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Federal Contracting for People with Disabilities:
Federal Contractor Knowledge of Section 503 Requirements and Recommendations

Wendy Wilkinson, LLD
Southwest ADA Center
Houston, Texas

Andy Winnegar
Andy Winnegar Consulting
Santa Fe, New Mexico

Fredrick E Menz, PhD
Professor Emeritus
University of Wisconsin-Stout
Menomonie, Wisconsin

June 2011

Introduction

Tite I of the Americans with Disabilities Act (ADA) of 1990, as amended in 2008, was enacted to end discrimination in employment for people with disabilities and, thereby, improve rates of access and advancement of qualified individuals in public and private sector employment1. However, the ADA is not an affirmative action employment law, and the provisions of the law have not resulted in increasing employment rates for people with disabilities.  The employment rate for people with disabilities hovers around 39.5 percent, compared to 79.9 percent for people without disabilities2.

Federal contracting to the private sector for goods and services in FY 2010 totaled $535 billion3. The Rehabilitation Act of 1973, as amended, define requirements for federal agencies (Section 501) and contractors to the federal government (Section 503) in regards to discrimination in hiring and advancement of people with disabilities. Further, federal contractors are required to demonstrate to the Office of Federal Contract Compliance Programs (OFCCP) their compliance with ADA and Equal Employment Opportunities (EEO) and Affirmative Action guidelines4.

The Committee for Purchase from People Who are Blind or Severely Disabled, a federal agency, administers the AbilityOne Program which is the major federal set-aside program established explicitly for people with disabilities under the Javitz-WagnerO'Day Act, estimated at less than 2% of all federal contracts.  In comparison, 22.8% ($77.7 billion) of all federal contracts were set aside for small businesses in FY 2006 under set-aside programs that encourage businesses operated by or on behalf of minorities, women, and veterans service-disabled veterans owned small businesses5. Service-disabled qualify veterans in the program from 0-100% disability6. However, those small businesses owned by individuals with disabilities not qualifying as service-disabled are not acknowledged as qualifying minority businesses by the Department of Commence or the Small Business Administration.

The AbilityOne Program, formerly Javits-Wagner-O’Day, employing more than 40,000 people who are blind or have other severe disabilities is the largest provider of custodial services and commissary shelf-stocking to the federal government. The program has federal contracts for military dining services and garments manufacturing. The AbilityOne website reports surveying their workforce in 2006 finding 68 percent of respondents with severe disabilities satisfied with their jobs7.

There are over 600 federal contracts through non-profit community-based organizations (CBROs) managed by the National Industries for the Severely Handicapped (NISH) and  the National Industries for the Blind (NIB) to fulfill. The AbilityOne Program is designed "to recruit, hire, train, support, and promote workers with significant disabilities". Its goals are in keeping with the intent of the ADA goal (improve the employment and economic status of people with disabilities) and subject to requirements of Section 5038.

To meet the non-discrimination intents of federal law, federal contractors must be knowledgeable and address explicit federal compliance to guidelines under Section 503 and EEO. To meet the intent of the ADA to improve employment status of people with disabilities, federal contractors must also understand the expectation and intents of ADA and Section 503 and demonstrate commitment to recruiting, employing and advancing the employment of people with disabilities.

The trend in CBRO financing since the 1980s has been to diversify income sources to decrease reliance upon public funding from VR and other agencies as shown in several national studies conducted by the Research and Training Center at the University of Wisconsin-Stout. A comparison of 1996 and 1998 surveys of CBROs first noted changes in the importance of revenue from business activity, but that business income was not nearly as important as public funding and fees for services9. A later survey of 450 CBROs found that VR fees accounted for less than 40% of revenue10 and case studies of 49 CBROs documented the diversity of sources used by CBROs to augment public funding: Only 50% of revenues came from fees for services and 32% were from business operations established to support vocational services11. This trend is expected to continue as public funding declines and demand for employment and related support services provided by CBROs increases. This trend portends emerging roles for CBROs in advancing people with disabilities under federal contracts and as technical resources to for-profit federal contractors that must meet Section 503 requirements and ADA expectations.

The NISH Academy offers its members a wide range of training programs, yet there was no evidence of training available through the Academy on ADA or 503 requirements for federal contractors12.

Questions remain as to how well federal contractors are prepared to meet both the requirements and intents of ADA and EOC guidelines:

• How knowledgeable are federal contractors, especially those who have a high proportion of employees with disabilities in their workforce, of Section 503 requirements and expectations?
• What are their training or technical assistance needs that would to increase knowledge and application of non-discriminatory practices in employing and advance employees with disabilities?

