SCHUMER ANNOUNCES, AFTER HIS PUSH, FEDS WILL THOROUGHLY REVIEW ALLEGATIONS OF EXORBITANT FED-IMPOSED PRICE MARKUPS ON LOCAL PRODUCTS THAT ARE PRODUCED BY VISUALLY IMPAIRED BINGHAMTON-AREA RESIDENTS – HIGH PRICES ARE LEADING TO FED AGENCIES PURCHASING OTHER BRANDS & PUTTING CRITICAL BINGHAMTON JOBS AT RISK
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AVRE in Binghamton Has Lost Over $1 Million In Sales As Result of Fed Gov. Changes; Feds Have Priced AVRE Products at 80% Mark-up, Compared to 10-15% for Other Similar Products – Schumer Called For Investigation Into Markups, Said Playing Field Needs To Be Level; These Jobs Are Critical Lifeline For Some Of Southern Tier’s Most Vulnerable People & We Must Protect Them
Schumer: Fed Investigation into Astronomical Price Hikes is Important First Step Toward Protecting Critical Jobs for Binghamton’s Blind & Visually Impaired
Today, U.S. Senator Charles E. Schumer announced that, following his push, auditors in the Office of the Inspector General of the federal General Services Administration (GSA) will conduct a thorough review the exorbitant price markups on locally produced goods, a markup that Schumer said is putting the jobs of 40 visually impaired Southern Tier residents at risk. Schumer explained that, as a result of a 1971 law authored by former New York Senator Jacob Javits, the federal government is required to purchase certain supplies and services from non-profit groups like Association for Vision Rehabilitation and Employment (AVRE) in Binghamton, which participates in a program called AbilityOne that employs blind people to make “SkilCraft” brand products, like file folders, copy paper and cleaning supplies for the federal government. However, due to exorbitant price markups on these SkilCraft products, sales of products manufactured at the AVRE have dropped by over $1 million in the last year, putting the entire operation – and the jobs – at risk. Just this month, Schumer joined with AVRE employees and called for an investigation into the price markups on AbilityOne products, which in some cases are 80 percent or greater. Schumer said that these markups, which are not imposed on other, similar products are leading federal agencies to purchase other, less marked-up products, even though they are required by law to purchase the ones produced by groups like Binghamton’s AVRE.
“The outrageous prices that private suppliers are charging for SkilCraft products are a detriment to an organization like AVRE. This markup does not make any sense, and it is not something that AbilityOne is imposing. Somewhere along the way, the price is being hiked and it could have a real impact on jobs. That is why I called on the GSA’s Inspector General to look into these exorbitant markups and I am pleased to hear that they are heeding my call and taking seriously the risk that these price hikes pose to the jobs of forty blind and visually impaired Southern Tier residents that produce these products for the federal government. I look forward to the results of their review and will not stop fighting for the employees of AVRE,” said Schumer. “These skilled manufacturing jobs are an amazing opportunity for the blind and visually impaired in the Southern Tier, and we must make sure they are preserved, as it could be extremely difficult for many blind and visually impaired people to find work elsewhere.”
During his visit to AVRE, Schumer pushed to preserve the AbilityOne program and the jobs at AVRE by calling on the GSA Inspector General to launch a full investigation into the significant markup of AbilityOne products sold through the GSA. Schumer said the decision to mark up AbilityOne products sold by GSA is currently leading federal agencies to purchase more reasonably priced products from other vendors, like Staples. Schumer said that the high prices of SkilCraft products, in addition to the GSA turning distribution over to private companies that specialize in commercial distribution, could put the entire AbilityOne operation in Binghamton in jeopardy.
Currently, over half of AbilityOne products are marked up significantly, some as high as 80 percent. Meanwhile, their manufacturers have been asked to reduce the cost to make the products. Schumer reiterated that these contradictions in GSA policy will continue to have an effect on local community members employed by the AbilityOne program if they are not remedied in a timely manner. That is why Schumer is calling on the Office of the Inspector General to launch a full investigation into the markup of these products.
Schumer highlighted the fact that 500 sheets of Skilcraft Multipurpose Copy Paper are sold through Staples for $89.54 per ream. By contrast, 500 sheets of Staples Recycled Multipurpose Paper are sold for $6.07 per ream, and 500 sheets of Hammermill Great White Multi-Use Recycled Paper are sold through Staples for $3.74 per ream. In addition to this, a ream of 5,000 sheets of Hammermill copy paper—ten times the amount of paper—is sold through Staples at $37.56 per ream. A ream of 5,000 sheets of Staples brand copy paper is sold at $34.29 per ream. Schumer explained that this means customers can purchase significantly more copy paper and spend less by buying other brands that are not marked up like the AbilityOne’s SkilCraft products. Schumer said this investigation should look into the impact of the privatization of GSA procurement, as AbilityOne typically sells a ream of 2,500 to GSA for $17.65 and can offer a ream of 2,500 through a direct sale to customers for $18.50. Schumer said that their nearly $90 ream of paper is a price hike that is not only unfair but negatively impacting the bottom line of AbilityOne and the jobs of many Binghamton residents.
Sales of SkilCraft products have fallen significantly from 2011-2013, and the National Industries for the Blind (NIB) and its associated non-profit agencies are very concerned about the impact these changes will have on future sales. Schumer said that the non-profits in Upstate New York that are a part of the AbilityOne Program and produce SkilCraft office products have also expressed concern that privatization of supply distribution will result in less over-sight to ensure that agencies are complying with JWOD and will hurt their business. Schumer explained that this is exactly what is happening to the AbilityOne Program in Binghamton. Forty blind or visually impaired AVRE employees in the AbilityOne program make SkilCraft products like copy paper and file folders and provide switchboard operations at three VA hospitals. Most of these employees make products that are directly distributed under the GSA commercial distribution system – namely copy paper, file folders, and bio-based cleaning detergents. These Southern Tier residents are now at risk of losing their jobs because of this privatization.
