants funded 
services include a wide array of employment-related activities ranging 
from intensive on-the-job skills training to discrete post-employment 
services such as job station redesign or repair and maintenance of 
technology to help them perform job functions, generally for up to 18 
months after job placement. In fiscal year 2005, the grant program was 
funded at approximately $37 million.[Footnote 8] 

The Supported Employment State Grants program is an integrated 
component of state VR programs, which are also overseen by 
Education.[Footnote 9] Title I of the Rehabilitation Act of 1973 
authorizes a federal-state VR program to provide services to persons 
with disabilities so that they may prepare and engage in meaningful 
employment.[Footnote 10] Education provided $2.6 billion in fiscal year 
2005 in VR grants to the states and territories based on a formula that 
considers the state's population and per capita income.[Footnote 11] 
Each state and territory designates a single VR agency to administer 
the VR program, except where state law authorizes a separate agency to 
administer VR services for individuals who are blind. State VR agencies 
provide services to individuals in 22 service categories, such as 
vocational counseling and guidance, job placement assistance, on-the- 
job supports, college or university training, rehabilitation 
technology, and interpreter services. State VR agencies that determine 
they will not be able to serve all eligible individuals who apply for 
services must develop criteria for prioritizing services to individuals 
with the most significant disabilities. Education reported that, as of 
fiscal year 2006, 40 of the 80 state VR agencies had such an order of 
selection. 

Oversight for Supported Employment State Grants is conducted as part of 
oversight of state VR programs, and Education is required to: 

* conduct annual reviews of state VR programs that include collecting 
and reporting information on budget and financial management data, and 
an analysis of program performance, including relative state 
performance, based on the standards and indicators; and: 

* conduct periodic on-site monitoring of state VR programs. 

Randolph-Sheppard: 

The Randolph-Sheppard program[Footnote 12] was created in 1936 to 
provide blind persons with gainful employment, enlarge their economic 
opportunities, and encourage their self-support.[Footnote 13] While 
Randolph-Sheppard is under the authority of Education, the states are 
primarily responsible for operating their programs, and every state 
except Wyoming has established a vendor program. Each state that has a 
Randolph-Sheppard program is required to have a state licensing agency 
(SLA), under the auspices of the state VR program and approved by 
Education, to operate the program, including the authority to 
promulgate rules and regulations that govern the program. The SLAs are 
responsible for training, licensing, and placing people who are blind 
as operators of vending facilities (machines, snack bars, and 
cafeterias) located on federal and other properties. In addition, SLAs 
must annually submit information about their Randolph-Sheppard programs 
to Education, including information on the number of applicants and the 
number accepted, the number of vending facilities and vendors, and the 
total amount of vendor earnings. 

In fiscal year 2005, SLAs spent about $37 million in federal and state 
VR grant funds to help operate and support the program. In addition to 
VR funds, some states fund the program through optional set-asides from 
licensed vendors, which are a percentage of their revenues, and through 
the profits from vending machines located on federal properties that 
are not operated by licensed vendors. State funds are also used to 
operate the program. In total, more than $76 million were used to 
operate and support the Randolph-Sheppard program nationwide in fiscal 
year 2005. 

In fiscal year 2005, the Randolph-Sheppard program generated $661.3 
million in total gross income and the average annual earnings of 
vendors was $43,584. Over a 5-year period (fiscal year 2001 through 
fiscal year 2005), the number of vending facilities have been in 
decline nationwide, decreasing from 3,193 to 3,080. Over the same 
period, the number of vendors decreased annually except in fiscal year 
2005, as shown in figure 1. 

Figure 1: Number of Vendors in Program, Fiscal Years 2001-2005: 

[See PDF for image] 

Source: Department of Education. 

[End of figure] 

While states are responsible for operating their programs, among other 
things, Education is required to: 

* approve applications from a state's VR agency to serve as the SLA, 
and approve the rules and regulations the SLA promulgates to implement 
the Randolph-Sheppard Act; 

* conduct periodic evaluations of the program to determine whether the 
program is being used to its maximum potential; and: 

* convene arbitration panels and pay for arbitration to resolve vendor 
and SLA disputes. 

Javits-Wagner-O'Day: 

Established in 1938,[Footnote 14] JWOD is a federal procurement set- 
aside program designed to increase employment and training 
opportunities for persons who are blind or have other severe 
disabilities.[Footnote 15] Through this program, the government 
purchases commodities and services from nonprofit agencies employing 
workers who are blind or have severe disabilities. According to 
Committee for Purchase officials, in fiscal year 2006, federal 
procurement expenditures for goods and services provided by JWOD 
program suppliers totaled about $2.3 billion, and provided employment 
for about 48,000 people who are blind or have severe disabilities at 
more than 600 participating JWOD nonprofit agencies. The types of 
employment opportunities range from working in food service or 
providing janitorial services in federal office buildings to producing 
and/or assembling boxes and office supplies such as pens, notepads, 
file folders, and other goods. For fiscal year 2005, Committee for 
Purchase officials reported that JWOD workers earned an average of 
$9.49 per hour. 

The Committee for Purchase, which administers the program, received 
about $5 million in federal funds in fiscal year 2005 to support the 
activities of a 15-member, presidentially appointed board and 29 full- 
time program staff, including managing the JWOD procurement 
list.[Footnote 16] The Committee for Purchase is required by law to 
designate one or more central nonprofit agencies to facilitate the 
distribution of federal procurement contracts among qualified nonprofit 
agencies, and has designated two agencies for this purpose: NIB, which 
represents member nonprofit agencies employing individuals who are 
blind, and NISH, which represents its member nonprofit agencies that 
employ individuals with other severe disabilities. 

In addition to its duties related to establishing and maintaining a 
procurement list of goods and services that must be purchased through 
qualified JWOD suppliers, the Committee for Purchase is required to: 

* establish rules, regulations, and policies to carry out the purposes 
of the JWOD program, and to provide that nonprofit agencies employing 
individuals who are blind have priority in obtaining JWOD contracts; 

* monitor nonprofit agency compliance with Committee for Purchase 
regulations and procedures; 

* inform federal agencies about the JWOD program and encourage their 
participation, and, to the extent possible, monitor federal agencies' 
compliance with JWOD requirements; and: 

* study and evaluate its activities on a continual basis to ensure the 
effective and efficient administration of the JWOD Act. 

The Committee for Purchase has also established regulations that 
require the two central nonprofit agencies (NIB and NISH) to evaluate 
the qualifications and capabilities of nonprofit agencies that apply 
for contracts and provide pertinent data concerning the JWOD nonprofit 
agencies, such as their status as qualified nonprofit agencies, and 
their manufacturing or service capabilities. Additionally, NIB and NISH 
are to monitor and inspect the activities of participating nonprofit 
agencies to ensure compliance with the JWOD Act and appropriate 
regulations. For example, to maintain its status as a qualified 
nonprofit agency organized for the purposes of the JWOD program, an 
agency must employ persons who are blind or have severe disabilities to 
perform at least 75 percent of the work-hours of direct labor during 
the fiscal year to furnish such commodities or services (whether or not 
the commodities or services are procured under the JWOD Act). 

The Committee for Purchase's regulations require that each nonprofit 
agency maintain employment files for persons with severe disabilities 
participating in the JWOD Program. Each file must contain either a 
certification by a state or local government entity or a written report 
signed by a licensed physician, psychiatrist, or qualified 
psychologist, reflecting the nature and extent of a participant's 
disability or disabilities that qualify as severe. These reports must 
also state whether an individual with severe disabilities is capable of 
engaging in normal competitive employment and be signed by persons 
qualified to evaluate their work potential, interests, aptitudes, and 
abilities.[Footnote 17] 

Three of the Four Programs Have Established Goals and Measures: 

Federal performance goals and measures have been established for three 
of the four programs we reviewed. Education has not established 
performance goals and measures for the Randolph-Sheppard program, 
although two of the four states that we visited had their own goals and 
measures. Education has one goal for the Supported Employment State 
Grants program, but the goal only provides an indirect measure of the 
program's performance because the data also include individuals with 
significant disabilities who receive supported employment services 
funded under state VR programs. Education has established a performance 
goal for PWI, which is consistent with the purpose of the program. 
Finally, for the JWOD program, the Committee for Purchase recently 
revised its performance goals and established some targets. 

Education Has Not Established Federal Goals for Randolph-Sheppard: 

Education does not have GPRA performance goals for the Randolph- 
Sheppard program, and neither the Randolph-Sheppard Act nor its 
implementing regulations require them. According to Education 
officials, no formal federal performance goals or measures currently 
exist for the Randolph-Sheppard program, but they are under development 
and expected to be completed by April 2007. Although not specifically 
required by law, Education does collect some information related to 
program performance from the states. For example, Education collects 
information on total vendor income, number of facilities, and vendors. 
Education also collects information on the numbers of individuals who 
are blind or have disabilities who are employed by vendors, although 
there is no requirement for vendors to employ workers who have 
disabilities. 

States may develop performance goals for their Randolph-Sheppard 
programs, and two (Arizona and Kansas) of the four states we visited 
had established performance goals. Arizona's goals were to increase the 
number of licensed vendors and vending facilities. In fiscal year 2005, 
the state set a target of 32 vendors and five new facilities. However, 
Arizona did not meet these targets and had 30 licensed vendors and 
added one new facility. Kansas' fiscal year 2005 goal was that at least 
90 percent of the licensed vendors maintain or increase their level of 
income from the prior year, and the state reported that this goal had 
been exceeded in each of the past 3 fiscal years. According to program 
officials in New York and North Carolina, no state goals were 
established for their Randolph-Sheppard programs. In the four states we 
visited, nearly $10 million, including more than $7 million in federal 
and state funds, were used to support operations for about 215 licensed 
vendors, as shown in table 1. 

