[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
SENIOR EXECUTIVE SERVICE BONUSES
AND OTHER ADMINISTRATIVE MATTERS AT THE
U.S. DEPARTMENT OF VETERANS AFFAIRS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 23, 2009
__________
Serial No. 111-43
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
BOB FILNER, California, Chairman
CORRINE BROWN, Florida STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South HENRY E. BROWN, Jr., South
Dakota Carolina
HARRY E. MITCHELL, Arizona JEFF MILLER, Florida
JOHN J. HALL, New York JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas VERN BUCHANAN, Florida
JOE DONNELLY, Indiana DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia
Malcom A. Shorter, Staff Director
______
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
HARRY E. MITCHELL, Arizona, Chairman
ZACHARY T. SPACE, Ohio DAVID P. ROE, Tennessee, Ranking
TIMOTHY J. WALZ, Minnesota CLIFF STEARNS, Florida
JOHN H. ADLER, New Jersey BRIAN P. BILBRAY, California
JOHN J. HALL, New York
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
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of converting between various electronic formats may introduce
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C O N T E N T S
__________
September 23, 2009
Page
Senior Executive Service Bonuses and Other Administrative Matters
at the U.S. Department of Veterans Affairs..................... 1
OPENING STATEMENTS
Chairman Harry E. Mitchell....................................... 1
Prepared statement of Chairman Mitchell...................... 25
Hon. David P. Roe, Ranking Republican Member..................... 2
Prepared statement of Congressman Roe........................ 26
Hon. John J. Hall................................................ 4
Hon. Timothy J. Walz............................................. 4
Hon. Harry Teague, prepared statement of......................... 26
WITNESSES
U.S. Department of Veterans Affairs:
James J. O'Neill, Assistant Inspector General for
Investigations, Office of Inspector General................ 6
Prepared statement of Mr. O'Neill........................ 27
Hon. W. Scott Gould, Deputy Secretary........................ 15
Prepared statement of Mr. Gould.......................... 32
MATERIAL SUBMITTED FOR THE RECORD
Post-Hearing Questions and Responses for the Record:
Hon. Harry E. Mitchell, Chairman, Subcommittee on Oversight and
Investigations, Committee on Veterans' Affairs, to Hon. George
J. Opfer, Inspector General, U.S. Department of Veterans
Affairs, letter dated September 25, 2009, and response letter
dated November 2, 2009 [An identical letter was sent to Hon.
David P. Roe, Ranking Republican Member, Subcommittee on
Oversight and Investigations, Committee on Veterans' Affairs.]. 37
Hon. Harry E. Mitchell, Chairman, Subcommittee on Oversight and
Investigations, Committee on Veterans' Affairs, to Hon. Eric K.
Shinseki, Secretary, U.S. Department of Veterans Affairs,
letter dated September 25, 2009, and VA responses.............. 38
SENIOR EXECUTIVE SERVICE BONUSES AND
OTHER ADMINISTRATIVE MATTERS AT THE
U.S. DEPARTMENT OF VETERANS AFFAIRS
----------
WEDNESDAY, SEPTEMBER 23, 2009
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Oversight and Investigations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:07 a.m., in
Room 334, Cannon House Office Building, Hon. Harry E. Mitchell
[Chairman of the Subcommittee] presiding.
Present: Representatives Mitchell, Walz, Adler, Hall, and
Roe.
Also Present: Representative Teague.
OPENING STATEMENT OF CHAIRMAN MITCHELL
Mr. Mitchell. Good morning and welcome to the Subcommittee
on Oversight and Investigations. This is a hearing on Senior
Executive Service (SES) Bonuses and other Administrative
Matters at the U.S. Department of Veterans Affairs (VA). This
hearing is being held on September 23, 2009. This hearing will
come to order.
I ask unanimous consent that Mr. Teague be invited to sit
at the dais for the Subcommittee hearing today. Hearing no
objection, so ordered.
Mr. Teague, thank you for being here.
Mr. Teague. Thank you.
Mr. Mitchell. I ask unanimous consent that all members have
5 legislative days to revise and extend their remarks, and that
statements may be entered into the record. Hearing no
objection, so ordered.
I would like to thank everyone for attending today's
Oversight and Investigations Subcommittee hearing entitled
Senior Executive Service Bonuses and Other Administrative
Matters at the U.S. Department of Veterans Affairs. Thank you
especially to our witnesses for testifying today.
We all know that the Department of Veterans Affairs has
some of the hardest working and dedicated employees; however,
there are concerns about the VA bonus process and how the VA
matches pay to individual and organizational performance. For
example, in fiscal year 2008, the VA performance award pool was
almost $4.3 million including $774,108 for just 21 Presidential
Rank Awards, with some awards as large as $60,270.
The VA does outstanding work in many areas, but there are
some areas where improvement is needed. Just this year, this
Subcommittee has been here on more than one occasion
questioning the Department's quality of care, safety standards,
and lack of necessary protocol and procedures. Members of
Congress on both sides have expressed frustrations over this
issue, especially in the wake of recent reports suggesting that
bonuses were not properly applied. The bonus system must
allocate responsibility where it lies. It must also be used to
adequately retain the best personnel available and to encourage
excellence in performance.
The reason we are here today is to help ensure that the
bonus system is being utilized in the appropriate manner, so
that we can tell veterans with full confidence that these
Senior Executive Service personnel are making the VA a better
place, and that the VA is serving our veterans and being good
stewards of American taxpayer dollars.
This Subcommittee is also here to examine hiring practices
and minority hiring trends within the Department. On August 18,
2009, the VA Office of Inspector General (OIG) released two
reports citing abuse of authority, nepotism, improper hiring,
and improperly administered awards. The Subcommittee has
concerns over these report findings, and we must ensure that
these reports don't point to a potentially bigger problem
within the department. However, these reports accurately show
what can happen when the proper procedures go unchecked.
I am grateful that the VA Office of Inspector General has
agreed to come here today to talk about their reports and give
specific and limited testimony into the correct hiring
procedures and protocols the VA should utilize.
Additionally, we would like to look into minority hiring
practices to guarantee that the VA is utilizing a fair and
equitable hiring system. Deputy Secretary Gould, along with
Assistant Secretary Sepulveda, has agreed to come here today to
assure the veterans that they have safeguards in place to
provide effective oversight.
In closing, I would like to make it clear that this
Subcommittee is not here to denigrate the dedicated work of the
VA employees. We have no intention of targeting specific
employees. We have no intention of questioning whether or not
the VA should award bonuses. We are all here to do what is
right for our veterans and instill the trust and integrity that
they should expect from their government. Our goal should also
be to ensure that they are being served with a system
reflective of their service and honor.
[The prepared statement of Chairman Mitchell appears on p.
25.]
Before I recognize the Ranking Republican Member for his
remarks, I would like to swear in our witnesses.
I would ask all witnesses to stand and raise their right
hand for both panels.
[Witnesses sworn.]
Mr. Mitchell. I now recognize Dr. Roe for opening remarks.
OPENING STATEMENT OF HON. DAVID P. ROE
Mr. Roe. Thank you, Mr. Chairman.
Last Congress, this Subcommittee held a hearing on the
Senior Executive Service's bonuses, during which then-Ranking
Member Ginny Brown-Waite expressed frustration of several
Members on our side of the aisle regarding the VA allocation of
bonuses to employees possibly involved in quality-of-care
issues at various VA medical facilities, as well as those
involved in providing benefits and processing claims at the
Veterans Benefits Administration (VBA).
While she cautioned Members to tread carefully through this
path, we are here again reviewing these bonuses and their
appropriateness, given the new reports of alleged malfeasance
at the Department's Office of Information and Technology
(OI&T).
Our Nation's veterans have fought faithfully for our
freedom and deserve to be treated with the utmost respect. They
have the right to expect their claims to be processed in a
timely and appropriate manner. They have a right to expect
their treatment at VA facilities to be among the best our
country has to offer. And they should expect that, in all their
dealings with the Department of Veterans Affairs, they will be
treated with the utmost respect and dignity.
Those in the Senior Executive Service, commonly referred to
as SES, are typically among the cream of the crop of our
Nation's Federal employees. These are the leaders of today and
tomorrow. To be elevated to these positions of responsibility,
they have to complete training programs and have dedicated
themselves to the service of our country.
There is no doubt in my mind that the bonuses many of these
individuals received reflect the value of the services they
provided. However, a few of these bonuses appear to be
extremely hefty in nature.
We are in a time of economic hardship. Many of our
citizens, including our veterans, are on the unemployment
lines, struggling to make ends meet. Many folks are tightening
their belts to put food on the table and clothes on their
children's backs, and yet, several of the bonuses issued by the
Department have been in the range of $30,000.
This is more money than many in our country see in a single
year. And, from what I can tell, this amount is the norm for
these individuals and considered part of their expected income,
as opposed to extra incentive for doing exceptional work. We
need to ensure that the VA is allocating these resources
wisely.
While many Americans are unemployed or are taking cuts in
salaries, or cuts in bonuses, we need to ascertain if it is
fiscally possible for the VA to issue such high bonus payments.
Are the bonuses being issued by the VA truly deserved, or is it
just considered a matter of course that these bonuses continue
to be awarded? We must make certain that the criteria and
performance metrics the VA is using to determine the amount of
bonuses issued to an individual in the Senior Executive Service
continues to be a fair and equitable process.
Mr. Chairman, these are the questions I would like to
ferret out during these hearings. I appreciate your bringing
the witnesses in today to testify, and look forward to hearing
them speak. Again, thank you, and I yield back the balance of
my time.
[The prepared statement of Congressman Roe appears on p.
26.]
Mr. Mitchell. Mr. Hall.
OPENING STATEMENT OF HON. JOHN J. HALL
Mr. Hall. Thank you, Mr. Chairman and Ranking Member Roe,
for holding this hearing and for the opportunity to address
this Subcommittee today.
Thank you to the witnesses who have taken their time to
come before us. With a new administration, it is important that
we evaluate procedures and policies which might need to be
changed.
Since 2007, I have been, and this Committee has been,
deeply concerned about the issue of bonus awards at the
Department of Veterans Affairs. I hope that this hearing will
demonstrate the steps that the VA has taken to make bonuses
about rewarding excellence, not about helping friends or
family.
Recent news articles and reports from the VA's Inspector
General have shed light on rampant nepotism and abuse by those
in positions of power. The Associated Press detailed an
embarrassing detail in which a VA employee, having an affair
with their superior, was reimbursed for 22 flights between
Florida and Washington. One office at the VA received $24
million in bonuses over a 2-year period. Twenty-four million
dollars is a lot of money in this economic climate, with many
veterans living on an ever-tightening budget; and it is
irresponsible for us to allow this to continue without taking a
careful look at who is earning the bonuses and who is not.
As many of you know, I introduced a bill in the last
Congress that required no bonuses to be paid out to senior VA
officials until the claims backlog was under 100,000 claims.
I think we can all agree that our first priority is to the
veterans who serve their country, our country, and who paid the
price. In this Congress, I am considering other ways to make
sure that bonuses are awarded fairly and within reason. And, to
me, an increasing backlog is an indication that there are some
at VA who should not be receiving bonuses.
I am not saying there are not many or even most at the
department who have done a stellar job and deserve recognition;
however, I am saying that we need to make sure the system
rewards only those who have earned it.
Thank you again, Mr. Chairman. And to our panelists, I look
forward to hearing the discussion and answers to our questions
and testimony; and I will submit more of my statement for the
record. [No statement was submitted.]
Mr. Mitchell. Thank you.
Mr. Walz.
OPENING STATEMENT OF HON. TIMOTHY J. WALZ
Mr. Walz. Well, thank you, Mr. Chairman and Ranking Member.
Again, I am very appreciative of your holding these
hearings, of our doing our responsibility of oversight. I want
to thank all of our panelists who are here today and those
folks in the VA and in the OIG who are, I know, committed to
trying to deliver the best possible care to our veterans.
I have often said that I am the strongest supporter of the
VA and, because of that, I will be the strongest critic. And I
think my colleagues here today have summed it up right. We
absolutely understand, we have stellar personnel. Members of
the SES are folks that could go work in the private sector for
far more money. We understand that. And trying to keep and
retain that high-quality personnel is absolutely critical.
