AbilityOne Nonprofits Get Fee Approval Rules and Subcontract Clarity
Published Date: 4/30/2026
Proposed Rule
Summary
The AbilityOne Program is updating rules so central nonprofit agencies must get written approval before charging fees, making things clearer and easier when subcontracting work. These changes help nonprofits save time and reduce paperwork, affecting agencies involved in AbilityOne starting soon. Comments on these updates are open until June 1, 2026, so jump in and share your thoughts!
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Analyzed Economic Effects
9 provisions identified: 5 benefits, 3 costs, 1 mixed.
Cooperative Agreement Required Before Fees
Central nonprofit agencies (CNAs) must enter into a cooperative agreement with the AbilityOne Commission before collecting any program fee. The cooperative agreement must be governed by 31 U.S.C., chapter 63 and 2 CFR part 200 (subject to any Committee-approved exceptions).
Program Fee Included in Contract Price
The rule makes explicit that the AbilityOne Program Fee is an allowable expense included in the Fair Market Price approved by the Committee and in the final contract price with a federal agency. The regulation says program fees must not exceed the ceiling set by the Committee.
No Fee on Subcontracted For-Profit Work
Program fees must be calculated based on nonprofit agency sales to the Federal Government, but the sales base must exclude the value or costs of any portion of the commodity or service that has been subcontracted to a for-profit entity unless the Committee permits otherwise. That means CNAs are entitled to collect fees only on the portion performed by the NPA, not on subcontracted-for-profit portions.
CNA Fee When Serving as Prime Clarified
When a CNA serves as the prime contractor and distributes orders to an authorized NPA subcontractor that is the source for a Procurement List requirement, the CNA may collect a program fee from that NPA subcontractor—unless administrative or indirect costs have already been negotiated with the contracting activity. The rule describes this arrangement as most likely when multiple NPAs support a single Procurement List requirement.
New De Minimis Subcontracting Thresholds
The proposed rule sets de minimis thresholds that limit when NPAs must notify or obtain Committee approval for subcontracting to for-profit entities: greater than 25% of direct labor hours for services and greater than 10% of the total value earned from Government orders for commodities/products. Subcontracting to for-profit entities below those thresholds requires only notice, and ad hoc or nonroutine subcontracting below those thresholds is exempt from notification/approval.
Less Competitive Process Required for Subcontracting
The proposed rule removes the existing regulatory requirement that NPAs conduct broad competition when selecting subcontractors, while still encouraging competitive practices to the maximum extent practicable. NPAs may select subcontractors in a manner most consistent with meeting contract performance objectives.
Fees Not Allowed After Termination Except Accrued
A CNA generally cannot collect program fees if its designation is severed or its cooperative agreement expires. The CNA may, however, collect program fees that were accrued prior to the date of termination or expiration.
Subcontracting Definition and Measurement
The rule defines subcontracting as assigning or outsourcing a portion of an NPA's Federal contract work to another party, and it excludes acquisition of raw or finished materials or ancillary products. The rule also explains how subcontracting is measured for services (by direct labor hours) and for commodities/products (by total value earned from Government orders).
Authorized NPA Subcontractor Rights Preserved
The proposed rule affirms that an authorized NPA retains the same Program rights and obligations when it serves as a subcontractor for a Procurement List requirement. An authorized NPA serving as a subcontractor cannot be replaced without coordination with the CNA and the Committee.
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