Table 1: Federal and State Funds, Other Funding Sources, Total Funds, 
and Funds per Vendor for Four State Randolph-Sheppard Programs in 
Fiscal Year 2005: 

State: Arizona; 
Federal and state funds: $1,681,418; 
Other funding sources[A]: $ 790,531; 
Total funds: $2,471,949; 
Vendors (staff years): 29.7; 
Funds per vendor: $83,231. 

State: Kansas; 
Federal and state funds: 517,202; 
Other funding sources[A]: 165,732; 
Total funds: 682,934; 
Vendors (staff years): 15; 
Funds per vendor: 45,529. 

State: New York; 
Federal and state funds: 2,705,026; 
Other funding sources[A]: 848,736; 
Total funds: 3,553,762; 
Vendors (staff years): 86.5; 
Funds per vendor: 41,084. 

State: North Carolina; 
Federal and state funds: 2,478,909; 
Other funding sources[A]: 711,558; 
Total funds: 3,190,467; 
Vendors (staff years): 82.3; 
Funds per vendor: 38,766. 

State: Total; 
Federal and state funds: $7,382,555; 
Other funding sources[A]: $ 2,516,557; 
Total funds: $9,899,112; 
Vendors (staff years): 213.5; 
Funds per vendor: $46,366. 

Sources: RSA-15 reports submitted by officials of the Arizona, Kansas, 
New York, and North Carolina Business Enterprise Programs. 

[A] Other funding sources are vending machine income (federal and non- 
federal), and a percentage of net proceeds from licensed vendors. 

[End of table] 

In these four states, we also interviewed seven licensed vendors who 
operated businesses that ranged from full-service cafeterias to small 
convenience stores or canteens. We found that all of the licensed 
vendors we met with worked full-time and most earned incomes that 
provided an income that made them relatively self-sufficient. However, 
not all licensed vendors nationwide receive incomes that allow them to 
support themselves and their incomes may be subsidized through program 
revenues generated by other vendors. Two states we visited were taking 
steps to increase vendors' income by consolidating facilities. 
Regardless of their financial status, three of the seven licensed 
vendors we interviewed continued to receive financial benefits from 
other federal disability assistance programs, such as Social Security 
Disability Insurance. In addition, at least 6 of the 7 vendors employed 
fewer than 10 workers, most of whom were not blind or did not have 
severe disabilities. However, some of the vendors we interviewed told 
us that they are interested in ways to reach out to and employ more 
workers who are blind or have severe disabilities. Further, states we 
visited told us about other program challenges, such as a decline in 
customers as a result of increased security in federal buildings and 
consolidation of unprofitable facilities that reduced the number of 
opportunities available to vendors. 

Education Has a Supported Employment State Grants Program Goal That 
Indirectly Measures Performance: 

Education has a GPRA goal for the Supported Employment State Grants 
program that the department uses to indirectly measure the program's 
performance. According to program officials, Education has not sought 
information that isolates the performance of federally-funded Supported 
Employment State Grants because they are used together with state and 
other federal funds to provide supported employment services, as is 
often the case when funds from different sources are used to achieve an 
outcome. Officials told us a separate measure for the Supported 
Employment State Grants program would be an artificial distinction. The 
performance goal is for individuals who have significant disabilities 
to achieve high quality employment. For this goal, Education only 
includes individuals with significant disabilities who have a goal of 
supported employment, that is, achieving competitive employment with 
support services such as rehabilitation technology or on-the-job 
supports. The measure is the percentage of individuals who achieve 
competitive employment, which they define as making minimum wage or 
higher, but not less than the wages paid to workers without 
disabilities performing similar work, and working alongside workers 
without disabilities in an integrated setting. 

During fiscal years 2003 and 2004, Education exceeded its performance 
target for placing Supported Employment State Grants program 
participants in competitive employment. For fiscal year 2005, Education 
increased the performance target to 93 percent and achieved 92.6 
percent, as shown in table 2. 

Table 2: Supported Employment State Grants Program Goal and Actual 
Performance, Fiscal Years 2003 through 2005: 

Goal: Individuals with significant disabilities with a supported 
employment goal will achieve high-quality employment: Performance 
measure: Percentage of individuals with a supported employment goal who 
achieve a competitive employment outcome; 
Performance: 2003: Target: 77.8%; 
Performance: 2003: Actual: 92.7%; 
Performance: 2004: Target: 78%; 
Performance: 2004: Actual: 92.8%; 
Performance: 2005: Target: 93%; 
Performance: 2005: Actual: 92.6%. 

Source: Department of Education. 

[End of table] 

Education Has Established One Federal Performance Goal for the PWI 
Program: 

Education has established a GPRA performance goal that includes four 
measures for the PWI program. The goal of the PWI program is to create 
and expand job opportunities for people with disabilities in the 
competitive labor market by engaging business and industry in the 
rehabilitation process. The four performance measures are consistent 
with the program's goal. For example, one measure is the percentage of 
individuals served by the program who were placed into competitive 
employment. Another measure, cost per placement, was only recently 
established for fiscal year 2006 and performance data are not yet 
available. In recent years, Education has had mixed success in meeting 
the GPRA targets. For example, in fiscal years 2003 to 2005, the PWI 
program did not meet its target of increasing the percentage of 
individuals who were placed into competitive employment. However, it 
consistently exceeded its target for increased earnings over the same 
period, as shown in table 3. 

Table 3: PWI Performance Goal and Actual Performance, Fiscal Years 2003 
through 2005: 

Goal: Create and expand job opportunities in the competitive labor 
market by engaging the participation of business and industry in the 
rehabilitation process: Performance measures: Percentage of individuals 
served by the program who were placed into competitive employment[A]; 
Performance: 2003: Target: 62.4%; 
Performance: 2003: Actual: 54.2%; 
Performance: 2004: Target: 62.7%; 
Performance: 2004: Actual: 61.5%; 
Performance: 2005: Target: 63%; 
Performance: 2005: Actual: 51.9%. 

Goal: Create and expand job opportunities in the competitive labor 
market by engaging the participation of business and industry in the 
rehabilitation process: Performance measures: Percentage of previously 
unemployed individuals served who were placed into competitive 
employment[A]; 
Performance: 2003: Target: 63%; 
Performance: 2003: Actual: 54%; 
Performance: 2004: Target: 64%; 
Performance: 2004: Actual: 65.5%; 
Performance: 2005: Target: 65%; 
Performance: 2005: Actual: 62.4%. 

Goal: Create and expand job opportunities in the competitive labor 
market by engaging the participation of business and industry in the 
rehabilitation process: Performance measures: Average increase in 
weekly earnings; 
Performance: 2003: Target: $231; 
Performance: 2003: Actual: $242; 
Performance: 2004: Target: $233; 
Performance: 2004: Actual: $247; 
Performance: 2005: Target: $238; 
Performance: 2005: Actual: $253. 

Goal: Create and expand job opportunities in the competitive labor 
market by engaging the participation of business and industry in the 
rehabilitation process: Performance measures: Cost per placement 
(federal grant funds only)[B]; 
Performance: 2003: Target: NA[C]; 
Performance: 2003: Actual: NA[C]; 
Performance: 2004: Target: NA[C]; 
Performance: 2004: Actual: $3,139[D]; 
Performance: 2005: Target: NA[C]; 
Performance: 2005: Actual: $3,014[D]. 

Source: Department of Education. 

[A] An evaluation of the PWI program, published in 2003, raised some 
doubts about the reporting on the percentage of individuals placed in 
competitive employment. 

[B] Cost per placement will become a GPRA indicator in fiscal year 
2006. 

[C] Not available. 

[D] Data are being used to develop a baseline for fiscal year 2006 
performance. 

[End of table] 

Education has revised its GPRA performance measures for the PWI program 
for fiscal year 2006. Specifically, Education will begin to measure the 
percentage of PWI projects whose cost per placement is within a 
specified range, which has yet to be determined. The agency will also 
measure the percentage of all individuals who exit the program and are 
placed in competitive employment. According to Education officials, 
this measure was added in response to recommendations by the Office of 
Management and Budget and will allow more accurate comparisons with 
other job training programs throughout the government. 

We visited four PWI grantees in the four states and found that these 
projects set goals that are consistent with the goals of the PWI 
program, such as placing people in competitive employment. For example, 
one PWI grantee in Kansas is serving individuals with all types of 
disabilities ages 16 and older. One goal of the project is to place 75 
percent of the people they serve each year in competitive employment, 
which is higher than the GPRA target set by Education. According to 
agency officials, clients are being placed in jobs such as call centers 
and other customer service positions, earning average salaries of $9.25 
to $10.00 per hour. In another example, one PWI grantee in New York has 
a goal to transition youth from school to work and targets its services 
to individuals ages 16 to 25 with a mental, physical, or emotional 
disability. One of the goals of the project is to place about 67 
percent of the people served in jobs over 3 years. According to the 
grantee, a successful outcome in the program is competitive employment 
in at least a part-time position paying at least the federal minimum 
wage, and continued employment for at least 6 months. The PWI projects 
in Kansas and New York just completed the first year of operations. 