I think the question here is making sure that bonuses are
paid based on performance, not on standard or set procedure, on
autopilot; making sure that we have the criteria in place, and
then making sure that in a climate such as we are in--and as
Mr. Hall clearly pointed out--that the focus here has to be on
the veterans, has to be on reducing a claims backlog that all
of us agree was an embarrassment and is wrong for our veterans.
And I think by holding this hearing, by getting the
answers, by collaborating together, all of us want to see the
best care for our veterans, all of us want to see the best
possible people retained, and all of us want to see a system
that rewards for quality and excellence and output, that we
can, as the Chairman said, be proud to go back and talk about
why we have the best people delivering the best quality care to
the Americans who put themselves on the line.
So I want to thank you all for being here.
We also know that many of you in the VA are veterans
yourselves, and you understand this on both sides of the issue.
So I appreciate your being here helping us understand this,
helping make sure the American public feels like we are doing--
as Mr. Hall said, again--absolutely right by our veterans.
So I yield back.
Mr. Mitchell. Thank you.
Mr. Teague.
Mr. Teague. Mr. Chairman, Ranking Member, and other
Members, I do have an opening statement, but to better use the
time of not only this Subcommittee but of the witnesses that we
have here today, I will submit my statement for the record.
[The prepared statement of Congressman Teague appears on p.
26.]
Mr. Mitchell. At this time, I would like to ask Panel One
to come to the witness table.
Joining us on our first panel is James O'Neill, Assistant
Inspector General for Investigations, Office of Inspector
General, U.S. Department of Veterans Affairs.
Mr. O'Neill is accompanied by Joseph Sullivan, Jr., Deputy
Inspector General for Investigations, Office of Inspector
General, U.S. Department of Veterans Affairs, and Michael
Bennett, Attorney Advisor, Office of Inspector General.
I ask all witnesses to please stay within 5 minutes for
their opening remarks. Your complete statements will be made
part of the hearing record. Thank you.
Mr. O'Neill.
STATEMENT OF JAMES J. O'NEILL, ASSISTANT INSPECTOR GENERAL FOR
INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF
VETERANS AFFAIRS; ACCOMPANIED BY JOSEPH G. SULLIVAN, JR.,
DEPUTY INSPECTOR GENERAL FOR INVESTIGATIONS, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND
MICHAEL R. BENNETT, ATTORNEY ADVISOR, OFFICE OF INVESTIGATIONS,
OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS
AFFAIRS
Mr. O'Neill. Good morning, Mr. Chairman and Members of the
Subcommittee.
My office conducts criminal and administrative
investigations related to the programs and operations of VA. I
have been invited today to discuss the results of two recent
administrative investigations into allegations of a variety of
prohibited personnel practices in VA's Office of Information
and Technology.
In the first investigation, we received an allegation that
an OI&T executive improperly hired a friend and did so at an
unauthorized high rate of pay. In the second case, we received
allegations of a different OI&T management official, and two of
her subordinates hiring several of their family members.
These investigations were focused reviews that initially
were limited to these specific allegations. During our
investigation, we discovered numerous additional improprieties
relating to the individuals involved in the initial
allegations. Included in the 45 recommendations we made to VA
in these two reports were to take appropriate administrative
action against eight individuals, recover funds expended as a
result of nepotism and improperly paid educational expenses,
determine appropriate corrective actions regarding
inappropriate hiring and promotion actions cited in these two
reports, and to review other appointments made by use of direct
hire authority and Federal career intern program and to examine
the appropriateness of each OI&T retention bonus and
expenditure related to academic degree funding.
Among our findings of administrative misconduct were the
following:
An OI&T executive engaged in prohibited personnel practices
related to her efforts to have a VA contractor and, later, VA
hire her friend. Three other OI&T officials were involved in
prohibited personnel practices when they participated in the
preselection of four GS-15s in OI&T.
A former VA management official engaged in nepotism when
she advocated for the hiring of her relatives. She also hired
an acquaintance and a friend at a rate above the minimum pay.
Two other OI&T officials improperly involved themselves in
the hiring of five of their family members.
OI&T employees were improperly hired using expired direct
hiring authority and an inappropriately administered Federal
career intern program.
OI&T improperly paid for graduate degrees without having
employees or programs that complied with requirements for fair
competition and adequate recordkeeping. VA records were so
lacking that we had to issue subpoenas to the private
universities to determine how much VA improperly spent on each
of the individuals.
Some OI&T managers approved awards in exorbitant amounts
with inadequate or no justification and without authority to
make such awards.
Because of favoritism and preferential treatment, better
qualified applicants were not selected for some positions and
the rights of preference-eligible veterans were sometimes
ignored. In addition, those who approved improper expenditure
of funds did not know or determine the proprietary of these
expenditures.
Federal ethics regulations provide that public service is a
public trust. Federal employees cannot use their public office
and taxpayer funds for private gain or for the gain of their
families and friends. OI&T officials broke the rules to hire,
favor, and financially benefit their friends and family. In so
doing, they wasted VA resources that could have been put to
better use, and they failed to ensure that the best qualified
individuals were hired so veterans can receive the best
possible service that they deserve and have earned.
This concludes my opening statement, and we would be happy
to answer any questions you may have.
[The prepared statement of Mr. O'Neill appears on p. 27.]
Mr. Mitchell. Thank you, Mr. O'Neill.
Let me ask a couple questions.
First of all, why did you just go to OI&T? How did you
happen to pick that? Have you done other divisions or
departments, or were you tipped off?
Mr. O'Neill. It was an allegation that we received, sir,
specifically about certain individuals in OI&T. That launched
our investigation.
Mr. Mitchell. And this is the only section that you have
looked into, the OI&T?
Mr. O'Neill. In this matter, yes, sir.
Mr. Mitchell. But you don't know if nepotism or the bonus
or anything in other departments--or you would find the same
type of behavior in other departments?
Mr. O'Neill. That would be speculation, because I don't
have any data to support it.
We periodically have conducted investigations relating to
allegations of nepotism in the past, but frankly, I can't
recall the last one we had. It has been a while.
Mr. Mitchell. I guess what I am saying is that a lot of
your investigations are based on somebody coming forward and
making allegations against some misuse or improper procedure?
Mr. O'Neill. Particularly administrative investigations,
yes, sir.
Mr. Mitchell. What are the top three recommendations that
you have made to the VA to ensure that the procedures that you
have outlined, and we know are there, are actually enforced?
Mr. O'Neill. Well, in this particular matter, we
recommended that they determine and apply the appropriate
administrative actions against the eight individuals that were
cited in the report; that they issue bills of collection, where
appropriate, for improper payments related to the graduate
degrees in particular; determine what corrective actions would
be appropriate to deal with the problems that we identified
during our investigation--someone hired under an expired direct
hire authority, the VA has to take some corrective action,
provide training on hiring and the provision of awards
throughout OI&T; and review the use of the hiring authorities
and the funding for academic degrees and retention allowances
to ensure compliance with applicable standards.
Mr. Mitchell. I guess maybe you have kind of answered this,
but what oversight function of the VA broke down in the human
resources (HR) process?
Mr. O'Neill. I would say that the leadership of OI&T did
not pay adequate attention to the awards that were being
distributed, the hiring practices that we cite in our report,
and of course, the payment for academic degrees.
So I would lay it at the feet of the management of OI&T at
the time. And whatever oversight H.R. would provide would
probably also need addressing.
Mr. Mitchell. It is mainly oversight. The procedures are in
place, the rules and regulations are all very clear. It was
just the oversight?
Mr. O'Neill. Yes, sir. We cite all the applicable
regulations, and they just failed to adhere to them.
Mr. Mitchell. Thank you.
Dr. Roe.
Mr. Roe. Thank you, Mr. O'Neill, for being here. I have
just a couple of questions.
One, as I read your testimony in here, it said, ``Further,
we identified two GS-5s who received 17 percent of the total
amount of cash awards given to all GS-5s that year and who
received awards for the time period that predated their
employment. Additionally we found a GS-13 employee who, within
the first 90 days of her employment, received a $4,500
performance award from the former VA official who said that she
did not even remember her.''
How does that happen? I mean, I have run a business and
helped run a city, and so has the Chairman. That just shouldn't
happen. How in the world does something that egregious happen?
Mr. O'Neill. Again, sir, the lack of proper oversight by
the management of OI&T.
These individuals you cite were favored individuals by the
people who could award them financially, and they benefited
from that. There wasn't oversight over the individual
responsible for issuing the awards.
Mr. Roe. Well, that is absolutely, totally intolerable
right there when you see something like that.
That personally does a couple things. One, it destroys the
morale of the organization. I can promise you, having run a
business for 30-plus years, if you did that in a private
business, the morale of your organization would be totally
ruined because people figure that out pretty quick. And nobody
is supposed to talk about what they make, but they do. And
people are not supposed to talk about the bonuses, but they do.
I guess the next question is, what happens to somebody who
does something like that? I mean, I read through this where
$139,000 of money--education money was spent. What happens to
people who do something this egregious, that paragraph I just
read? What occurs to them? What is the penalty?
Mr. O'Neill. That penalty depends if the person is still
employed by the government. But if they are employed by the
government, the Office of Information and Technology
collaborates with the Office of General Counsel and with Human
Resources to determine what administrative penalties can be
applied and sustained, if challenged.
So I would imagine a range of penalties can be the normal
range, anywhere from reprimand to removal. But, again, I am not
suggesting that----
Mr. Roe. I understand.
Mr. O'Neill [continuing]. That I understand what they will
do.
Mr. Roe. I understand that. And you are not here to do
that, nor am I. But I just wondered what penalties were there.
I mean, you get--$4,500 is a significant bonus for somebody
who had been there in the first 90--there isn't any way in the
world that should have been awarded. And these others, where
two people get most of the--get a fifth of all the bonus money.
I just wondered.
And the other question, and of course this is speculative,
too. I don't believe this could be systemic. I think this is--
you are looking at an organization that has 230,000 employees
and a lot of really good managers.
Is this the only place you have looked at so far, just this
one? And the reason you looked is because of the tip that you
got on the hotline; is that correct?
Mr. O'Neill. Yes, sir. We looked at a rather small slice of
the OI&T world. And we have recommended, though, that the
department do a thorough review of the remainder of these
questionable awards and particularly retention bonuses and
educational benefits throughout OI&T. But I wouldn't be able to
speculate.
Mr. Roe. I do understand that. Until you looked into it,
there would be no way you could offer an opinion on that.
And I know, in August, your office had said that there were
45 recommendations, and 11 were listed in Misuse of Position,
Abuse of Authority, Prohibited Personnel Practices, OI&T,
Washington, DC, were expected to be addressed and be completed
by the 19th of September, which is just a couple days ago.
Has that been done, as far as you know?
Mr. O'Neill. As far as I know, those recommendations
pertain to the one report involving the senior executive and
others. And I believe that there has been an extension
requested, but I am not certain, sir.
So I would just as soon not comment.
Mr. Roe. And I guess the last question is just, should the
VA H.R. have reviewed these personnel actions and bonus awards?
Should the Human Resources folks have looked at that?
Mr. O'Neill. We did not carry this investigation further
because there were no signs of misconduct relating to H.R.
officials outside of the OI&T H.R. So, again, it would be
speculation.
But there are indications, and I believe they will be
thoroughly vetted because of this report, but I don't have any
data for you.
Mr. Roe. Just one last comment. I know, if I had looked at
this--I mean, if anybody who had looked at some of the things
we have seen here would know that this absolutely doesn't--you
can't hire your family. You know that. And that is very clear
to anybody who has been around the Federal Government for 2
seconds. And I don't know how that wasn't picked up.
Thank you for your comments.
I yield back, Mr. Chairman.
Mr. Mitchell. Thank you.
Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman. And following up on
Ranking Member Roe's questions, Mr. O'Neill--and thank you for
your testimony and for being here--I understand that because of
personnel issues and policies, that maybe that there are things
that you can't talk about in public.
Mr. O'Neill. Yes, sir.
Mr. Hall. But, nonetheless, among the 40 recommendations
that you made to the Assistant Secretary for the Office of
Information and Technology, were some of those recommendations
for termination or various other kinds of discipline or perhaps
recovering some of the money that was paid?
Mr. O'Neill. Some were recommendations to recover money
that was improperly spent.
We do not recommend specific administrative action. Our
recommendations are always to take appropriate administrative
action, because the department actually has to take that
administrative action and be able to sustain it. So that is
their responsibility.
