SourceAmerica is a nonprofit organization that manages federal programs that direct government procurement contracts to nonprofit agencies that employ people with disabilities. ¹ SourceAmerica has been the subject of multiple investigations into fraud and mismanagement. ²

In 2020, the federal government’s National Council on Disabilities recommended ending the AbilityOne program that SourceAmerica administers, arguing that it encourages segregating people with disabilities from other workers and has not resulted in improved employment or wages for disabled workers over the life of the program. ³

Overview

In 1971, the Javits-Wagner-O’Day Act created the AbilityOne program, which requires federal government agencies to procure a defined set of products and services from nonprofits with workforces at least 75 percent comprised of people with disabilities. ¹ SourceAmerica was founded in 1974 as National Industries for the Severely Handicapped (NISH) to serve as a Central Nonprofit Agency (CNA) to operate the AbilityOne program. It changed its name to SourceAmerica in 2013. ⁴

SourceAmerica is one of three CNAs that administer the AbilityOne program on behalf of the federal government, along with National Industries for the Blind (NIB) and the National Federation for the Blind (NFB). ³

In 2024, SourceAmerica managed 85 percent of AbilityOne agencies. ⁵ It is responsible for overseeing the performance of those agencies and removing agencies that do not meet program standards. ⁶ It receives a set fee of 3.7 percent to 3.9 percent of every government contract with one of its nonprofits through the AbilityOne program. ^{6 3}

In 2024, $4.4 billion in federal contracts were awarded through the AbilityOne program, with the majority of that amount, $2.66 billion, being awarded by the U.S. Department of Defense. ¹

Controversies

2007 and 2013 GAO Reports

In 2007, a Government Accountability Office (GAO) report warned that SourceAmerica’s multiple roles created a conflict of interest, concluding, “This arrangement, as well as the fact that they receive a percentage of the total value of the contracts from the [Javits-Wagner-O’Day Act] 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.” ⁶

In 2013, a GAO report on the AbilityOne program was highly critical of SourceAmerica, calling out ways that it was using loopholes in federal contracting regulations to avoid limitations on executive compensation or lobbying expenditures. ⁷

The GAO report noted that while nonprofits receiving federal grants are required by law to limit their executive compensation to federal senior executive service salary structures, SourceAmerica was paying its executives significantly more than that thanks to a loophole that designated the nonprofits that had received the federal contracts, and not the federal government itself, the technical source of SourceAmerica’s fees. ⁷

The report also noted a similar issue with SourceAmerica’s lobbying expenditures. While federal law prohibits using federal appropriations to lobby the U.S. Congress, SourceAmerica’s fees were technically not government appropriations. The GAO noted that in the five years prior to its report, SourceAmerica – then known as NISH – had reported $3.5 million in lobbying expenditures. ⁷

In 2023, SourceAmerica reported $480,000 in lobbying expenditures. ⁸

2015 Federal Investigation

In 2015, federal law enforcement agencies and the inspectors general of the U.S. State Department, General Services Administration, U.S. Department of Defense, and Veterans Administration opened an investigation into alleged corruption, financial fraud, and other criminal activities at SourceAmerica, NIB, and some nonprofit agencies that participated in the AbilityOne program. ^{9 10} At the time, investigators reportedly told CNN that it was potentially the “biggest fraud case ever in a federal agency.” ²

In September 2015, federal agents raided a Goodwill Industries facility in Memphis, Tenn. in connection with the investigation. ¹¹

Program Changes

After the federal investigation and other allegations of fraud and abuse, the U.S. Congress considered draft language in the annual U.S. Defense Department (DoD) appropriations bill that would have banned the DoD from contracting through AbilityOne until the agency implemented new internal controls, fraud protections, and other systems. ² While the language was removed before the bill became law, the U.S. Congress pushed AbilityOne into signing new agreements with SourceAmerica and NIB, and created an Office of Inspector General (OIG) within the program in 2016. ¹²

The Ability One OIG has since identified multiple issues with SourceAmerica’s management of AbilityOne programs, and with the federal agency’s oversight of SourceAmerica. ¹³ For example, a 2019 audit of the fees charged by SourceAmerica and NIB found that government managers were not reviewing or questioning the agencies’ fee and expenditure reports. ¹⁴