The Committee for Purchase Recently Updated Its Strategic Plan for the 
JWOD Program; Progress toward Goals Is Not Yet Known: 

For the first time, the Committee for Purchase developed performance 
goals and measures for the JWOD program in its fiscal year 2005-2007 
strategic plan and updated this plan in October 2006, but it has not 
yet reported progress toward meeting these goals. While JWOD's enabling 
legislation and regulations do not require goals, the strategic plan 
includes five performance goals and a number of measures for each of 
these goals.[Footnote 18] The current strategic plan includes some 
performance measures and targets, but some of the measures that are 
more qualitative in nature do not include targets, and it is unclear 
how JWOD will measure progress in these areas. In keeping with the 
overall mission of the JWOD program, the goals are aimed at increasing 
the number of job opportunities for people who are blind or have severe 
disabilities. One of the plan's five goals is to expand employment 
opportunities. The other four goals include increasing customer 
satisfaction (JWOD customers are federal agencies), improving 
efficiency of operations, expanding program support and developing new 
markets for its products and services. However, these goals do not 
specifically address one part of the program's mission, which is to 
increase training opportunities.[Footnote 19] 

Furthermore, some of the performance measures are not clearly defined 
or may be difficult to measure, thus making it difficult to assess 
performance. For example, there are several measures that involve using 
"milestone tracking" although the milestones are not provided. One of 
these measures will track progress toward annually updating and 
implementing a plan to address communication and information sharing 
with and among stakeholders. Further, JWOD has over 30 performance 
measures, which may make it difficult to identify performance problems. 
As we discussed in our June 1996 guide on implementing GPRA,[Footnote 
20] performance measures should be limited to the vital few. Limiting 
measures to core program activities enables managers and other 
stakeholders to assess accomplishments and make decisions without 
having an excess of data that could obscure rather than clarify 
performance issues.[Footnote 21] The JWOD performance goals and 
examples of measures are shown in table 4. All of the JWOD performance 
measures are listed in appendix II. 

Table 4: JWOD Performance Goals and Examples of Performance Measures, 
Fiscal Years 2007-2009: 

Performance goals: Continue to expand employment opportunities for 
people who are blind or have other severe disabilities under the JWOD 
program, including wage progression, benefits, upward mobility, and 
personal job satisfaction; 
Examples of performance measures: 
* Percentage increase in direct labor hours performed by people who are 
blind or have other severe disabilities on JWOD products and services; 
* Percentage increase in the number of people who are blind or have 
other severe disabilities employed in direct labor positions on JWOD 
products/services. 

Performance goals: Partner with federal customers to increase customer 
satisfaction and loyalty, so that the JWOD program becomes their 
preferred source for products and services; 
Examples of performance measures: 
* Federal agency scorecard that evaluates the level of satisfaction 
with JWOD products, services, and/or customer experience among key 
federal agencies, using a stoplight or similar summary format; 
* Increased customer satisfaction with quality, timeliness, and price, 
based on customer surveys and/or alternative qualitative research 
(e.g., focus groups). 

Performance goals: Improve efficiency and effectiveness of the JWOD 
program by streamlining and automating processes and procedures, and 
improving communication, while continuing to ensure program integrity; 
Examples of performance measures: 
* Reduction in the cycle time for the addition of a new JWOD product or 
service to the procurement list; 
* Milestone tracking of evaluation of commercial distribution 
processes, including staff resources and financial resources. 

Performance goals: Expand awareness, understanding, and preference for 
the JWOD program within the public, Congress, federal agencies, the 
disability community, and other JWOD stakeholders through effective 
communication and information sharing; 
Examples of performance measures: 
* Milestone tracking of annual update and implementation of a plan that 
addresses communication and information sharing with and among both 
internal and external stakeholders; 
* Among members of congressional committees or subcommittees with 
oversight or other significance for the JWOD program, number who have 
been educated about the JWOD program and/or are actively engaged with 
their local JWOD- participating nonprofit agency(ies). 

Performance goals: Strategically develop new markets and expand 
existing markets in which the JWOD program can provide best value 
products and services to federal customers in order to expand 
employment opportunities that meet the needs of people who are blind or 
have other severe disabilities; 
Examples of performance measures: 
* Milestone tracking of establishment and implementation of a program 
market development plan that addresses existing customers, existing 
products/services, new customers, and new products/services; 
* Percent increase in the employment of people who are blind or have 
other severe disabilities under the JWOD program, measured in (1) 
actual direct labor hours, (2) actual jobs, (3) projected direct labor 
hours on procurement list additions, and (4) projected jobs on 
procurement list additions by key market segment. 

Source: Final FY 2007-2009 Strategic Plan for the Javits-Wagner-O'Day 
(JWOD) Program, Committee for Purchase from People Who Are Blind or 
Severely Disabled, October 16, 2006. 

[End of table] 

Uneven Federal Oversight Provides Little Assurance of Accountability 
for Two Programs: 

Education and the Committee for Purchase engage in a number of 
oversight activities for the programs they are responsible for, but 
their efforts to ensure compliance with applicable laws and regulations 
have been uneven, and overall have provided little assurance of program 
accountability for two of the four programs reviewed. Specifically, 
Education has established oversight procedures for the PWI and the 
Supported Employment State Grants programs that, if consistently 
followed, should provide reasonable assurance of compliance with 
relevant laws and regulations. The agency is just beginning to conduct 
on-site monitoring of PWI grantees that may be sufficient for testing 
the accuracy of the information used to monitor compliance. Education's 
oversight of these two programs has generally been more active than its 
oversight of the Randolph-Sheppard program. Education relies primarily 
on self-reported data for its monitoring of the Randolph-Sheppard 
program and does not routinely analyze or report the data it collects. 
Finally, the Committee for Purchase has established procedures for 
monitoring and overseeing the JWOD program, but has prescribed 
regulations that delegate most of the responsibility for carrying out 
these procedures to two central nonprofit agencies that are also 
responsible for representing the interests of the JWOD nonprofit 
agencies they monitor, raising questions about independence. 
Furthermore, there are no procedures in place for the Committee for 
Purchase to address instances where the central nonprofit agencies fail 
to carry out their oversight responsibilities. 

Education Performs Various PWI Oversight Activities, and On-site 
Monitoring Is Improving: 

Education regularly performs a number of oversight activities to ensure 
that PWI grantees are making progress toward project goals and 
complying with applicable laws and regulations. Specifically, program 
specialists told us they conduct quarterly monitoring calls with all 
PWI grantees in which they ask a series of 30 questions that help them 
to identify and proactively resolve problems with individual projects. 
The questions address several areas, including progress toward meeting 
goals, activities of the BACs, interaction with the state VR agency, 
and fiscal management. Further, Education requires that PWI grantees 
submit annual reports that include detailed information about project 
activities and performance, and informs grantees of this requirement as 
part of the application process. Education uses the project information 
it receives from grantees to identify those grantees that may be at 
risk of being out of compliance with program requirements and to target 
these grantees for additional assistance or for on-site reviews. 
Education also relies on the data it receives from grantees to provide 
information about grantees' performance in its annual reports to 
Congress.[Footnote 22] 

Although grantees are responsible for monitoring their own projects, 
Education is required to conduct random on-site reviews of 15 percent 
of PWI grantees annually.[Footnote 23] On-site reviews are the primary 
means by which Education can assess the accuracy of the performance 
data submitted by grantees. Education conducted 11 of the 12 required 
on-site reviews in fiscal year 2006 and had scheduled the remaining 
review for November 2006. However, it conducted only 3 of the 12 
required for 2005, and 0 in 2004, and therefore did not have enough 
information to provide reasonable assurance of the accuracy of the data 
submitted by grantees in those years. Although each of the PWI grantees 
that we visited had procedures in place to review the data they 
submitted to Education, a research organization conducted an evaluation 
of the program that raised doubts about the accuracy of PWI data 
submitted by grantees in general.[Footnote 24] Specifically, reviewers 
found that about one-fifth of PWI grantees surveyed (19 out of 92) 
provided information on the number of persons placed in fiscal year 
2001 that was inconsistent with the information they had submitted to 
Education. 

Education is also required to submit an annual report to Congress 
analyzing the extent to which the individual grant recipients have 
complied with program evaluation standards.[Footnote 25] In fiscal 
years 2003, 2004, and 2005, Education has met this requirement by 
providing summaries of the extent to which grantees have met program 
performance targets in its Performance and Accountability Report to 
Congress. 

Education's Oversight of Supported Employment Is Part of Overall VR 
Program Monitoring Efforts: 

Education's oversight of the Supported Employment State Grants program 
is integrated into its ongoing efforts to review and monitor state VR 
programs.[Footnote 26] During fiscal year 2006, Education revised its 
annual state plan review protocols and prepared a draft on-site 
monitoring plan for the VR program.[Footnote 27] Annual reviews include 
examining each state's VR program plans and other documentation, such 
as required annual data reports on VR customers, services, and 
outcomes; caseloads; and financial accountability and data reporting 
procedures. Education's October 2006 draft on-site monitoring protocols 
call for on-site reviews once every 3 years and are designed to verify 
and supplement the information it receives from the states regarding 
program performance and compliance, and include reviewing case files 
and holding public hearings or other discussions with VR program 
consumers and advocates, as needed. Education has not yet conducted any 
on-site reviews using the revised protocols, but plans to conduct its 
first reviews beginning in fiscal year 2007. Once fully implemented, 
the annual reviews and on-site monitoring, along with state-level 
activities, should offer reasonable assurance that the Supported 
Employment State Grants program is in compliance with applicable laws 
and regulations and the data that states submit to Education annually 
are accurate. 