Mr. Hall. Does the department have guidelines for
administrative action to cover this type of behavior, for
instance, hiring multiple members of one's family?
Mr. O'Neill. Certainly, sir.
Mr. Hall. Glad to hear it.
Is there a timeline for the implementation of your
recommendations by the Office of Human Resources?
Mr. O'Neill. Well, as I mentioned earlier, I believe that a
request came in to extend, in order to take the recommended
action, the individual against whom the action is recommended
had a period of time for appeal.
And so I think that the request is to allow that time to
provide a formal response to us. But I have reason to believe
that this is on track.
Mr. Hall. I will take that to mean that we shouldn't have
to worry that the VA is looking at this with the seriousness
with which the public and this Subcommittee sees it.
Mr. O'Neill. I am absolutely confident they are looking at
it with quite serious eyes.
Mr. Hall. What do you think is the top, number one
recommendation out of your report that would improve the way
bonuses are given out? We are all expressing a concern that
they reflect performance rather than just be an automatic,
yearly--like a Christmas gift.
Mr. O'Neill. Well, we made a specific recommendation to
review retention bonuses within the Office of Information and
Technology.
Retention bonuses make up a large portion of the bonus pool
that is expended in that area and, perhaps, elsewhere in VA.
But our recommendation, I think, is very specifically directed
at retention bonuses. We didn't make a formal recommendation to
look at awards beyond that, but it would be clear to me, after
reading this report, that the current management would feel
required to look at it.
This is pretty appalling when you talk about a $4,500 award
for a GS-5. I have been administering awards for a long time,
and we have GS-13s that risk their lives and don't get anything
close to that. So it is glaring. I think that our report will
prompt a close review of these processes.
Mr. Hall. Well, that is good to hear. Have you seen many of
these same issues among the other employees of the VA? Or are
some SES employees uniquely able to take advantage of the bonus
system?
Mr. O'Neill. Sir, we didn't do any work on the SES bonus
issue, so I couldn't comment on that at all. We were focused on
particular allegations. Some allegations were made against SES
officials, but it didn't have anything to do with any bonuses
they may or may not have received. So I wouldn't be able to
help you with that.
Mr. Hall. Regarding OI&T, we heard testimony before the
Subcommittee on Disability Assistance and Memorial Affairs and
the full Committee this summer to the extent that, for the
first time now--after years of our asking and the veterans
community asking, for the first time, they are able to make an
electronic handoff from the U.S. Department of Defense to VA of
a veteran's medical service record, which is critical to timely
processing of a claim, not to mention to the veteran's care.
So I am wondering, have you seen any correlation of the
bonuses in the Office of OI&T between this achievement and
those who have managed to do the technological fix to get two
different, incompatible systems to talk to each other?
The bonuses, have you identified yet what the reasons for
those bonuses were?
Mr. O'Neill. None of the awards that we looked at, that I
can recall, cited anything to do with that electronic handoff
of information. Again, we didn't look at a large slice of OI&T,
so I suspect that the individuals we weren't looking at were
those who were tasked with that electronic handoff.
So the fact that I didn't see it doesn't mean much except
that it wasn't related to our investigation.
Mr. Hall. They might have been too far down the food chain
to qualify for a bonus.
But, at any rate, there are people who deserve bonuses, and
let's hope that we can move toward getting them rewarded
properly and making sure the abuses are halted. Thank you for
your work, sir.
And thank you, Mr. Chairman.
Mr. Mitchell. Thank you.
Mr. Walz.
Mr. Walz. Thank you again, Mr. Chairman.
And, Mr. O'Neill, I truly thank you. I want you to know it
is not a thankless job you do. You are going to get plenty of
thanks from us. This is an important and critical step in
ensuring proper use of resources, making sure we reduce fraud,
waste, and abuse; and, most importantly, precious tax dollars
and public resources go to the cause that they are supposed to.
This panel and this Chairman and the Ranking Member have
championed expansion of your office for quite some time now. We
will continue to do that.
I know it is a very difficult job you do, but absolutely
critical. And I think your being here, this hearing happening,
your bringing this forward--for the breakdowns in the system,
the safety valve was still there; and for that I am thankful. I
think we are making good progress, and I am very appreciative
of that.
I think the question is obviously the nepotism issues and
some of the hiring issues. Those have to be addressed. The
question that we are being asked, that I am not sure you have
the ability to answer, is how big a systemic problem this is.
But I think it is very important for this Committee to clearly
separate performance bonuses, based on measurable outcomes for,
whether it be SES--and I say this as a former GS-7, who had the
ability to qualify for these. And I was in a work environment
where the standards were clearly laid out, the minimum
standards--where you were supposed to be, what would constitute
excellence and awards and put you in a position where you can
be put in for an award. It was very clear, it was very
measurable, and those outcomes had a direct impact on the
mission that we were trying to accomplish.
My questions are--and the thing I would say on this, and I
would appreciate the Ranking Member's comments. But this type
of thing is not the sole institution of government doing this,
lest I remind bonuses at AIG, Enron, Lehman Brothers, United
Health Group; that goes on and on and on. We have a problem of,
how do we get this for performance?
So my question is, Mr. O'Neill, if you can help me on this,
are there uniform hiring procedures and uniform bonus
procedures in place, like the one I described in the
organization I was in, where it was clearly laid out, and in my
yearly evaluations and my 6-month evaluations, my supervisor
was clearly stating where I was, and these were measurable
goals of achievement, trying to reach a point where you could
qualify for the bonuses?
Is that happening inside the VA?
Mr. O'Neill. Again, it really wasn't part of our specific
administrative investigations to review bonuses afforded SES
and whether they are tied to measurable outcomes. That wasn't
part of this. I wish I could help you, but it wasn't really a
part of it.
There are definitely hiring standards that need to be
complied with, and we cited where they weren't complied with.
Mr. Walz. Mr. Roe was very clear. We all know, you don't
have to have vast experience to know you don't hire your
relative, you don't give bonuses to those. That is very clear.
And the checks and balances in there, you wouldn't think it
would have to go very high above the person doing it to have
the system kick into place and red flag those.
So I am glad it eventually worked. I am glad you were
there. That is why I continue to say, you must be there. But I
am concerned, and I guess we will hear from the next panel more
where those procedures are in place.
Maybe, again, this is a question for the next--I'll save
it.
Trying to understand that maybe one of the problems we have
here, especially when it comes to retention bonuses, do we need
to take an honest and hard look at what we are paying people if
we are counting on retention bonuses to be the sole measure?
Maybe we need to make sure that the initial salaries are
where they need to be to make that happen. Because my problem,
and I guess the thing I am most concerned about, Mr. Chairman,
is--as Mr. Hall and Mr. Roe and everyone has pointed out--when
this type of incident happens, we lump together those that are
deserving and those that received a bonus on all the right
criteria, we lump them together with incidents of malfeasance
that pollute the whole system.
So, again, thank you for being here. You are in a very
important position, Mr. O'Neill, and one that I very much
appreciate. I know how hard it is to do what you do, but you
are making it better for our veterans.
So I yield back.
Mr. Mitchell. Thank you.
Mr. Teague.
Mr. Teague. Thank you, Mr. Chairman and Ranking Member and
other Members, for allowing me, again, to be here today.
Mr. O'Neill, thank you for coming before us today and thank
you very much for your testimony. And I want you to know that I
appreciate the work that you do.
And I think that most of our managers, all the way through
the VA, are doing a good job, but unfortunately, we do have
some people that need to be ferreted out. But, you know, I am
amazed that this problem can go unchecked for so long. Can you
explain the process that the VA set up for these bonuses?
And it is evident that we did not have people acting
without supervision. There was a process that was set up with
different layers of oversight, yet this still occurred. So
evidently we had a breakdown in the system.
When you found that spot, did you check up and down in the
system--and laterally, both--to see how far it went?
Mr. O'Neill. To the degree possible, we did. And we
certainly followed the administrative misconduct. The most
egregious examples of awards we have heard about today result
from misconduct, not mistakes but lack of attention from people
above those that were responsible for misconduct, this wasn't
just the way people do business.
So we looked at that, but a number of the people most
responsible were gone by the time we issued our report. So we
wouldn't be citing them for administrative action if they are
no longer with the government.
But I do believe that our recommendations for the
Department to follow up on these as they apply to OI&T--and I
suspect this will prompt throughout VA, I believe closer
attention being paid to awards.
When you read justifications for a $2,500 award for a GS-5
and the justification is ridiculously brief and off point, then
someone who approved that wasn't doing their job. Now, on those
particular cases, the person who approved it was approving it
as a result of misconduct, we believe, not because they thought
that the individual actually deserved those awards. So there
was favoritism. Preferential treatment associated with these
awards was the big issue.
But retention bonuses may just be something that requires
attention and may never have involved misconduct in the
decision, at least in most of these retention bonuses. But our,
at least, indications are that this needs further attention.
Mr. Teague. And you also stated that one former VA official
had repeatedly violated the nepotism regulations that are very
clearly laid out. But for this to have gone on for so long, do
you think that there is an environment or a culture that we are
fostering to discourage people to report wrongdoings?
Mr. O'Neill. I really don't have any reason to believe
that. I believe that our report will encourage responsible VA
employees to report instances of this.
And, of course, that is how we learned about it. Someone
who knew what was going on reported it, was offended by it.
And so I don't have any data to know if it is widespread or
not, but certainly the number of referrals are not
overwhelming, when it comes to nepotism in particular.
Mr. Teague. When you hire someone at a higher rate of pay,
how much additional paperwork do you have to do and how many
people have to see that?
Mr. O'Neill. Well, I took some notes on that.
When you want to hire someone at a particular grade level,
normally if they are new to government, they come in as a Step
1.
But if you want to increase their pay, then you have to
provide adequate justification. And you look at the efforts
that were taken to recruit people and how they failed, you look
at the candidate's superior qualifications compared to the
other candidates. You are looking for prior salary of the
individual to see if they were earning far more than the Step 1
would have, and why you were recommending hiring at that step
as opposed to a recruitment bonus.
All those steps are required. But in the cases we have
identified, they weren't followed at all. So the individuals
controlled the environment, and they allowed it to happen. So
that is the difficulty where someone above them wasn't paying
attention to what was going on.
Mr. Teague. Mr. O'Neill, once again, I want to thank you
for appearing today and for your testimony, and I appreciate
the answers that you gave me also.
And, Mr. Chairman, once again, thank you for allowing me to
be here.
Mr. Mitchell. One last question, Mr. O'Neill. We know that
there were some policies that were not followed and procedures
not followed and, also, some laws that were broken. Are we
pursuing legally any of these people who broke this law, or
were they just dismissed?
Is there any legal action against any of these people?
Mr. O'Neill. We looked at the actions that occurred, and in
open session, I would rather not discuss it. But there is still
ongoing work to look if any laws were violated.
If you don't mind, I would just as soon keep it to that.
Mr. Mitchell. No. Thank you. And thank you for being here
today. As everyone said, we appreciate the work that you are
doing. Thank you, sir.
Mr. O'Neill. Thank you.
Mr. Mitchell. I would like the welcome Panel Two to the
witness table.
For our second panel we will hear from the Honorable W.
Scott Gould, Deputy Secretary, U.S. Department of Veterans
Affairs, accompanied by John Gingrich, Chief of Staff, U.S.
Department of Veterans Affairs; the Honorable John Sepulveda,
Assistant Secretary for Human Resources and Administration,
U.S. Department of Veterans Affairs; and Willie Hensley,
Principal Deputy Assistant Secretary for Human Resources and
Administration, U.S. Department of Veterans Affairs.
And like the other panel, Mr. Gould, I would want to ask
you to keep your comments to 5 minutes, and anything that you
have in a written statement will be added to the record. Thank
you for being here.
STATEMENT OF HON. W. SCOTT GOULD, DEPUTY SECRETARY, U.S.
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY JOHN R.
GINGRICH, CHIEF OF STAFF, U.S. DEPARTMENT OF VETERANS AFFAIRS;
HON. JOHN U. SEPULVEDA, ASSISTANT SECRETARY FOR HUMAN RESOURCES
AND ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND
WILLIE L. HENSLEY, PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR
HUMAN RESOURCES AND ADMINISTRATION, U.S. DEPARTMENT OF VETERANS
AFFAIRS
Mr. Gould. Thank you, Mr. Chairman. And with your
permission, I can begin my oral statement? Thank you.