This study was conducted as a first-step in a three-step process in support of federal efforts "to increase employment and economic benefits for people with disabilities through employment under federal contracts." This first-step explored preparedness of a sample of CBROs with federal contracts to meet compliance requirements under Sections 503 in order to determine need for training and technical assistance. The second-step (guided in part by these exploratory findings reported here) will devise a tool and appropriate curricula with which to assess and address federal contractors training and technical assistance needs. The third-step will identify needs among federal contractors in the Southwest ADA Center service area and provide training and technical assistance strategies to increase federal contractor capacity to meet requirements and intents of ADA for improving employment of people with disabilities.

Method

A fifteen item questionnaire was designed to collect data for the study. Twelve of the items asked questions about respondent knowledge of facts (8 items) and recommendations (4 items) for federal contractors under Sections 503 of the Rehabilitation. The remaining three questions asked about what the CBRO would consider a reasonable cost for accommodation, CBRO's annual dollars in federal contracts, and how often the CBRO interacted with the state vocational rehabilitation program (VR). No other demographic or organizational data were collected in an effort to encourage CBRO participation.

A one page letter, outlining purpose of study and requesting assistance, was sent to the 126 AbilityOne Program non-profit agencies (CBROs) throughout the country which were identified at the NISH website in bold as federal contract(s) producing under the AbilityOne Program.  The 126 non-profits were selected for convenience having available email addresses on the NISH website.  The minimum requirements for Affiliation are: Nonprofit agency status under Section 501(c) 3 or 501(c) 4 of the Internal Revenue Code; Articles of Incorporation and/or Bylaws that include the purpose of serving individuals with disabilities; A statement in the Articles and/or Bylaws that "no part of the net income may inure to the benefit of any shareholder or other individual;" Internet and email access; Completion of registration annually is required to maintain affiliation; There are two categories of Affiliation: Affiliates and Producing Affiliates:  AbilityOne Programs were selected as NISH has been recognized as committed to quality management of federal contracts under the set-aside program, these CBROs are held in high esteem as federal contractors, and one would expect that their staff would demonstrate fairly good knowledge of requirements and recommendations under ADA and Section 503.

Recipients of the letter were asked to encourage colleagues to respond to the survey.

The questionnaire was administered online using Vovici, a survey tool (http://www.vovici.com/products/overview/index.aspx), between March 2 and March 25, 2011. Data were analyzed using SPSS descriptive statistics (percents accurate or among choice categories) and Chi-square analyses to estimate whether answers from larger or small federal contractors differed in any meaningful ways. Open-ended sub-questions permitted respondents to expand upon or support their choices and were categorized for primary themes.

Limitations

The study has several known limitations that affect generalizability beyond the present sample of 31 respondents. These include the following:

• The sample was a convenience sample and no attempts were made to achieve a representative sample (e.g., based upon stratification by state, organization size, experience with federal contracting, success in employing people with disabilities).
• The study was exploratory, soliciting responses from only AbilityOne Programs and no follow-up of non-respondents was attempted.
• All participants were volunteers and had access to a computer and the internet.
• The cover letter encouraged sharing the survey link with colleagues and there was no way to know how many organizations were actually represented in the sample.
• As demographic and organizational data were not collected, it was not possible to determine how representative the sample is of AbilityOne Programs or key program staff under federal contracts.
• Some survey items and rating choices may not have been as clear as desired to effectively assess contractor knowledge and needs.
• Additional items are required to assess federal contractor knowledge of Section 503, ADA, and related EEO requirements, expectations, and contractor specific needs for training and technical assistance.

Results

Sample Characteristics

Thirty-one responses were obtained for a 24.6 percent response rate. Responses to questions regarding CBRO volume of federal contracting, what they perceive as costs for reasonable accommodation, and interaction with state vocational rehabilitation program are reported on Table 1.

Volume of Federal Contracting Roughly a quarter of the respondents (25.8%) were either small (under $100,000), medium (under $1 million), and medium-large (under $5 million) federal contractors, while the remaining respondents were from CBROs with large (over $5 million) federal contractors. This grouping of CBROs was used to test for difference in responses between contractors doing more or less federal contracting.

Interaction with State VR Program   Fairly high and regular interaction with the state VR agency was reported. Ninety percent had monthly (9.7%), weekly (38.7%) or daily contact (41.9%). Less than 10 percent reported "less than monthly" contact with the state VR agency.

What CBROs Consider as Reasonable Cost for Accommodations  Cost a CBRO would pay for reasonable accommodation varied considerably:  Nearly two-thirds (64.5%) of CBROs would pay between $100 and $1000. Another quarter (25.8%) would pay under $5000 for reasonable accommodation. Only small percents of CBROs consider paying costs over $5000 (3.2%) or limit cost "under $100" (6.5%).