In addition, we found that all four states we visited had their own 
accountability procedures for ensuring that VR grant funds, including 
Supported Employment State Grants funds, were being used in accordance 
with federal laws and regulations. For example, the New York state VR 
agency has configured its automated information management system in a 
way that only authorizes payment for supported employment services to 
providers that have a contract to provide these services, at the 
contracted rates. In addition, three of the four states had adopted 
performance-based contracting systems, whereby vendors providing 
supported employment services, such as job coaching or training, are 
required to demonstrate progress toward required milestones in order to 
receive payment from the state agencies, and VR counselors monitor 
their progress on a weekly, biweekly, or monthly basis. 

Education Provides Little Oversight of the Randolph-Sheppard Program: 

Education provides little oversight of the Randolph-Sheppard program. 
Despite being required to conduct periodic evaluations of the program 
and being responsible for approving states' rules and regulations for 
implementing the Randolph-Sheppard Act,[Footnote 28] Education has no 
formal procedures for evaluating state programs. In addition to lacking 
procedures, Education has performed few on-site monitoring reviews of 
SLAs in recent years. According to agency officials, Education has 
performed five on-site monitoring reviews since the beginning of fiscal 
year 2005 and had performed no recent site visits in the four states 
that we visited. Education's oversight activities primarily consist of 
collecting data from states through annual reports from the SLAs that 
administer the program and providing requested technical assistance. 
Although the states report considerable information including earnings 
data; the number of vendors, facilities, individuals employed by 
vendors; types of facilities; costs; and sources of funding, Education 
does not test the accuracy of data that it requires states to report, 
nor does the agency routinely analyze the data to assess program 
performance and management. As a result, Education cannot assess trends 
in performance, identify possible best practices, or help states that 
may need assistance. Upon request, Education also provides technical 
assistance to SLAs. According to Education officials, technical 
assistance and guidance is regularly provided to SLAs through telephone 
calls and written correspondence, including e-mails, with staff on 
specific questions. 

In its oversight role, Education has not provided clear guidance to 
states on emerging issues that could have nationwide implications. 
Instead, Education responds to individual state concerns and convenes 
panels to arbitrate disputes that SLAs are unable to resolve. As a 
result, states have different policies regarding the permissibility of 
teaming agreements, which partner licensed vendors with commercial food 
operators in order to help manage larger food service operations at 
dining facilities at military bases. SLAs may have such agreements for 
various reasons, such as state program officials' lack of expertise or 
licensed vendors' inexperience running such facilities. In these cases, 
the licensed vendor generally does not operate the food service 
facilities, but rather manages some aspects of food service operations. 
For example, one of the states we visited (Kansas) had a teaming 
agreement. One of the states we visited (New York) does not currently 
allow teaming agreements, while another (Arizona) has no policy 
regarding teaming agreements. The fourth state, North Carolina, permits 
teaming agreements but does not currently have any as of June 2006. 

Although Education has noted the increasing use of teaming agreements, 
it has not issued guidance to the SLAs directly addressing whether 
these are in keeping with the spirit of the Randolph-Sheppard Act, or 
whether they should be subject to limitations, despite concerns 
expressed by states and others. For example, the California State 
Auditor found that by allowing teaming agreements, the SLA had 
inadequately protected the interests of the state and licensed vendors. 
The SLA had not (1) ensured that written contracts existed before 
beginning operations, (2) analyzed the investment and return on 
investment of the teaming agreement to the program and licensed 
vendors, (3) adequately reviewed the teaming agreements, or (4) ensured 
that the commercial food service operators were paying their fair share 
of program costs. In addition, the Georgia State Auditor identified 
some concerns about teaming agreements, including the failure to define 
the duties for participating licensed vendors, resulting in these 
vendors having little, if any, responsibility for the overall operation 
and success of subcontracted food services. Further, the auditor noted 
that the program is not ensuring that the commercial food service 
operators are making progress toward the program's goal that licensed 
vendors eventually assume responsibility for operating the facility. 

Additionally, Education has not provided clear guidance or policies 
regarding when federal agencies may charge fees or commissions to 
licensed vendors as a condition of operating a vending facility on 
federal property. The Randolph-Sheppard Act has been interpreted to 
prohibit commissions unless federal agencies obtain written approval 
from the Secretary of Education.[Footnote 29] We found that licensed 
vendors have paid commissions or fees in some locations but not in 
others and the federal agencies had not obtained approval from 
Education. For example, in one state we visited (Kansas), at least one 
licensed vendor was required to pay 1.5 percent of total revenues to 
the U.S. Postal Service in exchange for permission to operate vending 
facilities on the agency's properties. However, Education has not 
prohibited such practices or required the Postal Service or other 
federal agencies charging commissions to obtain written approval. 
Furthermore, officials in Kansas have chosen not to dispute it. 
According to agency officials, Education has never approved such a 
limitation and cannot routinely monitor state-level or vendor-specific 
business negotiations, but would intervene to bring the parties 
together in an attempt to resolve disputes or make clear the 
requirements of the Randolph-Sheppard Act. 

Although Education has exercised little oversight for this program, the 
four SLAs that we visited had certain procedures in place that should, 
if consistently operated along with other certain complementary 
processes and procedures such as management's monitoring of performance 
over time, help safeguard program assets. SLA officials obtained cash 
register receipts, daily reports on business activities, or monthly 
reports submitted by the vendors to review the financial operations for 
these programs. However, audits of programs in other states have 
reported certain issues relating to the accountability of state- 
operated programs under the Randolph-Sheppard Act. For example, the 
Michigan Auditor General reported that SLA staff did not comply with 
established equipment inventory control procedures for program 
equipment and could not account for equipment inventory, placing 
inventory at risk of misappropriation.[Footnote 30] Further, the 
California State Auditor reported that, among other things, the SLA has 
not followed up on missing financial reports from licensed vendors and 
has not been able to monitor licensed vendors' financial problems 
properly. In addition, the auditor found that the SLA was not 
adequately pursuing past-due commissions owed to the program by private 
businesses operating vending machines on federal properties.[Footnote 
31] 

Committee for Purchase Delegates Most Oversight Responsibilities for 
JWOD to Two Organizations That Represent the Interests of the Agencies 
They Oversee: 

The Committee for Purchase has established procedures for monitoring 
and overseeing the JWOD program, but has delegated most of the 
responsibility for monitoring participating JWOD nonprofit agencies to 
two central nonprofit agencies. As of April 2006, NIB officials 
reported that they worked with 81 participating JWOD nonprofit agencies 
that employed individuals who are blind, and NISH officials reported 
that they worked with 552 JWOD nonprofit agencies that employed 
individuals with other severe disabilities.[Footnote 32] In particular, 
although the Committee for Purchase must approve the nonprofit 
agencies' participation in the program, it relies on the central 
nonprofit agencies to certify that: 

* 75 percent or more of the direct labor hours under JWOD contracts are 
performed by individuals who are blind or have severe disabilities, and 
if not, that there is a suitable plan in place to bring this percentage 
up to the required level; 

* agencies maintain required documentation for each of these 
individuals; 

* agencies function as nonprofit entities serving individuals who are 
blind or have severe disabilities; 

* agencies have a required job placement program; and: 

* agencies comply with applicable occupational safety and health 
standards. 

The Committee for Purchase requires that the JWOD nonprofit agencies 
certify annually that they are in compliance with program requirements 
but does not routinely verify this information, relying instead on the 
central nonprofit agencies to do so. According to agency officials, the 
Committee for Purchase performs about 20 field visits annually, 
visiting up to 3 agencies per visit, or about 60 of the more than 600 
participating nonprofit agencies. At this rate, the Committee for 
Purchase is unable to satisfy its own requirements to perform on-site 
compliance reviews at each fully compliant participating nonprofit 
agency every 5 years. 

The Committee for Purchase's regulations create at least two problems 
for NIB and NISH: the potential for a conflict of interest resulting 
from a lack of organizational independence as well as disincentives to 
perform their monitoring duties effectively. Specifically, these 
regulations require that NIB and NISH, on behalf of the Committee for 
Purchase, monitor the compliance of JWOD nonprofit agencies, but, at 
the same time, represent them in their dealings with the Committee for 
Purchase. Moreover, the regulations also permit NIB and NISH to charge 
a fee based on JWOD nonprofit agencies' sales to the government that 
does not exceed the limit set by the Committee for Purchase, and 
require the nonprofit agencies to pay that fee in order to remain in 
good standing in the program. This system of compensation may create a 
disincentive for NIB and NISH to identify instances of noncompliance 
that could result in the JWOD nonprofit agency losing its contract, 
especially for those JWOD nonprofit agencies that are generating large 
volumes of JWOD sales. Finally, although the regulations and procedures 
provide for a number of duties that the central nonprofit agencies must 
perform, they do not specify actions the Committee for Purchase can 
take if the central nonprofit agencies fail to execute these duties. 

NIB and NISH officials reported that they monitor JWOD nonprofit 
agencies' compliance with relevant laws and regulations by conducting 
on-site reviews of nonprofit agencies every 3 years,[Footnote 33] and 
require quarterly statistical reports from the agencies they oversee. 
The Committee for Purchase has established procedures for these reviews 
that require each central nonprofit agency to use a standardized review 
sheet to assess whether the JWOD nonprofit agency is compliant in 11 
different program areas, including the percentage of direct labor hours 
performed by individuals who are blind or have severe disabilities, 
documentation of an employee's disability, and an evaluation of whether 
or not the individual is capable of competitive employment.[Footnote 
34] The on-site reviews are the primary means for NIB and NISH to test 
the accuracy of the data that the JWOD nonprofit agencies submit, but 
the scope of the reviews may not be sufficient to provide reasonable 
assurance of the accuracy of all of the data. For example, NIB and NISH 
officials reported that they test the accuracy of the data for 
percentage of direct labor hours by reviewing a sample of case files, 
but they do not verify other data, such as job placement and upward 
mobility statistics. Further, they do not always report instances of 
noncompliance they find to the Committee for Purchase. 