Mr. Chairman, Mr. Ranking Member, and Members of the
Subcommittee, I appreciate very much the opportunity to discuss
VA's progress in determining our senior executive performance
awards. VA has made many improvements since the previous
hearing in June of 2007, and we look forward to sharing them
with the Subcommittee today.
I am joined by Mr. John Gingrich, Chief of Staff of the VA
to my right; the Honorable John Sepulveda, Assistant Secretary
for Human Resources and Administration immediately to my right;
and to my left, Willie Hensley, who is our Principal Deputy
Assistant Secretary for Human Resources and Administration. I
ask that my full written statement be entered into the record.
Let me begin with a simple statement: People are VA's most
important asset. They make it possible to fulfill our mission
to our Nation's veterans; and day in and day out, VA's 292,000
employees provide world-class health care, pay critical
benefits, and render final honors to millions of veterans.
Only 313 of these employees are Members of the Senior
Executive Service. This small group of men and women who
comprise our SES corps play a critical role in providing the
leadership, shaping the culture, and promoting excellence in
VA. Whether it is here in Washington, DC, or out in the field,
our senior executives are responsible for the operations of
hundreds of facilities and for meeting the highest standards of
performance and integrity.
Importantly, they are responsible for ensuring that our
VA's daily operations meet our veterans' expectations for
quality care and services. Consequently, we seek to reward
those executives who excel in service to our veterans.
The authorization for the current SES performance award
program is set in law. The law puts forward a simple premise:
Encourage excellence by senior executives and do so fairly.
The law required evaluation and compensation of SES
personnel based strictly on their performance. It eliminated
the six existing pay levels in favor of an open pay range, and
it eliminated locality pay and across-the-board pay increases
to which the SES had become accustomed.
Now, VA strives to implement the letter of the law and its
spirit and intent. To that end, we have followed closely the
advice of the Office of Personnel Management (OPM), the U.S.
Government Accountability Office (GAO), and this Committee by
implementing recommendations to make sure that awards are made
properly.
For example, the VA ensures that all performance plans
focus on achieving measurable results. We revised the awards
determination process to ensure awards are granted based on
individual and organizational performance and results achieved.
We train new and serving Performance Review Board, or PRB
members on the policies and guidance of the SES PRB process and
their role on the PRB. And we enhance our PRBs by appointing
members from outside VA. VA has heard your recommendations and
acted on them.
Finally, VA has taken further steps to ensure excellence
and institute reforms by increasing the criteria for
performance awards to ensure that only those SES who are rated
as excellent or outstanding can receive them, placing caps on
performance awards and reducing the maximum pay adjustment
percentages allowable in a given year.
We believe that the steps we have taken to implement the
law, Committee recommendations, and our own initiatives will
have a strong impact on SES performance.
But every system can be improved, and in keeping with
Secretary Shinseki's vision for a 21st century VA, we are in
the process of implementing additional initiatives to improve
SES management and development, including leadership training,
career development, greater emphasis on mobility, and more
rigorous SES application and selection processes.
The men and women of the VA Senior Executive Service are
held to the highest standards of service. They routinely face
enormous challenges in delivering the best possible care and
benefits services to our veterans. We strive to reward those
whose success sets the standards for others to follow, and we
will hold those accountable whose character or quality of
service is not up to the standards of the SES.
Mr. Chairman, I want to thank you, the Ranking Member, and
all the Members of this Subcommittee for setting the tone of
the hearing today, which is a balanced perspective between the
vast majority of stellar performers and personnel who work at
VA and the unfortunate exceptions. I look forward to answering
your questions, but more so in working with you to encourage
excellence in performance by our senior executives for the
benefit of all veterans and the VA employees whom they lead.
Thank you, sir.
[The prepared statement of Mr. Gould appears on p. 32.]
Mr. Mitchell. Thank you very much. Just a couple follow-up
questions.
I know that you are fairly new to this position. We had a
hearing in the last Congress over the bonus issue. And I just
want to say hopefully, you are doing things different than was
done in the past as a result of the last hearing.
Can you give us an example of what you are doing that is
different and how you are overlooking these bonuses?
Mr. Gould. Yes, sir, I can. There are a number of things we
have done as a team that reflects the career continuity that is
here at the table and also the new political team that is here,
focusing real leadership on this.
Some quick examples: We have included non-VA executives on
our Performance Review Board, so we are reaching out for that
external perspective from VA to bring it into the discussion
about performance.
We have strengthened the performance plans themselves,
linking performance to the organization's strategic goals and
objectives and operating plans.
We require organizational heads to certify in writing that
the executives under their leadership are not pending any
disciplinary actions.
So this is one of the key points of self-discovery. It is a
very long process. It takes several months. Things can be
revealed along the way. We want to make sure that the OIG, that
medical investigations and so on, has a chance to put their
input into this process even as those packages are moving
through the system.
Two more quick ones: We have instituted mandatory training
for PRB members. As with any people-oriented process, it is the
training and the education of those individuals that really
determines your success, in my view.
And we work closely with OPM to create a performance
management training guide for our senior executives that we
think will be especially helpful.
So those are some of the examples of the improvements that
we have made since the 2007 Subcommittee hearing.
Mr. Mitchell. So, in a sense, you have really standardized
throughout the VA so that all these bonuses will go through the
same rigor?
Mr. Gould. Yes, sir.
It is a human process, and there are judgments being
applied there. But to the extent possible, we have multiple
levels of review now that start with the individual rater who
sits down and develops a performance plan for the year, meets
with their employee at the 6-month mark, evaluates them at the
end, writes a 2-page evaluation.
That evaluation then goes to a PRB and, ultimately, from
there, to a department-wide PRB.
And then it is pretty much across this table. The Chief of
Staff is going to read it, review it, and evaluate it. We are
going to get that external input from the OIG that I mentioned.
I personally will review those. And then the Secretary does so.
For these 313 senior executives, we have a lot of review, a
minimum of four levels of review, to make sure that this is
happening.
Mr. Mitchell. Very good.
One last question: Can you discuss the apparent
disproportion between minorities at the lower-level GS
positions, compared to the middle and upper management, to
include the SES positions? And do you have any plans to
implement or fix this challenge?
Mr. Gould. Yes, sir. I think probably the best way to
describe this with respect to diversity in our SES ranks is
that we have a long way to go. And we are committed as a
leadership team to make sure that those improvements in
diversity among our senior execs are made.
I can tell you a few things that we are doing, and I would
like to turn to Mr. Sepulveda and get a little bit of a better
sense, a fuller sense, for you and this Committee about what we
are doing.
But at all levels, we are trying to first make sure that
our current SESs have included in their performance evaluations
a focus on diversity.
Number two, at the middle level we are trying to develop,
and we have created, SES development programs that reach down
to 14s and 15s and give them an opportunity to participate in
that, get the special schooling, the developmental assignments
that will help them get into the SES.
And then, finally, reaching deep down into how we recruit,
targeted outreach to various communities, colleges, and
universities and so on, all with a long-term goal of making
communities aware of the opportunity for service at the VA and
then development.
And perhaps Mr. Sepulveda could give us some additional
perspective here.
Mr. Sepulveda. Thank you, Mr. Chairman.
Diversity is a high priority for this administration, and
certainly that is something that we have been working on
internally in terms of not only developing VA's first strategic
plan focused on diversity, but as the Deputy Secretary
mentioned making sure that diversity is something against which
SESers are managed and evaluated on.
The reality is that if we don't have our senior executives
focused on diversity in terms of the development of their
staff--doing the kind of outreach that is necessary, the kind
of training--then we won't develop the pipeline that ultimately
feeds into increasing the numbers of SES at the VA level. As
the Deputy Secretary said, we have a ways to go.
The good thing to mention is that VA's record in terms of
diversity, I think, is a good one. In terms of African American
representation, the VA is about close to 24 percent and
Hispanic, 6.5 percent; Asian American, Pacific Islander, about
7 percent. But the reality is that that doesn't translate into
better levels of representation at the SES level, and we
recognize that.
That is why the candidate development program that the
Deputy Secretary mentioned is a great opportunity to get those
folks that are in the pipeline into the kind of training,
because once they have completed that program--that is a 12 to
24-month program, very vigorous--once they've completed that
program and they're qualified by OPM, they can be appointed
noncompetitively into an SES position.
So we're looking forward to working on that. And I can
assure you, sir, I have been a longstanding advocate and
champion for diversity, and that is something I am going to be
focusing on during my tenure as Assistant Secretary.
Mr. Mitchell. Dr. Roe.
Mr. Roe. Are you having difficulty, Mr. Secretary, on
retaining good people? And basically are these bonuses
retention bonuses, or is it just to reward, you know, obviously
excellent service. Which would it be, or is it both?
Mr. Gould. It is for the purpose of encouraging excellence
among our senior executives. We do not use it as a tool for
retention nor as a tool to establish pay equity with the
private sector. So it is exclusively focused on encouraging
excellence.
Mr. Roe. Here is a question. I come at it from this, not
from the public sector, but the private. It says in your
testimony, the VA prudently used our financial resources in
2008 by reducing the maximum pay adjustment percentage for
senior executives who were rated fully successful from 5 to 3.
That looks to me like a COLA that you're giving, a 3-
percent increase, and actually from 7 to 6. And this--I guess
we talked about this beforehand. Did all of the employees get a
3 percent, or did all employees at the VA get a ``go,'' if they
were excellent, from a 7 percent to a 6 percent? And this was
in 2008 when we were shedding jobs like a dog shedding hair. It
was difficult. I know in the city where I was Mayor, nobody got
a raise this year, and a lot of people's pay went down. They
were really glad just to hang onto their job. I know these are
313 very, very good people, but did this filter through the
other 290,000 VA employees?
Mr. Gould. Well, sir, a couple of points, first being this
is not a COLA. And as you know, when the law changed in 2004,
we created a situation for our senior execs where there was no
automatic pay increase at all. So the base pay adjustments that
are made through the PRB process are the sole way in which we
address inflation.
So unlike our General Schedule employees who do get a COLA
that is established by government, it kind of works across the
board, the SES do not.
And to your second point, sir, about the context of this. I
loved that expression. That really makes a lot of sense. I
think all of us have to be sensitive to and aware of the hurt
that the general community is facing, the economic downturn,
and they see folks earning money in government or getting
performance awards, maybe a question gets raised in their mind.
In our view I believe that this is a time when we need to
be sensitive about that, and when our Secretary issues his
guidance to the PRB this year, I am sure that will be a factor
in his determination of what those limits will be. But it is
also a time when we need to be encouraging our VA employees
to--now that these services are needed more than ever--to be
setting a standard for high quality and excellence, and that is
what those performance awards are.
Mr. Roe. I've got counties where the unemployment rate is
17 percent, and they look at someone getting a $30,000 bonus in
a 3-year, or a 7-percent increase, a 6-percent increase in
their salary, it is pretty hard to explain to them.
Did the folks get bonuses? We have held hearings--the
Chairman's held--we have been on two hearings on the
colonoscopies where those particular institutions had
institutional problems. Were they bonuses? And I know where
we've been to Detroit where records were shredded. And those
areas, did those folks get bonuses?
Mr. Gould. If we have a substantiated OIG investigation or
a problem there, I would think it unlikely that a person would
qualify for a bonus, or at least it would diminish,
dramatically diminish, their opportunity before a PRB.
Mr. Roe. I'm not asking you today, but I would like to know
after this whether those folks got bonuses or not.
Mr. Gould. Dr. Roe, to the best of my understanding, that
would be a process yet to occur, so that is going to be in the
future. And I'm just indicating that that would be a factor in
the PRB process.
Mr. Roe. The other question I have is in the private
sector, at least in the city where I was Mayor, what happens to
the money if you don't spend it? If you feel like that the
organization is having a tough year--I know that is what we did
in the city--or our business was having the hard year, what
happens to the money then? Does it go back? Does it stay there?
What happens to it?
Mr. Gould. Sir, that is a great question. It is part of our
resource for funds under wage and salary. The pool each year is
created under law. So for the SESs it is a certain percentage
of the total payroll. And if it is not used, it would be
returned for use in the VA to purchase time for additional
people, or if at the end of the year it was not absorbed, then
it would roll into what is called a carryover and would be
unexpended funds at the end of the year and would be available
for use in the following year.