Schumer said that sales at AVRE’s AbilityOne program dropped by $1 million in the last year, putting the entire operation at risk. Between the years of 2011 and 2012, GSA sales in AVRE facility decreased over 23 percent, and then further declined by over 48 percent between the years of 2012 and 2013. The AVRE program typically generates around $7 million in SkilCraft revenue through GSA, and if this trend continues, they will no longer be able to absorb the loss.
Schumer has long been a supporter of the AVRE and has said previously that, in addition to this investigation, the federal government must comply with the law and purchase products from groups that participate in the AbilityOne program, since it would be extremely difficult for many of these blind and visually impaired employees to find a new job if the program is no longer viable. Under the 1971 law, whenever a government agency places an order with the federal General Services Administration (GSA) or with a GSA-approved private supplier for a product such as file folders, the order is supposed to be fulfilled using only Skilcraft brand file folders produced by the Southern Tier workers at AVRE. However, in recent years oversight has been lax and orders for products for which there is a Skilcraft Brand option increasingly have not been fulfilled with Skilcraft products, as the law requires. Moreover, the GSA is set to close its last remaining product depots, meaning all supplies will now be fulfilled by GSA-approved private suppliers, making compliance with the law even more critical.
Because of these changes, Schumer said the federal government must ensure it is complying with the law and purchasing products from AbilityOne non-profit agencies, since it would be extremely difficult for many of these blind employees to find a new job if the program is no longer viable. In order to ensure the AbilityOne program continues to thrive in Binghamton, Schumer previously called on the GSA to develop tools and resources that federal agencies and government offices can use to ensure that they are correctly adhering to the Javits-Wagner-O’Day Act, and he called on the federal Office of Management and Budget (OMB) to require federal agencies to report annually on their purchases and utilization of AbilityOne products. GSA and OMB recently responded to Schumer’s call and said they are monitoring the issue.
Schumer explained that the Javits-Wagner-O’Day Act (JWOD) passed in 1971 requires all federal agencies purchase specified supplies—like file folders, post-it notes, note pads, first-aid kits and cleaning supplies—from nonprofit agencies employing persons who are blind or have other significant disabilities. There are a number of nonprofit agencies in upstate New York who produce these SkilCraft brand products and then sell them to the federal government through its centralized procurement agency, the General Services Administration (GSA). Historically, GSA has operated distribution centers around the country that purchase these products from the non-profits and then distribute them to federal agencies. In an effort to reduce cost through smarter procurement systems, GSA is completely turning distribution over to private companies that specialize in commercial distribution, like Staples, and has begun to close their distribution centers over the past decade; the last two to be shuttered by the end of 2014.
Schumer explained that while he understands the need for cost reduction and smarter federal procurement systems, the federal government cannot overlook requirements in the process. Schumer further said that losing these jobs would be a blow to the entire community. AVRE pays its employees well above the minimum wage and provides comprehensive benefits. Nationally, approximately 97 percent of AbilityOne employees do not take welfare or public assistance benefits. Schumer explained that this means a net win for both the community and the government. The American Foundation for the Blind estimates that 70 percent of people with sustained vision loss are not working and nearly 50 percent of this population lives in poverty. What’s more, many AVRE employees who start working at the facility in Binghamton learn skills and move on to advance in their career, either in different capacities at AVRE or in the private sector.
Schumer explained that the AbilityOne revenue is also a critical sustaining source of funds for the entire AVRE organization, which employs a total of 65 people in the greater Binghamton region across a variety of businesses. Schumer has worked in close collaboration with fellow New York Senator Kirsten Gillibrand in pushing to secure the jobs at AVRE, as well as other AbilityOne program sites around New York State.
A copy of the Senators’ initial letter to the General Services Administration appears below:
Dear Acting Inspector General Robert C. Erickson, Jr.,
We write today to express our serious concern for the General Services Administration’s (GSA) ability to ensure adherence by federal agencies to the Javits-Wagner-O’Day (JWOD) Act. In addition, we are concerned about the significant markup of AbilityOne products sold through the GSA Global Supply and ask that the Office of the Inspector General launch a full investigation into the markup of these products.
As you know, the AbilityOne program is the largest single provider of employment for people who are blind or have significant disabilities and currently employ over 40,000 individuals at over 600 community-based non-profit agencies across the United States. We are proud supporters of the AbilityOne program in our offices and the work they do to provide employment and other services for persons who are blind or disabled. Additionally, we understand that strategic sourcing is an important tool for saving taxpayer dollars, and we must continue to prioritize our commitment to the AbilityOne program. However, GSA’s decision to apply extreme markups on AbilityOne products, coupled with their request for a substantial reduction in the cost of making these products, raises substantial concern.
The decision to markup AbilityOne products sold by GSA is leading federal agencies to purchase reasonably priced products from other vendors. Currently, over half of AbilityOne products are marked up significantly, some up to 80 percent. Meanwhile, their manufacturers have been asked to reduce the cost to make the products. We would like to reiterate the serious repercussions the decisions of GSA will continue to have on our local community members employed by the AbilityOne program if they are not remedied in a timely manner.
It is the duty of the Office of the Inspector General to detect and prevent waste, fraud and abuse and I implore you to take immediate action and investigate the markup of AbilityOne products. Some of the questions we would like addressed are: why these products are being marked up at their current rate, whether all vendor contracts are in line with current statute, and where the additional revenue from the markups is being allocated. We hope that you will to ensure that AbilityOne products and services remain available so we can continue to increase employment opportunities for our blind and disabled citizens.
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