In the states we visited, reports from NIB's and NISH's on-site reviews 
generally showed that the JWOD nonprofit agencies were in compliance 
with program requirements, and most files contained the required 
documentation. Eleven of 13 agencies that we visited provided 
documentation of the results of their most recent on-site reviews 
showing they were in compliance. However, in our limited reviews of 137 
case files at these 13 agencies, we found that 5 of 8 NISH agencies had 
at least 1 file that lacked the required medical documentation of a 
worker's disability, and that 3 of these 8 NISH agencies had at least 1 
file that lacked the required documentation on competitive employment. 
We also found that one of the five NIB agencies we visited had one case 
file that lacked the required medical documentation. In sum, 11 percent 
of the files we reviewed at the NIB and NISH agencies we visited lacked 
the required medical or competitive employment documentation. 

A serious instance of noncompliance escaped detection by the 
responsible central nonprofit agency (NISH) and the Committee for 
Purchase. In this case, the National Center for the Employment of the 
Disabled (NCED) in El Paso, Texas, failed to use workers with severe 
disabilities to perform the required percentage of direct labor hours 
on its JWOD contracts, which were valued at over $200 million. Instead, 
NCED inflated its reported percentage by improperly including 
economically disadvantaged workers. The problems at NCED were detected 
not through routine monitoring, but rather through an anonymous tip to 
the Committee for Purchase, and resulted in as many as 1,144 JWOD jobs 
being lost to individuals who did not have severe disabilities during 
fiscal years 2004 and 2005. The JWOD nonprofit agency took actions 
prescribed by the Committee for Purchase to come into compliance, 
including dividing the agency's operations into two different units-- 
one for JWOD work and one for commercial activities--and the Committee 
for Purchase is satisfied with the actions taken. 

The definition of a severe disability in the law allows for differing 
interpretations, which may complicate efforts to ensure compliance for 
agencies that serve individuals who have severe disabilities. The 
statutory definition of blindness is fairly straightforward: a lack of 
visual acuity of not more than 20/200 in the better eye with correcting 
lenses or a limited field of vision of not more than 20 degrees. In 
contrast, the definition of a severe disability requires a diagnosis of 
a residual, physical or mental impairment that limits functioning in 
one of five areas (mobility, communication, self-care, self-direction, 
and work tolerance or work skills), and a determination that the 
impairment has rendered the individual unable to engage in normal 
competitive employment over an extended period of time. Despite the 
fact that the definition is subject to interpretation, the Committee 
for Purchase has offered little additional guidance that would clarify 
when disabilities that may not normally be considered severe could be, 
such as the conditions under which a recovering alcoholic or a person 
with diabetes could be considered to have a severe disability. During 
our review of case files at 13 JWOD nonprofit agencies, we noted 
instances where it was unclear in the medical documentation that the 
disability was severe, such as a case in which the individual was 
diabetic, with no indicated symptoms, and another in which the 
individual was diagnosed as having an aggressive personality. 

Conclusions: 

All four of these programs generally provide training and employment 
opportunities that might not otherwise be available for individuals who 
are blind or have severe disabilities. However, two are hampered by 
weaknesses in performance management and program oversight that signal 
a need for stronger federal leadership. Absent federal goals for the 
Randolph-Sheppard program and routine analyses and reports from 
Education on states' program operations and performance, little is 
known about how this program is improving the lives of participants. 
Having such information about outcomes is an important component of any 
program, and essential during times of fiscal austerity. Further, by 
not exercising more oversight and issuing clear guidance to all states 
on emerging issues that could affect program participants, Education 
may be missing an important opportunity to help states improve program 
operations or proactively respond to these issues. While recognizing 
that there may be increased costs for improved oversight, these costs 
could be minimized by, for example, monitoring Randolph-Sheppard 
activities as part of Education's oversight for the VR program. 
Although the Committee for Purchase has made significant progress in 
developing goals for the JWOD program, some of the goals lack key 
elements--clear measures and performance targets. Also, the current 
approach for overseeing nonprofit agencies operating under the JWOD 
program poses difficult challenges for the two central nonprofit 
agencies in managing the conflicts of interest that may exist because 
of their lack of organizational independence, and therefore demands 
strong and effective oversight from the Committee for Purchase. 
Ensuring program integrity is particularly important for JWOD since 
nonprofit agencies are given a competitive advantage over private 
business and industry in the federal procurement system to ensure that 
opportunities are provided to individuals with severe disabilities. 

Recommendations: 

1. To improve program performance management and oversight, we 
recommend that the Secretary of Education provide more effective 
leadership of the Randolph-Sheppard program by: 

* establishing performance goals to identify desired programwide 
outcomes that assess states' licensed vendor programs' performance as a 
whole in achieving established goals; 

* being more proactive in disseminating clear, consistent and routine 
guidance about program requirements and prohibited practices to federal 
agencies and states; and: 

* strengthening their monitoring of SLA and Randolph-Sheppard program 
performance in a cost-effective manner. 

2. To improve program performance management, we recommend that the 
Chairperson for the Committee for Purchase assess goals and measures 
for JWOD to ensure that they are clear, measurable and continue to 
capture key aspects of program performance as the Committee for 
Purchase continues to develop its performance management system. 

3. To help ensure that JWOD nonprofit agencies comply with program laws 
and regulations, we recommend that the Chairperson of the Committee for 
Purchase improve procedures for overseeing these agencies. This could 
include requiring the central nonprofit agencies to enter into written 
contracts with the Committee for Purchase that clearly lay out their 
oversight responsibilities and the consequences for failing to fulfill 
them, providing a means of compensating the central nonprofit agencies 
for their services that provides an incentive for effective 
enforcement, or having the Committee for Purchase assume greater 
responsibility for oversight of JWOD nonprofit agencies, by performing 
more on-site compliance reviews. 

Agency Comments and Our Evaluation: 

We received written comments on a draft of this report from the 
Department of Education and the Committee for Purchase. Education and 
the Committee for Purchase generally agreed with our recommendations 
and provided information on activities they had underway or planned. 

Education agreed that it should provide more effective leadership of 
the Randolph Sheppard program and commented that the actions we 
recommended were consistent with the steps the program is taking to 
improve program administration. Some of the steps Education cited 
included developing appropriate performance goals, enhancing its 
efforts to provide clear and consistent guidance, and improving program 
monitoring. We believe these efforts will help to improve program 
performance management and oversight. 

The Committee for Purchase agreed that its performance goals and 
measures for the JWOD program should be assessed to ensure that they 
are clear and quantifiable. However, the Committee for Purchase 
commented that its regulations did not intend for "training" to be 
taken literally as a mission output and, therefore, the agency did not 
establish a separate goal for training activities. Rather, the 
Committee for Purchase stated that it viewed training as an important, 
but incremental activity that equips persons who are blind or have 
severe disabilities with the knowledge and skills necessary for 
employment, which it considers the paramount goal of the program. Also, 
the Committee for Purchase believes the reporting requirements for 
establishing a separate goal for training would burden the nonprofit 
agencies. To avoid confusion over the Committee for Purchase's goals in 
the future, the agency plans to clarify its regulations. While we 
believe that training is key to preparing persons who are blind or have 
severe disabilities for employment, we can understand the Committee for 
Purchase's view that the paramount program goal is employment. 
Clarifying the regulations regarding the Committee for Purchase's 
intent with respect to the role of training may make it clear that a 
separate goal for training is not essential. 

With respect to ensuring effective monitoring and oversight, the 
Committee for Purchase agreed that more guidance was needed to help 
ensure that JWOD nonprofit agencies comply with program laws and 
regulations. Additionally, the Committee for Purchase commented that it 
has recently begun taking steps to address possible conflicts of 
interest between the two roles played by the central nonprofit 
agencies. The Committee for Purchase also commented that it is 
considering establishing other oversight and compliance mechanisms and 
in its proposed fiscal year 2007 budget included three new positions 
and additional funding for oversight, compliance monitoring, and 
program review. We believe the Committee for Purchase's proposed 
actions are positive steps toward helping to ensure that JWOD nonprofit 
agencies comply with program laws and regulations. 

Education and The Committee's comments appear in appendixes III and IV, 
respectively. Both agencies also provided technical comments, which we 
have incorporated into the report as appropriate. 

We are sending copies of this report to the Secretary of Education, 
Chairperson of the Committee for Purchase, relevant congressional 
committees, and others who are interested. Copies will also be made 
available at no charge on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. 

Please contact me on (202) 512-7215 if you or your staff have any 
questions about this report. Contact points for our Offices of 
Congressional Relations and Public Affairs can be found on the last 
page of this report. Other major contributors to this report are listed 
in appendix V. 

Signed by: 

Robert E. Robertson: 
Director: 
Education, Workforce, and Income Security: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of our study were to assess to what extent (1) 
performance goals and measures have been established for these programs 
and (2) the agencies responsible for these programs have established 
adequate procedures for overseeing program implementation and assuring 
laws and regulations are followed. 

To determine what performance goals and measures have been established 
for these programs, we reviewed program laws, guidance, and performance-
related documents. To obtain additional information about the 
performance goals and measures, and determine the extent that the 
agencies responsible for these programs have established adequate 
procedures for overseeing program implementation and assuring that laws 
and regulations are followed, we (1) reviewed federal laws, 
regulations, and guidance to determine the programs' requirements; and 
(2) interviewed agency officials at the Rehabilitation Services 
Administration (RSA) within the Department of Education, and the 
Committee for Purchase from People Who Are Blind or Severely Disabled 
(Committee for Purchase). In addition, we interviewed officials of the 
two central nonprofit agencies--the National Industries for the Blind 
(NIB) and NISH--that have been delegated certain oversight 
responsibilities for Javits-Wagner-O'Day (JWOD) member nonprofit 
agencies by the Committee for Purchase. 