Mr. Roe. So you could keep it. Leaving it in the city, it
would go to a fund balance, or in your business you would use
it as capital in investments. So you could actually hire other
personnel if you didn't use that money; is that correct?
Mr. Gould. That is correct.
Mr. Mitchell. Thank you.
Mr. Hall.
Mr. Hall. Deputy Secretary Gould, thank you for your
testimony and work on behalf of your veterans.
Do you see a problem, sir, with Members of the SES at the
VBA receiving bonuses at a time when the claims backlog
continues to rise?
Mr. Gould. Sure. SES performance awards are now tied to
organizational performance. It is specifically a part of our
PRB review process. So for those individuals who were tied
exclusively to that problem, that would be a factor in
determining whether or not they should receive a performance
award for the year.
But, sir, I do want to point out, it is easy to kind of
lump everybody together, and, you know, there are probably five
big business units there. So if you put somebody who runs our
loan guarantee or our insurance operation at the SES level,
which has spectacular customer service, customer satisfaction
rates, and you lump them in there with that, then you can see
in that PRB process you wouldn't want to do that because they
don't actually influence that backlog.
So the PRB's job is to integrate organizational performance
and make sure that it really is focused on that particular
individual. They have control over the outcome.
Mr. Hall. Right. I understand it. That makes sense. I agree
with that. At the same time, VBA, last we heard, was
considering a claim to be backlogged when it was over 125 days
and still not resolved. I personally think that is a long time
before you start considering a backlog, given the returning
veterans that we have from the conflicts in Afghanistan and
Iraq and the homelessness, the suicide rate, the divorce and
the bankruptcy rates that we're seeing among the veterans
community.
So I just was wondering if you could quantify that or be
more specific with us about what constitutes performance that
justifies a bonus in those instances, not for people who are
dealing with loans or educational benefits, but specifically
with the claims process.
Mr. Gould. Thank you for that question.
And Secretary Shinseki and I and this leadership team are
focused on directing that backlog issue. It is serious. We need
to address it. And as you know, we have a major initiative
under way to use new business processes and technology to go
after that.
As I'm sure that you're also aware there are a certain
minimum days required where the VA literally has to hold and
wait for our veteran to give them adequate time. That element
of due process adds to what I would regard as an overly long
process that we absolutely must reduce, and we're focused on
making that happen.
You asked for some examples of what might actually
constitute a positive result for a performance award. I've got
a couple that may be helpful. For example, this came out of
last year's batch. We had a senior exec to improve the regional
office claims processing productivity by 77 percent and met up
to 95 percent of the office's goals.
So if you look at the distribution of performance among the
regional offices where these claims are being processed, you
will actually see some that are much, much more successful than
others at this. Now, the average is too slow and too long, but
there are some exemplars there, like this person, who received
a performance award, and I would feel good about signing off on
that and recommending that to the Secretary.
Mr. Hall. Thank you. I feel good about your saying that,
and I would be happy to stand there and shake the person's hand
for that big of an improvement in a year in any regional office
or any department.
Are there PRB boards that help determine bonuses for those
who are not in SES?
Mr. Gould. Sir, will you repeat the question, please?
Mr. Hall. Are there PRB boards or similar boards that
determine who qualifies for a bonus for those not in the SES,
or is that simply done by you and the other top executives at
VA?
Mr. Gould. Let me ask Mr. Hensley to respond to that
question for you. I don't have the information personally.
Mr. Hensley. Congressman, just to comment on the fact that
by law the Performance Review Board process is established by
law and is responsible for looking at bonus recommendations
relative to the Senior Executive Corps. Bonus processes or
performance awards, as we would refer to them as, or for
General Schedule employees are handled through policy. We have
policy that guides how that should take place, the level of
reviews that should be in place before those are awarded,
before they are processed. So there is no board. It is a
supervisor's recommendation. There are, again, three levels of
review after the supervisor signs off in an effort to make sure
that they are valid and that they move through the process.
Mr. Hall. Thank you very much for your enlightening us,
and, Deputy Secretary Gould, thank you. This is the first time,
I believe, in the time that I've been here that we've heard
somebody explain specific instances that justify a bonus, and
that is what we have all been looking for. And I think you're
moving in the right direction, and I can compliment you on that
and wish you all of the best in succeeding in that mission.
I yield back. Thank you, Mr. Chairman.
Mr. Mitchell. Mr. Walz.
Mr. Walz. Thank you, Mr. Chairman, and Deputy Secretary and
your staff here today. I very much appreciate it.
As I said earlier, we're all here for the care of our
veterans. Many of you sitting at that table are veterans
yourselves and should understand this issue very well, and I'm
very appreciative of that; also understanding that each of you
have--I wish people would look at this--our SES folks.
Mr. Hensley, for example, I wish they would look at your
resume and see the type of quality of people we're getting and
understand where--this retaining you folks is critically
important.
And, Mr. Gould, yourself coming from IBM and choosing to
serve our veterans, I think it is very important.
So the issue, we're all in it together to use those
precious resources, which I think many of us up here now feel
are finally reaching adequate levels. My fear, as always,
though, if we fully fund and misuse that money, it is going to
set us back a long, long ways. And that is why we have to be
very, very focused on this.
I think you answered many of the questions I was looking
at, and I would agree with Mr. Hall on this, his question. Mr.
Hensley was very good about that procedure. I said myself in my
experience I think it worked very fairly in that sector as in
my private-sector jobs where there were clear-cut criteria,
there was midyear evaluations, there were metrics to be
measured to see if I got there, and it was put out accordingly.
I think that is a great tool.
We would like to think that everybody is going to do their
very best regardless of that, but we know that market of
incentives can boost folks up. So I am very curious about that.
My biggest concerns, and the ones that I am going to focus
on, I think, here, are on the nepotism and the minority hiring
that we're trying to get here, a couple of things.
The first thing I would like--and I know this can all
happen. You listened to the OIG, Deputy Secretary. You think
there is a systemic problem here with nepotism and some of the
oversight, or do you think this is an isolated incident that
probably isn't happening widespread, just in your evaluation?
Mr. Gould. First of all, we're all incredibly disappointed
in the performance here, professionally disturbed, disgusted by
the behavior here. It is inexcusable.
We're also, though, arbiters of a process, a due process, a
fair process. We're going through systematically that process
now, and I believe that there will be a point in time when
we're able to report back to you a status on what has happened
and what the consequences of that are.
I believe that the OIG did a very thorough job in OI&T. We
self-initiated an H.R.-led review of other systems inside the
VA asking the very same question you're posing. We did not get
any negatives from that, but I think every single leader in the
organization on down from the Secretary is somehow disturbed by
this and now is more vigilant as a result. And so you see in
our process we're about to go through a greater leadership
commitment and focus to make sure that cannot happen on our
watch.
Mr. Walz. Very good.
Mr. Hensley, I noticed in your past you worked for the
Center for Minority Veterans, very important position. Could
you give your evaluation of how we're doing on this in terms
of--and I know I listened to--the Deputy Secretary, I think,
gave a good example and talked about what we needed to do to
increase participation on that. There is a gap, if I'm not
mistaken, between the entry-level GS position midgrades and the
SES. Are we moving in the right direction there?
Mr. Hensley. Yes, sir, we are. As Assistant Secretary
Sepulveda pointed out, our candidate development program is a
very solid program, 18-months to 24-month developmental
program. I'm a graduate of that program. I started in VA--left
the military on a Friday, started on a Monday morning in the
Center. Very delighted about what I do for the department, a
great passion for serving veterans.
I absolutely believe we're moving in the right direction.
We're seeing great numbers in terms of the 15 to 14 levels in
terms of outreach, targeted--outreach in those particular
areas. I have an opportunity as well to talk to, mentor, coach
minorities as well in the department.
So I'm committed to that, as is Assistant Secretary
Sepulveda. We do have a ways to go. I believe we're on the
right track.
Mr. Walz. Thank you very much. I appreciate your
involvement in this. Again, we're trying to get this right for
our veterans. We know we share that absolute concern, and I'm
very appreciative of all of your service.
And, Mr. Gingrich, as a former artillery man, I hope we
were speaking loudly enough for you.
I yield back.
Mr. Mitchell. Thank you very much. Thank you for the
service you're doing. I know you've been in about 6 months. But
I think from what I've heard and what I've read that you're
headed in the right direction.
There are an awful lot of people depending on the VA's
services. Just even in your own testimony, I was looking at the
statistics about the number of veterans versus the number in
the medical service. And you had almost 25 million veterans;
there are only about 8 million that are actually registered.
And, of course, we're trying to find out why and increase that.
But those 8 million people, just by my observation, I think
everybody here, they need this, they need it desperately. And
those trying to get into it need it.
So we appreciate all that you are doing to try to make that
happen, and to get rid of that backlog, and to serve the
veterans, which so richly deserve it.
Thank you so much, again, for your testimony, and this
hearing is adjourned.
[Whereupon, at 11:20 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Hon. Harry E. Mitchell, Chairman,
Subcommittee on Oversight and Investigations
I would like to thank everyone for attending today's Oversight and
Investigations Subcommittee hearing entitled, Senior Executive Service
Bonuses and Other Administrative Matters at the U.S. Department of
Veterans Affairs. Thank you especially to our witnesses for testifying
today.
We all know that the Department of Veterans Affairs has some of the
hardest working, and dedicated employees. However, there are concerns
about the VA Bonus process and how the VA matches pay to individual and
organizational performance. For example, in Fiscal Year 2008, the VA's
performance award pool was almost $4.3 million, including $774,108 for
just 21 Presidential Rank Awards--with some awards as large as $60,270
dollars!
The VA does outstanding work in many areas, but there are some
areas where improvement is needed. Just this year, this Subcommittee
has been here, on more than one occasion, questioning the department's
quality of care, safety standards, and lack of necessary protocols and
procedures. We are here today to ensure that the VA is making sure that
its bonuses and awards closely match levels of performance, not just
individually, but organizationally.
Members of Congress on both sides have expressed frustration over
this issue, especially in the wake of recent reports suggesting that
bonuses were not appropriately applied. The bonus system must allocate
responsibility where it lies. It must also be used to adequately retain
the best personnel available and to encourage excellence in
performance.
The reason we are here today, is to help ensure that the bonus
system is being utilized in the appropriate manner, so that we can tell
veterans with full confidence that these Senior Executive Service
personnel are making the VA a better place. And that the VA is serving
our veterans and being good stewards of American taxpayer dollars.
The Subcommittee is also here to examine hiring practices and
minority hiring trends within the department. On August 18, 2009 the VA
Office of Inspector General released two reports, citing abuse of
authority, nepotism, improper hiring and improperly administered
awards. The Subcommittee has concerns over these reports findings, and
we must ensure that these reports don't point to a potentially bigger
problem within the department. However, these reports accurately show
what can happen when the proper procedures go unchecked. I am grateful
that the VA Office of Inspector General has agreed to come here today
to talk about their reports and give specific and limited testimony
into the correct hiring procedures and protocols the VA should utilize.
Additionally, we would like to look into minority hiring practices, to
guarantee that the VA is utilizing a fair and equitable hiring system.
Deputy Secretary Gould, along with Assistant Secretary Sepulveda
have agreed to come here today to assure the veterans that they have
safeguards in place to provide effective oversight.
In closing, I would like to make it clear, that this Committee is
not here to denigrate the dedicated work of the VA's employees. We have
no intention of targeting specific employees, and we have no intention
of questioning whether or not the VA should award bonuses. We are all
here to do what's right for our veterans, and instill the trust and
integrity that they should expect from their government. Our goals
should always be to ensure that they are being served with a system
reflective of their service and honor.
Prepared Statement of Hon. David P. Roe, Ranking Republican
Member, Subcommittee on Oversight and Investigations
Thank you Mr. Chairman.
Last Congress, this Subcommittee held a hearing on the Senior
Executive Service bonuses, during which then Ranking Member Ginny
Brown-Waite expressed the frustration of several members on our side of
the aisle regarding the VA allocation of bonuses to employees possibly
involved in quality of care issues at various VA medical facilities, as
well as those involved in providing benefits and processing claims at
the Veterans Benefits Administration. While she cautioned members to
tread carefully through this path, we are again here reviewing these
bonuses and their appropriateness given new reports of alleged
malfeasance at the department in the Office of Technology and
Information.