Knowledge of Section 503 Requirements and Expectations
Findings on knowledge of requirements and recommendations under Section 503 among this sample of contractors are summarized on Table 2, both in terms of correctness and uncertainty of a correct answer. Uncertainty data is included to suggest how respondents deal with complex information contained in case-scenarios and/or where items may need clarification in subsequent needs assessment research. Reponses to requirement and expectation questions were not found to differ based upon amount of federal contracts.

Knowledge of Requirements These questions were phrased as applications of general reasonable accommodations for an employer in hiring, retaining, and advancing a candidate. Respondents were most knowledgeable of Section 503 requirements that an individual may request multiple accommodations (87.1%), that the company is responsible for paying "reasonable" costs for accommodations (80.6%), and that the request for accommodations need not be in writing (71%). They were less knowledgeable about whether a person can be fired if they cannot perform essential functions of a job (64.5%) or that an employer does not have to provide for every requested accommodation (58.1%). They were least knowledgeable and more uncertain about whether the employee must request an accommodation before the employer is required to provide one (41.6%), that a "reasonable" time limit applies in responding to a request for accommodations, and that a company would have to provide an interpreter for a deaf person interviewing for a supervisory position (35.5%).

The more interpretive or case-study like the question, the greater the uncertainty as indicated above. Also, written comments provided for "unsure" and "incorrect" answers either cited a specific statement regarding what they would consider an absolutely correct answer or their understanding what constitutes "reasonable accommodation" (e.g., undue financial or administrative hardship for employer, if an accommodation helps person do 100% or job, cost must be reasonable).

Understanding of Recommendations These questions related to what contractors know about their organization's policies, staffing, and practices to deal with accommodations in hiring and advancing people with disabilities. Responses to these questions suggested a slightly better and more consistent working knowledge of what one's CBRO was doing in these regards. Nearly all reported that their CBRO had a written affirmative action plan to hire and promote people with disabilities (90.3%) and three-quarters reported they had policies or procedures for providing accommodations (74.2%). Approximately two-thirds of CBROs (67.7%) had a staff position or unit designated to assist in accommodations. Typically, a rehabilitation person or department (8 responses), the human resources division (6 responses) or an administrator (4 responses) was designated with this responsibility. Whether and into what supervisory positions workers with disabilities had been promoted by their CBROs was less clear: 64.5% reported there had been promotions and 22.6% are uncertain. Of the 10 titles provided as examples of promotions, only 5 were clearly supervisory (i.e., as lead, as supervisor).

Conclusions and Recommendations

A need to improve knowledge and application of Section 503 requirements and recommendations among federal contractors is suggested in these findings. The following conclusions and recommendations appear warranted from the data reported above:

• Respondents were less knowledgeable and more uncertain about specific requirements for Section503, than would be expected among AbilityOne Programs. That these finding were consistent across CBROs with small, medium, medium-large, and large federal contracts, suggests that there is a need for training and technical assistance for federal contractors, even those with high commitment to employing and advancing people with disabilities. The need may be greater among federal contractors that have less commitment to recruiting and advancing high proportions of people with disabilities under federal contracts than any of the AbilityOne Programs surveyed.
• Several items posed complex or modifying conditions around specific Section 503 requirements. These findings on case-law applications to practice, suggest that need is for training and technical assistance regarding specific requirements of Section 503, with an emphasis on application through case studies pertinent to federal contractor issues in hiring.
• Participating CBROs appear to have policies and practices in place for staffing, accommodating, and advancing people with disabilities as recommended in Section 503 and intended by the ADA. That the sample appeared fairly conversant of the expectations and their organizations practices, suggests that need is for short-term training or technical assistance that is topical and applied.
• The lower than desired knowledge of requirement and recommendations and consistency across CBROs with different levels of contracting, further suggests need for training and/or technical assistance that would be widely and easily accessible to all staff instrumental in delivering upon federal contract within the contracting organizations; perhaps through webinars, case-studies, interactive technical assistance, and specific guidance materials.
• Qualifier statements that accompany "uncertain" and "incorrect" answers, along with the widely differing range of responses to the question of what the CBRO would pay as a reasonable accommodation, suggest important topics for for training and technical assistance: What constitutes compliance, what constitutes reasonable, what constitutes hardship, and what constitutes "best practices" in these and other areas of Section 503 and ADA needs?
• That qualifier examples provided in response to question of advancing persons with disabilities into supervisory positions were absent in most cases or as likely as not were not really advancements, touches on the issue of to what extent federal contractors are prepared to meet the intent to advance qualified employees with disabilities under federal contracts. An area to address may be in identifying, exploring, and suggesting good practices through guidance materials that fit with training and technical assistance and address both requirements and intents of federal law.
• Responsiveness of the AbilityOne Programs to this survey, evidence of awareness and the high level of interaction of CBROs with the state VR system suggests a collaborative venue to better realize the intents of the set-aside program and improve contractor responsiveness to Section 503 requirements and ADA intents. A collaborative relationship between NISH, state VR agencies, OFCCP, and SWATC to examine needs, training and technical assistance, and prepare guidance materials for motivating and maintaining organizational commitment to application and enforcement of requirements and intents of ADA is suggested as a coherent way to ensure that needs are efficiently addressed in these five states.