To obtain additional information about program goals and measures and 
oversight for the four programs, we conducted site visits to four 
states (Arizona, Kansas, New York, and North Carolina). During these 
visits, we met with state VR agency officials to discuss the Supported 
Employment, Projects with Industry (PWI), JWOD, and Randolph-Sheppard 
programs. In addition, we visited 4 PWI grantees, 13 JWOD nonprofit 
agencies, and 7 Randolph-Sheppard vendors. Several criteria were used 
in selecting the states to visit. States that were considered had all 
four of the employment-related disability programs currently present 
and operating in them. States varied in the administration of their VR 
programs with about half of all states having two separate programs-- 
one for the general VR and a separate one for the blind--and the 
remaining states having only one VR program. We selected two states 
(New York and North Carolina) that had both general and blind VR 
programs, and two states (Arizona and Kansas) that had one VR program 
that served all people with disabilities seeking employment-related 
assistance. In addition, we selected states based on a review of 
information about the characteristics of NIB and NISH member nonprofit 
agencies to include both large and small, urban and rural, and 
different kinds of work performed (products and services). States were 
also selected to include geographic diversity. 

During the state visits, we met with officials representing each of the 
four programs. For Education's programs, we interviewed local officials 
of nonprofit agencies with PWI grants, state program administrators for 
the state-operated Randolph-Sheppard programs as well as licensed 
vendors, and state VR officials responsible for administering the 
Supported Employment State Grants program. For JWOD, we interviewed 
chief executive officers or their representatives of the JWOD nonprofit 
agencies with current federal contracts to provide goods and/or 
services. In addition, during these meetings, we collected 
documentation to ascertain how the federal and two central nonprofit 
agencies were monitoring their respective programs. We also reviewed 
the records of 137 workers who were blind or had severe disabilities, 
selecting some records at each of the 13 JWOD nonprofit agencies we 
visited. The records were randomly selected from lists of current JWOD 
workers. A random number generator was used to assign a number to each 
name on the active roster and records were selected on the basis of the 
number--starting with the lowest number. During the record review, we 
assessed whether the agencies' files of workers who were blind or had 
severe disabilities contained required medical documentation and 
assessment of ability to work in competitive employment. 

We determined that the fiscal and program data we used in this report 
was reliable for our purposes. To make this determination, we assessed 
the reliability of fiscal and programmatic data by interviewing 
officials knowledgeable about the data and the steps they take to 
ensure accuracy. For Supported Employment, prior GAO work had 
systematically tested relevant variables, including all 22 variables of 
the services provided. In addition, for this engagement we obtained 
documentation from two states (Kansas and New York) that described the 
states' procedures for checking the reliability of their data. 
Programmatic data collected by the Committee for Purchase for the JWOD 
program, and Education for the PWI and Randolph-Sheppard programs were 
self-reported by local program officials. For example, reviews of the 
information reported by officials for the PWI program were generally 
performed by project managers. For fiscal reporting, however, we found 
that JWOD nonprofit agencies, PWI grantees, and licensed vendors 
generally had systems and procedures for stronger accounting of 
financial data. For example, state licensing agency (SLA) officials 
used cash register receipts and routine reports on business activities 
submitted by the licensed vendors to the SLAs to review the financial 
information for these programs. In addition, licensed vendors were also 
required to complete merchandise inventories at least once each year. 

We also reviewed other available reports on the Randolph-Sheppard 
program of the states visited, and reviewed the findings and 
recommendations of state audit reports from four other states-- 
California, Georgia, Michigan, and South Carolina--that had evaluated 
all or certain aspects of their state-operated Randolph-Sheppard 
programs in recent years. In addition, we interviewed officials of 
agencies engaged in disability research and advocacy at the national 
level to learn more about each of the objectives. These organizations 
were the Council of State Administrators of Vocational Rehabilitation, 
Disability Policy Collaboration, Easter Seals, Goodwill Industries 
International, National Council on Disability, and the National Council 
of State Agencies for the Blind. We also met with officials of the 
General Services Administration, a federal procurement agency and 
partner of the JWOD program. 

We conducted our work between March 2006 and December 2006 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Performance Goals and Measures for the Javits-Wagner-O'Day 
(JWOD) Program: 

Table 5: JWOD Performance Goals and Measures: 

Performance goals: Continue to expand employment opportunities for 
people who are blind or have other severe disabilities under the JWOD 
program, including wage progression, benefits, upward mobility, and 
personal job satisfaction; 
Performance measures: 
* Percentage increase in direct labor hours performed by people who are 
blind or have other severe disabilities on JWOD products and services; 
* Percentage increase in the number of people who are blind or have 
other severe disabilities employed in direct labor positions on JWOD 
products/ services; 
* Percentage increase in the number of people receiving benefits versus 
not receiving benefits; 
* Percentage decrease in the number of people receiving less than the 
federally-mandated minimum wage or Service Contract Act wage rate, 
segmented by disability; 
* The number of employees who are blind or have other severe 
disabilities who are promoted into a direct labor job, other than 
supervisory or management positions, which includes increased wages 
and/or fringe benefits, not attributed to cost of living or 
productivity increases of less than 20 percent. Promotions can be 
movement between JWOD and non- JWOD jobs; 
* The number of employees who are blind or have other severe 
disabilities who are promoted into an indirect labor job requiring 
supervisory, management, or technical skills, that included increased 
wages and/or fringe benefits, not attributed to cost of living raises; 
* The number of employees who are blind or have other severe 
disabilities who leave the nonprofit agency through competitive or 
supported employment placements. 

Performance goals: Partner with federal customers to increase customer 
satisfaction and loyalty, so that the JWOD program becomes their 
preferred source for products and services; 
Performance measures: 
* Federal agency scorecard that evaluates the level of satisfaction 
with JWOD products, services and/or customer experience among key 
federal agencies, using a stoplight or similar summary format; 
* Time to resolve customer questions or complaints received via the 
central customer feedback mechanism(s) or other means of communication; 
* Increased customer satisfaction with quality, timeliness, and price, 
based on customer surveys and/or alternative qualitative research 
(e.g., focus groups). 

Performance goals: Improve efficiency and effectiveness of the JWOD 
program by streamlining and automating processes and procedures, and 
improving communication, while continuing to ensure program integrity; 
Performance measures: 
* Overhead cost as a percentage of JWOD program direct labor hours, 
calculated as total Committee for Purchase budget plus central 
nonprofit agencies' operating and supporting costs (excluding capital 
expenditures), divided by total number of direct labor hours, segmented 
by overall program (Committee for Purchase plus central nonprofit 
agencies' overhead), National Industries for the Blind (NIB) and NISH; 
* Reduction in the cycle time for the addition of a new JWOD product or 
service to the procurement list; 
* Percentage increase in sales of products through commercial 
distribution channels, segmented by product category; * Ranking of 
commercial distributors, evaluated against consistent program 
performance expectations, including compliance with the Committee for 
Purchase's Essentially The Same (ETS) requirements, segmented by 
product category; 
* Milestone tracking of evaluation of commercial distribution 
processes, including staff resources and financial resources. 

* Percent of information technology projects on which the Committee for 
Purchase, central nonprofit agencies, and nonprofit agencies 
collaborated to increase efficiency and exchange of information; 
* Decrease in the percentage of JWOD nonprofit agencies found out of 
compliance, segmented by reason; 
* Consider a future measure linked to the results of governance and 
executive compensation actions. 

Performance goals: Expand awareness, understanding, and preference for 
the JWOD program within the public, Congress, federal agencies, the 
disability community, and other JWOD stakeholders through effective 
communication and information sharing; 
Performance measures: 
* Effectiveness of communication and information sharing measured by 
increased percentages in awareness, familiarity (understanding) and 
preference, segmented by key stakeholders; 
* Milestone tracking of annual update and implementation of a plan that 
addresses communication and information sharing with and among both 
internal and external stakeholders; 
* Analysis of program-level communications execution to ensure that 
program resources are used in support of the strategic communications 
plan; * Analysis of program-level publications, events, and other 
communications tools to evaluate message alignment; 
* Facilitate nonprofit agency adoption of program messaging and 
branding; 
* Awareness, understanding, preference among federal customers, 
segmented by Department of Defense and civilian agencies; 
* Awareness, understanding, preference for "the disability community," 
comprised of government policy makers, academia, and private membership 
or advocacy organizations for people who are blind or have other severe 
disabilities; 
* Among members of congressional committees or subcommittees with 
oversight or other significance for the JWOD program, number who have 
been educated about the JWOD program and/or actively engaged with their 
local JWOD-participating nonprofit agency(ies). 

Performance goals: Strategically develop new markets and expand 
existing markets in which the JWOD program can provide best value 
products and services to federal customers in order to expand 
employment opportunities that meet the needs of people who are blind or 
have other severe disabilities; 
Performance measures: 
* Milestone tracking of establishment and implementation of a program 
market development plan that addresses existing customers, existing 
products/ services, new customers, and new products/services; 
* Percent increase in the employment of people who are blind or have 
other severe disabilities under the JWOD program, measured in (1) 
actual direct labor hours, (2) actual jobs, (3) projected direct labor 
hours on procurement list additions, and (4) projected jobs on 
procurement list additions by key market segment; 
* JWOD goal achievement, by agency and overall federal government; 
* Milestone tracking of establishment and implementation of a strategy 
for greater cooperation between JWOD and the small business community, 
which may explore counting appropriate JWOD awards toward the annual 
Small Business procurement goals and/or the federal government's 
inclusion of disability-owned businesses within the small business 
measure categories (relates to leveraging the JWOD program to create 
additional jobs in the commercial sector); 
* Milestone tracking of implementation of a strategy for greater 
cooperation between JWOD and Randolph-Sheppard programs; 
* Milestone tracking of establishment and implementation of a strategy 
for greater cooperation with service-disabled veterans' businesses. 