Our Nation's veterans have fought faithfully for our freedom, and
deserve to be treated with the utmost respect. They have a right to
expect their claims to be processed in a timely and appropriate manner;
they have a right to expect their treatment at VA medical facilities to
be among the best our country has to offer, and they should expect that
in all their dealings with the Department of Veterans Affairs, they
will be treated with the utmost respect and dignity.
Those in the Senior Executive Service, commonly referred to as SES,
are typically among the cream of the crop in our Nation's Federal
employees. These are the leaders of today and tomorrow. To be elevated
to these positions of responsibility they have completed training
programs and have dedicated themselves to the service of our country.
There is no doubt in my mind that the bonuses many of these individuals
received reflect the value of the service they have provided.
However, a few of these bonuses appear to be extremely hefty in
nature. We are in a time of economic hardship. Many of our citizens,
including veterans, are on the unemployment line, struggling to make
ends meet. Many folks are tightening their belts to put food on the
table and clothes on their children's backs. And yet, several of the
bonuses issued by the department have been in the $30,000 range. This
is more money than many in our country see in a single year, and from
what I can tell, this amount is the norm for these individuals and
considered part of their expected income as opposed to an extra
incentive for doing exceptional work.
We need to ensure that VA is allocating these resources wisely.
While many Americans are unemployed or are taking cuts in salary, and
cuts in bonuses, we need to ascertain if it is fiscally responsible for
the VA to issue such high bonus payments? Are the bonuses that are
being issued by the VA truly deserved, or is it just considered a
matter of course that these bonuses continue to be awarded? We must
make certain that the criteria and performance 0.metrics VA is using to
determine the amount of a bonus issued to an individual in the Senior
Executive Service continues to be a fair and equitable process.
Mr. Chairman, these are the questions I would like to ferret out of
these hearings. I appreciate you bringing the witnesses in today to
testify, and look forward to hearing them speak. Thank you again and I
yield back my time.
Prepared Statement of Hon. Harry Teague
Mr. Chairman and Ranking Member, thank you very much for allowing
me to participate in this hearing today. When I first heard about the
findings from the Inspector General's report, I sent a letter asking
Chairman Bob Filner to conduct hearings on these incidents so that we
could find out what went wrong and take steps to remedy these problems.
Our constituents expect us to be responsible stewards of their tax
dollars. They expect us to treat the Federal treasury as a resource
that belongs to all Americans. When they feel that we haven't done a
good job of watching over their tax dollars, they let us hear about it
and every 2 years they can let us know how much they disapprove by
sending us home.
But this isn't the case for everyone in the Federal Government.
Sometimes our resources are expended in ways that are wrong. When that
happens, it is up to us to exercise out constitutional authority and
exercise our oversight powers to make sure that officials in the
Federal bureaucracy are responsible and accountable. When they're not,
we need to send them home, but more importantly, we need to make sure
it doesn't happen again.
That's what I hope we can do here today. It's always easy to let
someone have it when they've been caught doing something wrong. It's
easy and quick and we get to score some political points in the short
run, but it really doesn't help anything in the long run. We need to
make sure that when we are presented with a problem such as this that
we are using it as a moment where we can learn from our mistakes and
take steps to ensure that it isn't repeated.
We can use this as a way to make sure that our system is run better
and that we are delivering quality care and benefits to our veterans
who are the real victims here.
I hope that's what we can accomplish today. I hope that we can work
together across party lines to build this system up and not tear it
down.
Prepared Statement of James J. O'Neill, Assistant Inspector
General for Investigations, Office of
Inspector General, U.S. Department of
Veterans Affairs
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to discuss several issues that were the subject of two
recent Office of Inspector General (OIG) reports, Administrative
Investigation--Misuse of Position, Abuse of Authority, and Prohibited
Personnel Practices Office of Information & Technology, Washington, DC,
and Administrative Investigation--Nepotism, Abuse of Authority, Misuse
of Position, Improper Hiring, and Improperly Administered Awards, OI&T,
Washington, DC. I am accompanied by Mr. Joseph G. Sullivan, Jr., Deputy
Assistant Inspector General for Investigations, and Mr. Michael R.
Bennett, Attorney Advisor.
While the reports deal with different VA officials, many of the
same issues are contained in both reports. In keeping with the
Subcommittee's instructions, we will discuss the issues related to the
hiring process and other administrative actions, which include:
nepotism, misuse of position, prohibited personnel practices, misuse of
hiring authorities, improper funding of academic degrees, and improper
administration of awards.
NEPOTISM
Federal law states that a public official may not appoint, employ,
promote, advance, or advocate for the appointment, employment,
promotion, or advancement, in or to a civilian position any person who
is a relative of the public official. An individual may not be
appointed, employed, promoted, or advanced in or to a civilian position
in an agency if such appointment, employment, promotion, or advancement
has been advocated by a public official, serving in or exercising
jurisdiction or control over the agency, who is a relative. It further
states that money shall not be paid from the Treasury as pay to an
individual appointed, employed, promoted, or advanced in violation of
this section.
The Standards of Ethical Conduct for employees of the Executive
Branch prohibit an employee from using his or her public office for the
private gain of relatives and prohibits the use of his or her
Government position or title or any authority associated with his or
her public office in a manner that is intended to coerce or induce
another person, including a subordinate, to provide any benefit,
financial or otherwise to himself, to friends, or to relatives.
VA policy mandates that the restrictions on the employment of
relatives apply to all VA employees; that public officials may not
recommend or refer a relative for consideration by a public official
standing lower in the chain of command; and that ``extreme care must be
taken to avoid any possibility of likelihood that the nepotism law may
be violated in an employment action.'' The policy further requires that
management officials ``take appropriate actions to avoid situations
which have the potential for, or appearance of, being a violation of
nepotism requirements'' and at a minimum, document cases where
relatives are employed or being considered for employment in the same
organizational element or chain of command.
One of the reports details the actions of a former VA official who
was involved in the hiring of two family members through the Federal
Career Intern Program (FCIP). In fact, the former VA official advocated
for the hiring of one family member on two separate occasions for two
different positions. However, her improper actions were not limited to
the hiring of the family members but also included hiring friends,
involving herself in a change of work schedule for her relative,
checking on the status of a cash award for the family member, and
authorizing expenditures for graduate courses for family member. This
former VA official also helped put a family member's application
package together, and she told a subordinate that the family member was
qualified for a GS-5 position and submitted arguments and documents in
an effort to advocate for her assertion that the family member was, in
fact, qualified. Further, she asked the selecting official to interview
her family member, and instructed a subordinate, to ``push'' the family
member's application as an FCIP candidate.
We found it problematic that the former VA official's relative,
after being hired as a part-time intern trainee, was able to convert to
a full-time position working a part-time schedule from a remote
location over 500 miles away from the relative's managers and duty
station. We found no plausible rationale supporting any aspect of this
peculiar arrangement.
Misuse of Position
The Standards of Ethical Conduct for Employees of the Executive
Branch state that public service is a public trust; that each employee
has a responsibility to place loyalty to the Constitution, laws, and
ethical principles above private gain; and that employees shall
endeavor to avoid any actions creating the appearance that they are
violating the law or ethical standards. The Standards also state that
an employee shall not use his public office for his own private gain or
for the private gain of friends or persons with whom the employee is
affiliated in a nongovernmental capacity, and they prohibit an employee
engaged in a financial transaction from using nonpublic information or
allowing the improper use of nonpublic information to further his own
private interest or that of another, whether through advice,
recommendation, or by unauthorized disclosure. Also, Federal
Acquisition Regulations state that Government business must be
conducted in a manner above reproach and with complete impartiality and
with preferential treatment for none.
We found that a VA official misused her official position for the
personal gain of a friend when she told a potential VA contractor that
they should consider hiring a long time friend of the VA official and
provided that friend's resume to the contractor. While the contractor
was never told to hire the friend, the contractor did ask the friend to
help them put together their proposal and offered her full-time
employment should VA award them the contract. While there may not have
been an expressed quid pro quo, the VA official clearly and improperly
pressured the contractor to hire the friend while the VA official was
involved in setting up a VA contract.
We found that the same VA official violated Federal acquisition
regulations when she shared nonpublic VA procurement information with
her friend by telling her that VA planned to issue a request for
proposal, that a certain contractor was a potential vendor, and
suggested that her friend contact the contractor for employment,
resulting in a personal gain for her friend. We found it problematic
that the VA official also shared nonpublic VA information with another
friend who was not employed by VA or the contractor, and allowed him to
act as an emissary for a VA procurement. This gave the friend an
opportunity to exploit the situation for his own personal gain and
possible employment with the contractor, and it also gave the
contractor a significant advantage in obtaining a VA contract.
We found that a former VA official abused her authority and engaged
in prohibited personnel practices in the hiring of friends when as the
appointing official she gave preference to her two friends when she
selected them for positions within the Office of Information &
Technology (OI&T). In addition, her selection of three other
individuals constituted pre-selection based on a previous relationship.
This same former VA official also improperly appointed her two
friends at rates above the minimum salary. Personnel records contain no
justification for their appointments at a higher pay rate, and the
justification memorandum for one friend's higher salary did not comply
with all the requirements outlined in VA policy. It appeared that these
appointments at a higher than minimum pay rate were predicated merely
on the prior existing relationships between the former VA official and
these individuals, since the documentation justifying the benefit is
either nonexistent or insufficient.
We found that an OI&T manager misused his position for the private
gain of a family member when he helped her obtain employment within
OI&T by recommending her to the hiring official. This manager was well
aware that the hiring official was desperate for administrative help,
and he exploited her need, perceived or otherwise, to the benefit of
his family member. In addition, he knew that when he recommended his
relative for the position, separate from the competitive review
process, he was orchestrating a means for the relative to bypass the
competitive process for the position. We also concluded that his
relative's appointment did not comply with merit system principles, was
made improperly, and his actions led to his relative's appointment to a
position for which she was not qualified.
In addition, the same manager misused his public office for the
private gain of another family member when he advocated to the Austin
Human Resource staff for her appointment and a higher than minimum
salary. Furthermore, a former VA official improperly appointed this
family member non-competitively under the FCIP at a pay rate above the
minimum salary. We found no documentation to justify the appointment at
a rate above the minimum.
Prohibited Personnel Practices
Federal law states that recruitment should be from qualified
individuals from appropriate sources in an endeavor to achieve a
workforce from all segments of society, and selection and advancement
should be determined solely on the basis of relative ability,
knowledge, and skills, after fair and open competition which assures
that all receive equal opportunity. This is the essence of hiring based
on merit. The law further provides that any employee, who has authority
to take, direct others to take, recommend, or approve any personnel
action, shall not, with respect to such authority, grant any preference
or advantage not authorized by law, rule, or regulation to any employee
or applicant for employment for the purpose of improving or injuring
the prospects of any particular person for employment, as well as
knowingly take, recommend, or approve any personnel action if the
taking of such action would violate a veterans' preference requirement.
The Merit Systems Protection Board defines an ``abuse of authority'' as
an arbitrary or capricious exercise of power by a Federal official or
employee that adversely affects the rights of any person or that
results in personal gain to preferred other persons.
We found that a VA official abused her authority and engaged in a
prohibited personnel practice when she expressed to her subordinates,
who were also the rating and selecting officials, that her preference
was for them to hire her friend, giving the friend an advantage over
other applicants, and when she failed to assure that all applicants
received an equal opportunity, in particular those with veterans'
preference. The VA official's efforts to hire her friend as her
Executive Assistant started when the friend was a contractor employee
and the VA official began integrating her into government day-to-day
business. The VA official went to the extent of requesting that a
position be re-announced so that her friend had an opportunity to
apply; closed out the certificate because her friend could not be hired
due to a 10-point veteran blocking her; and then planned to hire her as
a Supervisory Information Technology (IT) Specialist so that she could
later laterally move her into an Executive Assistant position.