Finally, this study was an exploratory study subject to several limitations, including those described above. Replication of the study with a larger sample of federal contractors to verify need and estimate levels and topics for training and technical assistance is suggested. Such a study should more fully examine needs for both compliance with non-discrimination requirements and advancement intents of the ADA among federal contractors. Instrumentation for such a study should include additional queries around ADA, Section 503, relevant Executive Orders, and related EEO regulations/legislation. Sampling should consider type of contractor (for-profit, non-profit), required emphasis on disability (set-aside programs, general goods and services contractors), and contract sector (products, services). Additional demographic items on respondent and organizational characteristics should be incorporated to permit better classification of need and optimal method for delivery of training and technical assistance.

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The Southwest ADA Center is a program of ILRU (Independent Living Research Utilization), at TIRR Memorial Hermann in Houston, Texas. The DBTAC is funded by a grant (H133A060091) from the Department of Education's National Institute on Disability and Rehabilitation Research (NIDRR). NIDRR is not an enforcement agency. The information herein is intended solely as informal guidance and is neither a determination of your legal rights or responsibilities under the Americans with Disabilities Act (ADA), nor binding on any agency with enforcement responsibilities under the ADA and other disability-related laws. While this research was supported in part by NIDRR, conclusions and opinions offered in this paper are those of the authors and not those of the NIDRR or the U.S. Department of Education.

References

Table 1 Sample Characteristics

	Frequency	Percent	Cumulative Percent
13. CBRO Size as Federal Contractor
Small (Under $100,000)	8	25.8%	25.8%
Medium (Under $1 million)	8	25.8%	51.6%
Medium-Large (Under $5 million)	8	25.8%	77.4%
Large (Over $5 million)	7	22.6%	100.0%
Total	31	100%
15. Interaction with VR
Daily	13	41.9%	41.9%
Weekly	12	38.7%	80.6%
Monthy	3	9.7%	90.3%
Less than Monthly	3	9.7%	100%
Total	31	100%
7. Pay Cost for Accommodation
Under $100	2	6.5%	6.5%
Under $500	8	25.8%	32.3%
Under $1000	12	38.7%	71.0%
Under $5000	8	25.8%	96.8%
Over $5000	1	3.2%	100%
Total	31	100%

 

Table 2 Knowledge of Section 503 Requirements and Recommendations

Section 503 Requirements and Recommendations	Correct Answer	Percent Knowledgeable	Percent Unsure
Requirements
1. Does an employee have to ask for an accommodation for there to be a legal obligation to provide one?	Yes	41.9	16.1
2. Does a qualified person with a disability have to be provided with the accommodation that they request?	No	58.1	12.9
3. Does a qualified person with a disability have to provide a written request for an accommodation?	No	71.0	16.1
4. Is a qualified individual with a disability allowed to have multiple accommodations?	Yes	87.1	12.9
5. Is your company as the employer responsible for paying for reasonable accommodations?	Yes	80.6	9.7
6. Does your company have to provide an interpreter for deaf person interviewing for a supervisory position?	Yes	35.5	32.3
8. Is there a time limit for providing accommodations that a person with a disability requests?	Reasonable period	38.7	32.3
11. Can a person with disability be fired if they cannot perform the essential functions with or without accommodations because of their disabilities?	Yes	64.5	16.1
Recommendations or Expectations
9. Does your organization have policies or procedures for providing accommodations to employees with disabilities?	Recommended	74.2	9.7
10. Does your company have a person who assists with accommodations for employees with disabilities?	Recommended	67.7	6.5
12. Has your company promoted workers with disabilities into supervisory positions not considered direct labor for Federal Contracting?	Desirable	64.5	22.6
14. Does your organization have a written affirmative action plan to hire and promote people with disabilities?	Recommended	90.3	9.7