Source: Final FY 2007-2009 Strategic Plan for the Javits-Wagner-O'Day 
(JWOD) Program, Committee for Purchase From People Who Are Blind or 
Severely Disabled, October 16, 2006. 

[End of table] 

[End of section] 

Appendix III: Comments from the Department of Education: 

United States Department Of Education: 
Office Of Special Education And Rehabilitative Services: 
The Assistant Secretary: 

Jan 10 2007: 

Robert E. Robertson, Director: 
Education, Workforce, and Income Security Issues: 
United States Government Accountability Office: 
441 G Street N.W. 
Washington, D.C. 20548: 

Dear Mr. Robertson: 

Thank you for the opportunity to review the draft report to 
Congressional Requesters: Federal Disability Assistance-Stronger 
Federal Oversight Could Help Assure Multiple Programs' Accountability, 
GAO-07-236. The Government Accountability Office (GAO) reviewed four 
employment programs in this study, including three programs 
administered by this Department (Projects With Industry, the Supported 
Employment State Grant program, and the Randolph-Sheppard Act program). 
The draft report includes a recommendation on one Department program, 
the Randolph-Sheppard Act program. This Department does not administer 
the fourth program reviewed by GAO, the Javits-Wagner-O'Day (JWOD) 
program, and thus, we are not providing comments on the report as it 
pertains to that program. 

We generally agree with the recommendation in the report, and discuss 
below the steps the Department is already taking to improve program 
administration and performance. We have also enclosed some technical 
comments on several specific matters discussed in the draft report in 
an effort to make the report clearer and more accurate. 

The first program discussed in the report, Projects With Industry 
(PWI), is a discretionary grant program assisting individuals with 
disabilities to obtain competitive employment. You found PWI to have an 
appropriate performance goal with four measures, including a new 
efficiency measure established in fiscal year 2006. You noted that the 
Department performed appropriate monitoring and oversight activities, 
and that on-site monitoring is improving. GAO made no recommendations 
to the Secretary on this program. The Department will continue its 
efforts to improve data quality, and monitoring to help improve the 
performance of PAT grantees. 

The Supported Employment State Grant program was the second program 
reviewed for which GAO made no recommendations to the Secretary. You 
noted that the Department has a goal to measure (at least, indirectly), 
program performance in placing participants into competitive 
employment. For fiscal years (FY) 2003-04 the performance targets set 
were greatly exceeded. For FY 2005, the target was missed by 0.4 
percent after having been raised 15 percent from the preceding year. As 
you have noted, the program is closely aligned with the far larger 
state vocational rehabilitation formula grant program closely aligned 
with the far larger state vocational rehabilitation formula grant 
program that also provides services to individuals who may obtain 
employment in the specialized supported employment outcome. As noted in 
the report, because of the relationship of the Supported Employment 
State Grant program to the larger program, it is somewhat difficult to 
isolate the effects of the smaller program and measure those effects 
directly. 

The Randolph-Sheppard (R-S) Act program was the third Department 
program reviewed. GAO made a recommendation to the Secretary that 
includes establishing performance goals, being more proactive in 
disseminating clear and consistent guidance, and strengthening 
monitoring. The Department agrees with the recommendation, and note 
that it is consistent with steps the Department is already taking to 
improve program administration. 

Prior to the GAO study, the Department initiated a number of 
administrative activities and steps to improve the management, 
performance and accountability of the R-S program, and we are building 
on those activities and steps. The Department is in the process of 
developing appropriate performance goals, is enhancing its efforts to 
provide clear and consistent guidance, and has taken steps to improve 
and enhance its program monitoring. For example, the Department 
completed compliance reviews pertaining to state regulations and set- 
aside schedules in fiscal year 2006 for eight states: Iowa, Texas, 
Maine, Alabama, Oklahoma, Wisconsin, Nevada and Hawaii, and we are 
completing final reports for monitoring in South Carolina, Hawaii, West 
Virginia, Wisconsin and the District of Columbia. These initiatives are 
substantially aligned with and are addressing the recommendations in 
the draft report. 

We have attached a summary of several more specific and technical 
comments and suggestions to help make the report clearer and more 
accurate. We look forward to working with the Government Accountability 
Office in your new study of military food service and the role of R-S 
agencies and JWOD as contractors to the Department of Defense. Please 
let me know if you have any questions about our comments. We appreciate 
the opportunity to review the draft report and provide comments. 

Sincerely: 

Signed by: 

John H. Hager

Enclosure: 

[End of section] 

Appendix IV: Comments from the Committee for Purchase from People Who 
Are Blind or Severely Disabled: 

Committee For Purchase From People Who Are Blind Or Severely Disabled: 
Jefferson Plaza 2, Suite 10800: 
1421 Jefferson Davis Highway: 
Arlington, Virginia: 
22202-3259: 
703-603-7740: 
Fax 703-603-0655: 

January 5, 2007: 

Mr. Robert E. Robertson: 
Director: 
Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

RE: Comment on Draft Report GAO-07-236: 

Dear Mr. Robertson: 

As you requested in your note of December 14, 2006, here are the agency 
comments of the Committee for Purchase From People Who Are Blind or 
Severely Disabled (the Committee) on the subject report. The report 
reflects the efforts of your staff to learn and understand our somewhat 
obscure program. We are generally satisfied with the findings and 
recommendations. However, there are a few areas where we believe 
improvements can be made. For example: 

(a) The report states under Results in Brief on pages 3: "For the JWOD 
program, the Committee for Purchase first developed performance goals 
and measures as part of their fiscal year strategic plan, but did not 
include a key component -performance targets-necessary for assessing 
performance. The Committee for Purchase has since revised its 
performance management system and established some performance targets, 
but cannot yet report progress toward its goal. Measures under the 
revised system have some limitations, such as not being clearly defined 
or being difficult to measure." 

We believe that a more accurate statement would be: "That while the 
strategic plan as adopted by the Committee for the Javits-Wagner-O'Day 
(JWOD) Program for FY 2007-2008 does have some strategic goals and 
objectives that are readily quantifiable, and thus have specific 
targets identified, other goals and objectives which are more 
qualitative in nature still require benchmarking in order to develop 
appropriate measures or targets. The Committee has revised its 
performance management system and agrees that over the next few years, 
milestone-tracking and "to-be-determined" targets will be converted to 
more objective, quantifiable targets. As benchmark data is collected in 
several areas during FY 2007, an update of the strategic plan will 
include more specific targets by FY 2008." 

(b) The report states under Results in Brief on page 4: "With regard to 
JWOD, the Committee for Purchase delegates most of its responsibilities 
for monitoring compliance to two central nonprofit agencies that must 
represent the interests of the JWOD nonprofit agencies they oversee." 

We believe that a more accurate statement would be: "With regard to 
JWOD, the Committee for Purchase does perform some compliance 
monitoring for its participating nonprofit agencies. However, the 
majority of the compliance visits made to the over 600 participating 
nonprofit agencies are delegated to be performed by the Committee's two 
designated central nonprofit agencies, which also must represent the 
interests of the JWOD nonprofit agencies they oversee." 

(c) The report states under Javits-Wagner-O'Day on page 10 that: "the 
total program sales for 2006 are estimated at $3 billion." Our most 
recent estimates indicate that this figure is closer to $2.3. billion. 
Additionally, the report states: "that the JWOD program provides 
employment for over 45,000 people who are blind or have severe 
disabilities." Our most recent estimates indicate that this figure is 
closer to 48,000. 

(d) The report states under Javits-Wagner-O'Day on page 11 that: " .for 
the purposes of the JWOD program, an agency must employ persons who are 
blind or have severe disabilities to perform at least 75 percent of the 
work-hours of direct labor during the fiscal year to furnish such 
commodities or services." 

We believe that a more accurate statement would be: ".for the purposes 
of the JWOD program, an agency must employ persons who are blind or 
have severe disabilities to perform at least 75 percent of the work-
hours of direct labor during the fiscal year to furnish such 
commodities or services (whether or not the commodities or services are 
procured under the JWOD Act)." 

(e) The report states under "The Committee for Purchase Recently 
Updated its Strategic Plan" on page 16 that: "However, these goals do 
not address one part of the program's mission, which is to increase 
training opportunities." 

It is our opinion that the term "training" as it appears at 41 C.F.R. 
51-1.1(a) is not intended to be taken literally as a mission output. We 
view training as an important but incremental activity that equips 
persons who are blind or severely disabled with the knowledge and 
skills necessary for employment, which we consider the paramount goal 
of our program. Accordingly, we have not established a separate goal 
for training activities, nor do we believe it appropriate to burden our 
nonprofit agencies with an additional reporting requirement for 
training. The Committee will clarify the policy statement in 41 CFR 51- 
1.1(a) to avoid confusion over the Committee's goals in the future. 

(f) The report states under "Uneven Federal Oversight Provides Little 
Assurance" on page 19 that: "while the Committee has established 
procedures for monitoring and overseeing the JWOD program, it has 
delegated responsibility for these functions to the central nonprofit 
agencies, raising questions about those agencies' independence, as they 
are also charged with representing the producing nonprofit agencies." 