Additionally, the VA official expressed to the selecting official,
that she ``really wanted her friend to come on board,'' and they
developed a plan to hire the friend into a GS-15 Supervisory IT
Specialist position under the selecting official's area of
responsibility. The selecting official selected the friend as the best
qualified for the position based solely on the VA official's
recommendation and desire to get the friend ``on board'' into Federal
service; however an independent review of the applicant packages
disclosed that the friend was not the best qualified. The friend even
admitted to us that she did not have the technical skills necessary for
the position and that it made better sense to put her skills to use as
an Executive Assistant. Moreover, the VA official did not comply with
VA policy when she requested that the friend be appointed at a rate
above the minimum based on her qualifications and private sector
salary. The VA official's limited justification did not comply with VA
policy requiring her to provide a description of her recruitment
efforts, a comparison of the friend's qualifications to the other
applicants, or the reason for the rate instead of a recruitment
incentive.
We found that another VA official abused her authority and engaged
in prohibited personnel practices when she preselected three other
individuals for GS-15 positions. The selecting official selected the
individuals from certificates without taking the required steps to
determine the best qualified candidate and with a total disregard for
fair and open competition in violation of merit systems principles.
We further concluded that three other OI&T employees abused their
authority and engaged in prohibited personnel practices when they
knowingly failed to properly process applicant packages for four GS-15
positions. Four individuals were preselected for positions, false
spreadsheets were created and backdated, and the preferred candidates
were listed on top.
Misuse of Hiring Authorities
Federal Career Intern Program
Executive Order 13162, dated July 6, 2000, authorized the
establishment of the FCIP to assist agencies in recruiting and
attracting exceptional individuals with a variety of experiences,
academic disciplines, and competencies necessary for the effective
analysis and execution of public programs. Federal regulations provide
that appointments made under FCIP expire after 2 years; however, civil
service status may be granted to career interns who successfully
complete their internships and meet all qualification, suitability, and
performance requirements. Regulations further state that agencies are
required to provide the career interns with formal training and
developmental opportunities to acquire the appropriate agency-
identified competencies needed for conversion to permanent Federal
employment. The U.S. Office of Personnel Management (OPM) Web site
states that the benefits to using the FCIP program are that there is no
requirement to publically announce the positions; it can be used with a
targeted recruitment program; it provides flexibility in training; and
that after 2 years, the employee can be noncompetitively converted to a
permanent appointment.
VA policy requires that any occupation for which a Career Intern
Program is established must lend itself to a formal training and
development component. Components of a program should include, but are
not limited to, individual development plans, performance standards,
position descriptions, rotational assignments, specific skills to be
acquired, etc. Policy further states that H.R. personnel, in
collaboration with the selecting official/subject matter expert, are
required to identify appropriate targeted recruitment sources of
candidates with the appropriate background, skills, or education; and
develop a career intern formal training and development plan, provided
one does not already exist elsewhere within VA for the specific career.
Policy also requires H.R. management officers at local facilities to
ensure a Career Intern Program complies with policy.
We identified three specific instances of improper appointments to
Management Analyst, GS-5 positions under FCIP. We found no evidence
that OI&T established a Career Intern Program for Management Analysts
or that a formal plan existed for trainees to acquire the appropriate
agency-identified competencies needed for conversion to permanent
employment. Given the scope of recruitment activities that took place
as a result of the 2006 OI&T reorganization efforts and other large
scale OI&T hiring initiatives, it appears, based on personnel records
reviewed, that OI&T hiring officials made additional improper
Management Analyst FCIP appointments and subsequently failed to provide
the required 2-year formal training program.
Improper Use of Direct-Hire Authority
Federal law provides agencies with the authority to appoint
candidates directly to jobs for which OPM determines that there was a
severe shortage of candidates or a critical hiring need. OPM's Web site
states that the Direct-Hire Authority (DHA) is an appointment authority
that enables an agency to hire, after public notice is given, any
qualified applicant without regard to rules requiring competitive
rating and ranking, veterans' preference, and ``rule of three''
procedures.
Federal law permits an agency with delegated examining authority to
use DHA for a permanent or non-permanent position or group of positions
in the competitive service if OPM determines that there is either a
severe shortage of candidates or a critical hiring need for such
positions.
We identified four people who were appointed for IT Specialist
positions at the GS-5 level under the DHA. However VA's authority for
IT Specialists at the GS-5 level expired on June 14, 2004, which was
prior to their appointments. We notified VA Central Office's Office of
Human Resources of VA's improper use of the DHA to hire these
employees. The Director of Central Office Human Resource Service told
us that she conferred with the Director of Recruitment and Placement
Policy Service, Office of Human Resources Management, and that she
verified that VA did not have DHA for any Title 5 positions to include
IT Specialists at pay grades below GS-9. We referred the improper use
of DHA to the Acting Assistant Secretary for Human Resource and
Administration for his immediate review and action.
Improper Funding of Academic Degrees
The Homeland Security Act of 2002 amended the Government Employee
Training Act 1958 by expanding an agency's authority to pay or
reimburse an employee for the costs of academic degree training. VA
employee development policy promulgates this authority and allows an
employee to obtain an academic degree at VA expense only when such
training contributes to: (1) significantly meeting an identified
agency, administration, or staff office training need that is
consistent with VA's Strategic Plan; (2) solving an identified agency
staffing problem; (3) accomplishing goals in VA's Strategic Human
Capital Management Plan; and (4) a planned, systemic, and coordinated
program of professional development.
VA training policy stipulates that VA officials exercising this
authority must require employees selected to benefit from this
provision to sign a continued service agreement prior to training. It
also requires that prior to implementing academic degree training, VA
officials in implementing offices are to establish a system of records
and develop written plans and procedures for: (1) accounting of funds
spent for academic degree training and the number of employees and
types of programs enrolled in or completed; (2) ensuring competitive
procedures for selecting employees for academic degree training are
consistent with the requirements of 5 CFR Sec. 335; (3) ensuring
educational institutions awarding an academic degree are accredited by
a nationally recognized body, as recognized by the U.S. Department of
Education; and (4) certifying how such training will meet VA training
needs, resolve an identified VA staffing problem, or accomplish a VA
goal in the VA Strategic Human Capital Management Plan. Finally, VA
policy provides that employees may take training from non-Government
sources if the following conditions are met: (1) adequate training is
not reasonably available by, in, or through a government facility; (2)
the training is the most practical and least costly to the government;
and (3) the non-Government facility does not discriminate based on
race, sex, color, national origin, disability, religion, age, sexual
orientation, or status as a parent.
We found six instances where OI&T managers as well as approving
officials, improperly authorized the expenditure of VA funds to pay for
academic degrees for OI&T employees. There was no documentation
whatsoever to connect the academic training to the individuals' VA
position and justify the training. Furthermore, OI&T managers were
fiscally irresponsible when they not only authorized $139,330.88 in
improper degree funding, but also by authorizing graduate degree
funding at George Washington University (GWU), one of the Nation's most
expensive private universities. There is no evidence or documentation
that would justify a GWU program or degree over those at other
universities in Washington, DC.
OI&T did not have a program, as required by law, to allow VA to pay
for academic degrees for its employees. In fact, in order to determine
how much VA spent on each employee, we had to issue subpoenas to the
universities in question. We found no existing OI&T system of records
to account for VA funds spent for academic degree training or for the
number of employees and types of programs enrolled in or completed. We
found no documentation indicating that OI&T had a Masters Degree
Program. We also found no records to reflect that funding was dispersed
through a competitive process for selecting employees for academic
degree training, ensuring that the educational institutions awarding an
academic degree were accredited, or how such training would meet VA
training needs, resolve an identified VA staffing problem, or
accomplish a VA goal in the VA Strategic Human Capital Management Plan.
Further, we found no records to indicate that employees sought their
training through a government source or from a source that was the
least costly to the government.
Improper Administration of Awards
Federal regulations require Federal employees to act impartially
and to not give preferential treatment to any individual. VA policy
authorizes awards to recognize individual employees who make
contributions in support of the mission, organizational goals and
objectives, and VA's Strategic Plan.
The September 4, 2007, OI&T Delegation of Authority Memorandum
delegated award approval authority to the Principal Deputy Assistant
Secretary (DAS) and various Deputy Assistant Secretaries, Executive
Directors, VACO Service Line Directors, and Regional Directors, as well
as first and second line supervisors having the authority to approve
performance and special contribution awards. Award limits were defined
by management levels and further defined by individual and group
amounts. The memorandum did not delegate any authority to approve
incentive awards to the Director of the Executive Staff. A subsequent
January 10, 2008, memorandum rescinded the earlier one, and it issued
new award guidance, including the position, Director of the Executive
Staff, as an award approving official. Both the 2007 and 2008 memoranda
identified the Principal Deputy Assistant Secretary and Deputy
Assistant Secretaries as the only individuals authorized to act as both
the recommending and approving officials.
OI&T senior managers recognized that there was an OI&T budgetary
shortfall, but OI&T managers still spent over $24 million on awards and
retention bonuses in a 2-year time period while working under a
deficit. We recognize that OI&T's mass reorganization efforts were the
major causes of the deficit; however, we found that not all managers
were fiscally responsible when rewarding employees. One former VA
official acted as if she was given a blank check book to write
unlimited monetary awards. We also found that she failed to properly
administer VA awards policy. Prior to the issuance of the September
2007 and January 2008 memoranda re-delegating the authority to approve
awards, the former VA official was not authorized to approve awards;
however, she improperly approved numerous awards worth thousands of
dollars. Additionally, she violated awards policy when she signed as
both the recommending and approving official. Although our
investigation focused on these specific allegations, we found similar
violations of the awards policy by other OI&T managers.
We found four GS-15s who received about $60,000, $73,000, $58,000,
and $59,000, respectively, over a 2-year period, with some personnel
files containing insufficient or questionable justification. We found
that various managers gave a GS-14 about $15,000 within a 9-month time
period for the same body of work that was part of his primary job
duties. Further, we identified two GS-5s who received 17 percent of the
total amount of cash awards given to all GS-5s that year and who
received awards for time periods that predated their employment.
Additionally, we found a GS-13 employee who within the first 90 days of
her employment received a $4,500 performance award from the former VA
official who said that she did not even remember her.
A current and former DAS both told us that they were ``stunned'' by
the total amount of appropriated funds that OI&T spent on awards/
bonuses. Although we did not find that the dollar amounts given to each
employee violated VA policy, we found that the money spent on many of
the annual awards we examined were fiscally irresponsible, and in many
cases, highly questionable.
Conclusion
In the two reports, we made over 40 recommendations to the
Assistant Secretary for Information and Technology covering the issues
discussed in this statement as well as others. He concurred with all of
our recommendations and said that he would confer with the Office of
Human Resources and Administration and the Office of General Counsel to
ensure that appropriate administrative and corrective actions are
taken. We will follow up in accordance with our policy to ensure that
the recommendations are fully implemented.
Mr. Chairman, this concludes my statement and we would be pleased
to answer any questions that you or other Members of the Subcommittee
may have on these issues we have presented.
Prepared Statement of Hon. W. Scott Gould, Deputy Secretary, U.S.
Department of Veterans Affairs
Mr. Chairman, Members of the Subcommittee, I am accompanied today
by John Gingrich, the Chief of Staff, John Sepulveda, the Assistant
Secretary for Human Resources and Administration, and Willie Hensley
the Principal Deputy Assistant Secretary for Human Resources and
Administration.
I am very pleased at the opportunity to come before you today to
provide an overview of the Senior Executive Service (SES) performance
management system for the Department of Veterans Affairs (VA).
Let me say that in these 7 months, we have observed that, as a
group, VA's Senior Executives are extremely professional and dedicated.
They strive every day to deliver the best possible services and medical
support to our Nation's Veterans. They are dedicated professionals who
desire to move VA into the 21st Century organization that the President
has charged Secretary Shinseki with accomplishing.
Today, and for the near future, there are 23.4 million Veterans in
this country who have put themselves on the line for our safety and our
well-being. Currently, 7.8 million Veterans are enrolled in our medical
services system. In 1997, VA developed and distributed enterprise-wide
the most comprehensive electronic health record (EHR) system in the
country, linking our 153 medical centers to their 768 Community Based
Outpatient Clinics (CBOCs), 232 Veterans Centers, as well as outreach
and mobile clinics. This EHR, called VistA, makes VA the largest,
integrated health care provider in the country.
VA also operates the largest national cemetery system with 130
cemeteries and the Nation's eighth largest life insurance enterprise
with $1.3 trillion in coverage. VA is second only to the Pell grant
Program in providing education benefits, totaling $8 billion annually,
and we guarantee nearly 1.3 million individual home loans having an
unpaid balance of $175 billion.
