These designated  national agencies charge fees for the services provided to local nonprofit  agencies. The JWOD program provided  employment for about 48,000 people who are blind or have severe  disabilities. In August 2006, DOD,  Education, and the Committee for Purchase issued a policy statement that  established certain guidelines, including the following:    The Randolph-Sheppard program will not seek contracts for dining  support services that are on the JWOD procurement list, and Randolph- Sheppard will not seek contracts for operation of a dining facility if the  work is currently being performed under the JWOD program; JWOD  will not pursue prime contracts for operation of dining facilities at  locations where an existing contract was awarded under the Randolph- Sheppard program (commonly known as the “no-poaching” provision). Randolph-Sheppard Places Blind Individuals in Managerial Roles, while JWOD Employs Persons with Disabilities in Less Skilled Jobs

The Randolph Sheppard and JWOD programs utilize different operating  procedures to provide dining services to DOD. For the Randolph-Sheppard  program, state licensing agencies act as prime contractors, and train and  license blind vendors to operate dining facilities. According to our  survey, 33 of the 39 Randolph-Sheppard contracts relied on a food service  company—known as a teaming partner—to provide assistance in  operating dining facilities. The Committee for Purchase Works with NISH and Local Nonprofit Agencies to Employ Individuals with Disabilities in DOD Dining Facilities

The Committee for Purchase works with NISH to match DOD’s need for  services with nonprofit agencies able to provide food services. Programs Differ Regarding How Contracts Are Awarded and Priced, and How Program Beneficiaries Are Compensated

The Randolph-Sheppard and JWOD programs have significant differences  in terms of how contracts are awarded and priced, and in the  compensation provided to beneficiaries who are blind or have other  disabilities. This priority may come into play when contracts are  awarded either by direct noncompetitive negotiations or through  competition with other food service companies. Under the JWOD program, competition is not a factor  because DOD is required to purchase food services from a list maintained  by the Committee for Purchase. The two programs also  differ in terms of how program beneficiaries are compensated. Randolph-Sheppard blind vendors received, on the average,  pretax compensation of about $276,500 annually, while JWOD workers at  the three sites visited earned on average $13.15 per hour, including fringe  benefits. Of the eight Randolph-Sheppard contracts  we reviewed in detail, six had been awarded through direct negotiations  with the state licensing agency. Negotiations in either case typically begin with a pricing proposal  submitted by the state licensing agency, and will then involve a  comparison of the proposed price with the prices in previous contracts, an  independent government estimate, or the prices offered by other  competitors, if any. Randolph-Sheppard Vendors Generally Receive a Percentage of Profits, and JWOD Beneficiaries Are Paid Hourly Wages According to Federal Law

Compensation for Randolph-Sheppard blind vendors is computed  differently from compensation paid to JWOD disabled workers. These figures are based on  pretax earnings. Appendix I: Scope and Methodology

To accomplish our research objectives, we interviewed officials from the  Department of Defense (DOD), the Department of Education, the  Committee for Purchase, and organizations representing both the  Randolph-Sheppard and Javits-Wagner-O’Day (JWOD) programs.
Why GAO Did This Study

Randolph-Sheppard and Javits-Wagner-O'Day (JWOD) are two federal programs that provide employment for persons with disabilities through federal contracts. In 2006, participants in the two programs had contracts with the Department of Defense (DOD) worth $465 million annually to provide dining services at military dining facilities. The 2007 National Defense Authorization Act directed GAO to study the two programs. This report examines (1) differences in how the Randolph-Sheppard and JWOD programs provide food services for DOD and (2) differences in how contracts are awarded, prices are set, and program beneficiaries (i.e. persons with disabilities) are compensated. GAO interviewed program officials, conducted a survey of states with Randolph-Sheppard programs, and reviewed eight Randolph-Sheppard and six JWOD contracts.

What GAO Found

The Randolph-Sheppard and JWOD programs use different procedures to provide food services to DOD. In Randolph-Sheppard, states act as prime contractors, and train and license blind individuals to act as managers of dining facilities. In most cases, the blind vendor relies on a food service company--known as a teaming partner--to assist in operations, provide expertise, and help with start-up costs. About half of the blind vendors are required to employ other persons with disabilities. JWOD is administered by an independent federal agency called the Committee for Purchase from People Who are Blind or Severely Disabled (Committee for Purchase). The Committee for Purchase engages a central nonprofit agency to match DOD's needs with services provided by local nonprofit agencies. Most of the individuals working for these local nonprofit agencies are employed in less skilled jobs such as serving food or washing dishes. The Randolph-Sheppard and JWOD programs differ significantly in the way DOD dining contracts are awarded, how prices are set, and how participants are compensated. For Randolph-Sheppard, DOD awards contracts to the states either through direct negotiations or competition with other food service companies. In either case, DOD and the states negotiate the prices based on factors such as historical prices and independent government estimates. Under JWOD, competition is not a factor because DOD is required to purchase services it needs from a list maintained by the Committee for Purchase, which establishes fair market prices for these contracts. In terms of compensation, Randolph-Sheppard blind vendors generally received a percentage of contract profits, averaging about $276,500 per vendor annually. JWOD beneficiaries are generally paid hourly wages according to rules set by the federal government. For the three sites we visited, we estimate that beneficiaries received an average wage of $13.15 per hour, including fringe benefits. Given the differences in the roles of the beneficiaries of these two programs, comparisons of their compensation have limited value.