We would like it to be noted that the Committee has recently begun 
taking steps to eliminate any possible conflict of interest between the 
two roles. At its December 14, 2006 meeting, the Committee's Governance 
Subcommittee considered establishing other mechanisms for performing 
the program's oversight and compliance monitoring functions. The 
Subcommittee plans to continue this consideration at its next meeting, 
and to recommend to the Committee shortly an alternative to continued 
performance of these functions by the two existing central nonprofit 
agencies. As for the Committee's own efforts in this area, the 
Administration's budget for Fiscal Year 2007 included three new 
positions and additional funding which the Committee will use for 
oversight, compliance monitoring, and program review, if this part of 
the budget is enacted. 

(g) The report states under "Committee for Purchase Delegates Most 
Oversight" on page 25 that the level of central nonprofit agency 
compensation by the producing nonprofit agencies is negotiated by those 
parties is not accurate. 

The Committee's regulations, at 41 CFR 51-3.5 and 51-4.3(b)(9), permit 
the central nonprofit agencies to charge a fee based on nonprofit 
agency sales to the Government that does not exceed the limit set by 
the Committee, and require the nonprofit agencies to pay that fee in 
order to remain in good standing in the program. To our knowledge, 
individual fees are not usually negotiated. 

(h) The report states under "Committee for Purchase Delegates Most 
Oversight" on page 27 "that the Committee has offered little guidance 
on when a disability may be considered severe." 

The Committee would like it to be noted that the Committee's 
regulations at 41 C.F.R. § 51-4.3. require that each nonprofit agency 
employing persons with severe disabilities participating in the JWOD 
Program shall maintain in each individual with a severe disability's 
file a written report signed by a licensed physician, psychiatrist, or 
qualified psychologist, reflecting the nature and extent of the 
disability or disabilities that cause such persons to qualify as a 
person with a severe disability, or a certification of the disability 
or disabilities by a State or local governmental entity. It also states 
that reports must state whether that individual is capable of engaging 
in normal competitive employment. These reports shall be signed by a 
person or persons qualified by training and experience to evaluate the 
work potential, interests, aptitudes, and abilities of persons with 
disabilities and shall normally consist of preadmission evaluations and 
reevaluations prepared at least annually. The file on individuals who 
have been in the nonprofit agency for less than two years shall contain 
the preadmission report and, where appropriate, the next annual 
reevaluation. The file on individuals who have been in the nonprofit 
agency for two or more years shall contain, as a minimum, the reports 
of the two most recent annual reevaluations. 

However, the Committee realizes that more guidance is needed. We are 
currently in the final stages of creating a new staff manual providing 
detailed guidance on disability definitions, interpretations, and 
documentation requirements. This manual will be made available to our 
community and interested persons through the Committee website by March 
2007. 

Thank you for the opportunity to review and comment on your draft 
report. We look forward to receiving the final report. 

Sincerely, 

Signed by: 

Leon A. Wilson, Jr. 
Executive Director: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robert E. Robertson (202) 512-7215: 

Acknowledgments: 

The following individuals made important contributions to this report: 
Shelia D. Drake, Timothy Hall, Regina Santucci, Don Allison, Rachael 
Valliere, Daniel Schwimer, Walter Vance, and Robert Owens. 

FOOTNOTES 

[1] Cornell University Institute for Policy Research, Policy Brief, 
Dismantling the Poverty Trap: Disability Policy for the 21st Century 
(Washington, D.C.: July 2005). 

[2] NISH was formerly known as the National Industries for the Severely 
Handicapped. 

[3] The Government Performance and Results Act of 1993 (GPRA) requires 
federal executive branch agencies such as the Department of Education 
to set goals, measure their performance, and report on their 
accomplishments. Agencies are required to develop annual performance 
plans that use performance measurement to reinforce the connection 
between the long-term strategic goals outlined in their strategic plans 
and the day-to-day activities of their managers and staff. 

[4] State VR programs provide assistance to individuals with 
disabilities and are overseen by the Department of Education. 

[5] Pub. L. No. 95-602 (1978); 29 U.S.C. § 795. 

[6] Competitive employment is any full-or part-time job that pays at 
least the federal minimum hourly wage and provides a work setting 
typically found in the community in which individuals with disabilities 
interact with non-disabled individuals, other than non-disabled 
individuals who are providing services to them, to the same extent that 
non-disabled individuals in comparable positions interact with other 
persons. 

[7] Pub. L. No. 95-602 (1978); 29 U.S.C. §§ 795g-795n. 

[8] States do not have a matching requirement for federal funds to 
receive this grant. 

[9] In this report, the term state VR programs refers to programs or 
agencies in the 50 states, the District of Columbia, and the 
territories of American Samoa, Guam, Northern Marianas Islands, Puerto 
Rico, and the Virgin Islands. 

[10] This program was most recently reauthorized as part of the 
Workforce Investment Act of 1998. 

[11] The act generally requires states to match federal funds at a 
ratio of 78.7 percent federal to 21.3 percent state dollars. 

[12] In the four states we visited, Randolph-Sheppard is called the 
Business Enterprise Program. 

[13] Randolph-Sheppard Act, ch. 638, 49 Stat. 1559 (1936) (codified at 
20 U.S.C. §§ 107, 107a-107f). 

[14] Wagner-O'Day Act, ch. 697, 52 Stat. 1196 (1938) (codified at 41 
U.S.C. §§ 46-48). 

[15] A blind person is defined as a person who has been determined to 
have (1) not more than 20/200 central visual acuity in the better eye 
with correcting lenses or (2) an equally disabling loss of the visual 
field as evidenced by a limitation to the field vision in the better 
eye to such a degree that its widest diameter subtends an angle of no 
greater than 20 degrees. A person with a severe disability, other than 
a blind person, is any person who has a severe physical or mental 
impairment (a residual, limiting condition resulting from an injury, 
disease, or congenital defect) that so limits the person's functional 
capabilities (mobility, communication, self-care, self-direction, work 
tolerance or work skills) that the individual is currently unable to 
engage in normal competitive employment. 41 C.F.R. § 51-1.3. 

[16] The Committee for Purchase is responsible for publishing a 
procurement list of the commodities produced by any qualified nonprofit 
agency for the blind or by any qualified nonprofit agency for the 
severely disabled and the services provided by any such agency, which 
the Committee for Purchase determines are suitable for procurement by 
the government under JWOD. The Committee for Purchase determines the 
fair market price of commodities and services that are contained on the 
procurement list and offered for sale to the government by any 
qualified JWOD agency. 

[17] 41 C.F.R. § 51-4.3. 

[18] Although the JWOD Act does not require GPRA performance goals and 
measures, the Committee for Purchase has determined that the JWOD 
program is covered by federal strategic planning requirements. 

[19] 41 C.F.R. § 51-1.1(a). 

[20] GAO, Executive Guide: Effectively Implementing the Government 
Performance and Results Act, GAO/GGD-96-118 (Washington, D.C.: June 
1996). 

[21] GAO, Tax Administration: IRS Needs to Further Refine Its Tax 
Filing Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 
22, 2002). 

[22] By law, Education is required to develop standards for the annual 
review and evaluation of a grant recipient's project, which include a 
number of compliance indicators. These include, for example, the number 
of applicants and individuals eligible for a program, and the number of 
significantly disabled people who ended their participation in the 
program, became employed, and were still employed after 6 and 12 
months. 

[23] 29 U.S.C. § 795(f)(3)(A). 

[24] RTI International, Evaluation of the Projects with Industry 
Program, Final Report (Research Triangle Park, N.C.: 2003). 

[25] 29 U.S.C. § 795(f)(5). 

[26] For more information on Education's oversight of state VR 
programs, see GAO, Vocational Rehabilitation: Better Measures and 
Monitoring Could Improve the Performance of the VR Program, GAO-05-865 
(Washington, D.C.: September 2005). 

[27] The procedures were developed with input from national experts, 
state VR agency officials, State Rehabilitation Council members, VR 
consumer and advocacy groups, community partners and provider 
organizations and other key stakeholders. 

[28] 20 U.S.C. § 107a and 34 C.F.R. §§ 395.4 - .5. 

[29] Under 20 U.S.C. § 107(b), any limitation on the placement or 
operation of a vending facility shall be fully justified in writing to 
the Secretary, who shall determine whether such limitation is 
justified. In 2005, an arbitration panel ruled that a 10-percent 
commission charged by the U.S. Postal Service to licensed vendors 
without authorization of the Secretary of Education was a limitation 
not allowed under the law. The panel was convened by Education after it 
received a complaint and, as required by law, Education published a 
synopsis of the decision in the Federal Register. 70 Fed. Reg. 60803- 
04. 

[30] Michigan Office of the Auditor General, Performance Audit, 
Michigan Commission for the Blind, Department of Labor and Economic 
Growth and Family Independence Agency, Report Number: 43-231-03 
(October 2004). 

[31] California State Auditor, Department of Rehabilitation: Its Delay 
in Correcting Known Weaknesses Has Limited the Success of the Business 
Enterprise Program for the Blind, Report No. 2002-031 (September 2002). 

[32] NISH was formerly called National Industries for the Severely 
Handicapped. 

[33] In 2005, NIB performed about 27 on-site reviews in 2005 and NISH 
performed about 180, according to agency officials. 

[34] For individuals employed at NISH associated agencies, any 
individual who is capable of competitive employment is not considered 
severely disabled, according to program regulations. See the Committee 
for Purchase's Compliance Memorandum No. 7, "On-Site Compliance 
Reviews," dated May 6, 1998. 

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