In 2024, an OIG investigation found that SourceAmerica and National Industries for the Blind were not reporting data to the AbilityOne Commission as required by their contracts, and “do not have consistent policies or procedures for collecting, processing, and handling data” for the AbilityOne program. ⁵ The OIG report also noted that the map of agencies on the AbilityOne website was four years out of date. ⁵

National Council on Disability Report

In a 2020 report recommending the elimination of the AbilityOne program, the National Council on Disability criticized SourceAmerica for working with 233 nonprofits that used “14c certificate” waivers from the U.S. Department of Labor that allowed them to pay workers with disabilities sub-minimum wages. It noted that SourceAmerica’s fellow AbilityOne manager National Industries for the Blind had ended its work with all but one agency using those waivers. ³

The Council on Disability report also criticized SourceAmerica for conducting “paper-only” audits of the nonprofits it oversees, noting that “SourceAmerica auditors do not speak to the employees or conduct other evaluations” to determine whether workers are, in fact, disabled. ³

1. “Home.” AbilityOne. Accessed February 24, 2025. https://www.abilityone.gov/.
2.  Bronstein, Scott, and Drew Griffin. “Federal Agency Accused of Fraud Could Lose Majority of Contracts | CNN Politics.” CNN, June 1, 2016. https://www.cnn.com/2016/05/27/politics/abilityone-sourceamerica/index.html.
3. “Policies from the Past in a Modern Era-The Unintended Consequences of the AbilityOne Program & Section 14(c).” National Council on Disability, October 14, 2020. https://www.ncd.gov/assets/uploads/reports/2020/ncd-abilityone-2020.pdf.
4. “History.” AbilityOne. Accessed February 24, 2025. https://www.abilityone.gov/abilityone_program/history.html.
5. “Performance Audit Report of Data Reliability, Availability, and Accessibility – Office of Inspector General Report No. 2022-06.” Oversight.gov, April 22, 2024. https://www.oversight.gov/sites/default/files/documents/reports/2024-06/Final-Report-US-AbilityOne-Commission-Data-Reliability-Availability-and-Accessibility-Audit-06-26.pdf.
6. “GAO-07-236: Federal Disability Assistance.” U.S. Government Accounting Office, January 2007. https://www.gao.gov/assets/gao-07-236.pdf.
7. “Employing People with Blindness or Severe Disabilities: Enhanced Oversight of the AbilityOne Program Needed.” U.S. Government Accounting Office, May 30, 2013. https://www.gao.gov/products/gao-13-457.
8. “SourceAmerica Lobbyists.” OpenSecrets. Accessed February 24, 2025. https://www.opensecrets.org/federal-lobbying/clients/lobbyists?cycle=2023&id=D000054710.
9. ^[1] Bronstein, Scott, and Drew Griffin. “Sources: Nation’s Disabled Work Program Mired in Corruption, Fraud.” CNN, July 31, 2015. https://www.cnn.com/2015/07/27/us/disabled-work-program-investigation/index.html.
10. Cohen, Rick. “Indicators Were There before Current Investigation into SourceAmerica: Lessons for Nonprofits .” Nonprofit Quarterly, July 30, 2015. https://nonprofitquarterly.org/indicators-were-there-before-current-investigation-into-disabilities-contractor-sourceamerica-lessons-for-nonprofits/.
11. Bronstein, Scott, and Curt Devine. “Agents Raid Goodwill amid Growing Investigation into AbilityOne.” CNN, September 5, 2015. https://www.cnn.com/2015/09/04/us/abilityone-investigation-update/index.html.
12. “What Is the Difference between the Missions of AbilityOne and AbilityOne’s OIG?” AbilityOne Office of Inspector General. Accessed February 24, 2025. https://abilityone.oversight.gov/what-difference-between-missions-abilityone-and-abilityones-oig.
13.  “All Reports.” AbilityOne Office of Inspector General OIG. Accessed February 24, 2025. https://abilityone.oversight.gov/reports/all?page=0.
14. “Performance Audit on the AbilityOne Program Fee.” AbilityOne Office of Inspector General, December 20, 2019. https://abilityone.oversight.gov/reports/audit/performance-audit-abilityone-program-fee.