The scope of services delivered through these complex systems makes
VA the second largest Federal Department. As such, we require
sufficient resources and capabilities to address the needs and
expectations of our Veterans. Employees are our most important
resource. Our senior executives are directly responsible for the
success or failure of these systems and programs and meeting our
obligations to Veterans and their families. In 2008, we had
approximately 308 career executives and approximately 260,000
employees--1 executive for every 844 employees--one of the smallest
executive-to-employee ratios in Federal Government. On a daily basis,
our senior executives are responsible for demonstrating the highest
levels of performance to fulfill the department's mission while also
effectively managing the performance of a large number of subordinates.
VA operates its performance award system in strict adherence to
Federal law and the Office of Personnel Management's (OPM) policies and
procedures in order to ensure accountability, transparency, and the
integrity of the system.
With the passage of the National Defense Authorization Act for
Fiscal Year 2004 (P.L. 108-136), agencies were required to implement a
new performance-based pay system which established a clear and direct
linkage between executive performance and pay. The system was created
based on the premise that, ``equal pay should be provided for work of
equal value and appropriate incentives and recognition should be
provided for excellence in performance.''
The law eliminated the six senior executive pay levels that had
been used to set pay for over two decades in favor of an open pay
range. Prior to the passage of this Act, senior executives were
accustomed to receiving locality pay with annual adjustments and/or
annual across-the-board pay increases, which were mandated by Executive
Order. After the implementation of the new system, senior executives
were no longer afforded locality pay or these adjustments, and they are
now required to be evaluated and compensated based strictly on their
performance.
While the level of responsibility for our senior executives has not
changed, the vast majority of positions have increased in complexity,
demands, and scope. Additionally, the manner in which senior executives
are compensated for the execution of their duties is more transparent,
centralized, accountable and regulated.
Federal regulations (5 CFR 430.301) require agencies to establish
performance management systems that hold senior executives accountable
for their individual and organizational performance, and to use the
results of their performance as a basis for pay, awards, development,
retention, removal, and other personnel decisions. Agencies must
establish one or more Performance Review Boards (PRBs) to make
recommendations to the Secretary on the performance of its senior
executives. The names of each PRB member must be published in the
Federal Register before he or she can serve on the Board and make
recommendations to the Secretary. More than one-half of the PRB members
must be career senior executives.
Board members make recommendations to the Secretary on performance
appraisals, ratings, awards and pay adjustments. In accordance with
Federal regulations [5 CFR 534.405 (c)], performance awards must be at
least 5 percent but no more than 20 percent of a career senior
executive's base salary.
In 2007, 3 years after the new system was implemented, OPM and the
Government Accountability Office (GAO) conducted an extensive review of
VA's performance management system, and VA leaders subsequently
participated in a hearing before this Subcommittee in June 2007.
Those reviews and that hearing, yielded four recommendations for
improvements, and established the need for additional consideration of
three elements of VA's senior executive performance evaluation process.
The recommendations were:
Ensure all performance plans focus at least 60
percent on achieving measurable results;
Revise the VA PRB awards determination process to
ensure awards are granted based primarily on individual and
organizational performance and results achieved. Discussions
within the VA PRB should center on measurable results achieved,
and the awards scoring form used by the VA PRB (which leads the
discussion and scoring) should more clearly focus on results;
Train new PRB members on the policies and guidance of
the SES PRB process and their role on the PRB. All PRB members
should receive refresher training annually; and
Management guidance issued to PRB members regarding
how to consider organizational performance when determining
ratings and awards should be made clear to all PRB members. A
report summarizing organizational performance should be
provided to PRB members with instructions on how to use the
information in its deliberations.
The three elements requiring further consideration were:
Consider during the PRB process, and review by the
Secretary, the existence and results of investigations by the
VA Inspector General and/or the Office of Medical
Investigations;
Appoint PRB members who are not VA employees; and
Assess VA SES bonuses in comparison with bonuses
awarded at other Federal agencies.
We have fully implemented all of the recommendations, confirmed
that the additional three elements are included in our process and made
our own internal modifications. As a result of the significant
improvements to our system, OPM and the Office of Management and Budget
(OMB) have granted full certification of our performance management
system through July 21, 2010. The criteria for certification are
outlined in the Code of Federal Regulations, and VA has met every one
of them. But there is more to be done.
We are committed to continuously improving our senior executive
management and further strengthening the linkage between senior
executive performance and VA strategic goals and operating plans. As we
begin the process for recertification of our system in January 2010, we
will be working closely with OPM and OMB staffs to set the highest
standards of excellence for our management and performance merit
processes.
As mentioned previously, in 2008, we had 308 career executives and
approximately 260,000 employees--one executive for every 844 employees.
Let me emphasize again that this represents one of the smallest
executive-to-employee ratios in Federal Government.
Federal regulations [5 CFR 534.405 (b) (1) (i)] allow agencies to
establish a performance awards pool using a maximum of 10 percent of
the aggregate career executive salaries. As stated earlier, the
individual award must be no less than 5 percent but no more than 20
percent of the senior executive's base pay. Historically, VA has used 9
percent--less than the maximum amount allowed. The award pool for 2008
was 9 percent, or approximately $4.3 million. Overall, VA salaries were
approximately $10.6 billion. For every $1 million in salaries, VA
awarded just over $400 in awards in 2008, and a higher percentage (12.7
percent) of the award pool funds were unspent as compared to the funds
in 2007.
VA executed our performance merit process with transparency and
strict accountability ensuring compliance with guidance from this
Committee, OPM, GAO, and Federal statute. There remain areas for
improvement, however, which I will discuss later. The justifications
for awards and pay adjustments we provided to the Committee a few weeks
ago are the product of a more strict and rigorous performance
management process compared to previous years.
VA places great value on honesty and integrity. Thus,
we held executives to a higher standard by factoring in any
pending administrative investigations. When allegations were
substantiated, the SES did not receive any awards. This was the
case for three senior executives in 2008.
VA ramped up the criteria for performance awards. The
statute allows senior executives who are rated at the fully
successful level or higher to be considered for performance
awards. VA, among a handful of agencies, only considered those
senior executives rated at the excellent or outstanding level
to be eligible for performance awards. Therefore, senior
executives who were fully successful did not receive
performance awards last year; this constitutes approximately 11
percent of the total senior executive pool. In most instances,
newly appointed senior executives during their period of
probation are rated at the fully successful level and therefore
do not receive performance awards. This results from the fact
that new senior executives generally have not had sufficient
time to make significant contributions to their organization.
VA prudently used our financial resources in 2008 by:
reducing the maximum pay adjustment
percentage allowed for senior executives who were rated
at the fully successful from 5 percent to 3 percent,
and excellent from 7 percent to 6 percent. Performance
awards are one-time payments, but pay adjustments are
long-term and factor into an executive's retirement. As
a result, our reduction in percentages makes an even
greater impact on VA's financial resources than the
immediate reductions in award caps.
instituting an internal cap on the total
performance-based compensation (awards and adjustments)
that senior executives could receive in 2008. The total
amount for performance awards and pay adjustments was
capped at $35,000, with the maximum performance award
amount not to exceed $30,000 for any senior executive.
By comparison, the statutory limit for the performance
award alone was $34,440. By implementing this cap, for
example, a senior executive who received a $30,000
performance award could receive up to a $5,000 pay
adjustment. All of the awards were reviewed and many
were adjusted at the PRB level before reaching the
Secretary for review and approval.
making meaningful distinctions between senior
executive positions and responsibilities. VA places
senior executives into one of three pay bands. A senior
executive's salary is capped at the maximum limit for
his or her respective pay band. The maximum salary for
an executive is currently $177,000, and approximately
34 percent of our senior executives are in the most
complex positions that justify being in band one with
the potential of earning this amount.
For 2008 these limitations restricted senior executives to $35,000
for performance-based pay, which is below the potential performance-
based pay of $60,000 or more.
In addition, some of our newly appointed senior executives, with
broader spans of control and greater responsibilities, earn less than
high level General Schedule employees (i.e., Grade 15 non-executives)
with less control and responsibility. This occurs because, unlike
General Schedule employees, senior executives are not eligible for
across-the-board pay increases, periodic or accelerated step increases,
or locality pay as mentioned previously.
VA is very appreciative of the recommendations from the
Subcommittee, OPM, and GAO. As we have described, these
recommendations, as well as our internal performance policy guidance,
have resulted in more accountability for every SES member; enhanced the
credibility and integrity of our system; and, promoted excellence in
support of our Nation's Veterans and their families.
While we are here today to discuss last year's process, I must
stress we have and plan to take actions that will produce more
visibility and accountability for the future.
We are currently preparing for the FY 2009 process by benchmarking
other Federal agencies for best practices, and drafting end-of-annual
performance appraisal instructions as well as award and pay adjustment
guidelines.
VA will continue to seek guidance from OPM and OMB on ways to
continuously improve our system through:
Training;
Strengthening adherence to OPM's criteria for
certification;
Ensuring fairness and equity for all executives in
the performance management process; and
Linking FY 2010 performance plans to VA operating
plans.
We are adding additional oversight. All senior executive actions
will be critically reviewed by the Assistant Secretary for Human
Resources and Administration, who is also the department's Chief Human
Capital Officer, before being forwarded to the Chief of Staff and
eventually through the Deputy Secretary to the Secretary for final
approval. Every Performance Review Board recommendation regarding
senior executive performance awards and/or pay adjustment
recommendations is reexamined. As part of that reexamination, every PRB
recommendation is weighed against measurable organizational results,
including reports from the Offices of the Inspector General, General
Counsel, Medical Investigations, Resolution Management and public
scrutiny.
The Assistant Secretary for Human Resources and Administration will
also serve as the Chair of the Performance Review Board to ensure that
all performance actions are aligned with Federal law and OPM criteria.
As one last verification, the Secretary has charged the Chief of
Staff to personally interview all individuals who are recommended for
senior executive positions in the department prior to approval. This
ensures consistency across the department in several areas including:
understanding VA's strategic direction; their responsibility as senior
executives to successfully perform at the executive level; and the need
to demonstrate the character and integrity that the public deserves
from all civil servants.
We are standing up a Corporate SES Management Office to better
manage and oversee all SES recruiting, retention, assignments,
promotions, incentives, and awards to more effectively develop and
maintain standards for performance of senior leaders throughout VA. The
Corporate Office will be responsible for implementing leadership
training and a new certification program for senior executives. The
program will require senior executives to receive leadership training
and development and demonstrate that they have the knowledge, skills,
and abilities to continue to operate at the executive level. VA's
senior executives will be certified every 3 years.
The Corporate Office will also be responsible for managing the
Senior Executive Candidate Development Program, which is a formally
structured developmental program designed to establish the bench
strength in our executive talent pool. High performing General Schedule
employees are chosen for the program through a rigorous selection
process. From 2008 to 2009, approximately 337 individuals have applied
to VA's program and 60 were selected. Upon completion of the program
and certification by OPM, graduates are eligible for noncompetitive
appointments to senior executive positions. We are committed to using
the program as an effective tool to increase diversity in the
leadership ranks and to mirror the diversity across the department. We
are making progress in this area as approximately 15 percent of the
program participants for 2008 and 2009 are African American, 3 percent
are Hispanic, and 2 percent are Pacific Islanders. Overall, 50 percent
of the participants are female.
We are also holding our SES' accountable for personal actions. For
those who do not perform, we take the proper procedures to either
improve deficiencies or remove the individual from the SES ranks.
Secretary Shinseki is committed to transforming VA into a ``People-
centric, Results-driven, and Forward-looking'' department. In this
regard, he will continue to use performance-based pay as a way to
recognize those executives who make significant contributions to the
transformation of VA. We will hold every senior executive accountable
for achieving measurable results. Senior executives who excel, while
maintaining the highest degree of public trust, confidence, honesty and
integrity, will be rewarded within the Federal guidelines established.
Thank you for your time and interest to better serve our Nation's
Veterans. I look forward to your questions.
MATERIAL SUBMITTED FOR THE RECORD
Committee on Veterans' Affairs
Subcommittee on Oversight and Investigations
Washington, DC.
September 25, 2009
Honorable George J. Opfer
Inspector General
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420
Dear Inspector General Opfer:
Thank you for the testimony of the James J. O'Neill, Assistant
Deputy Inspector General for Inspections, Office of Inspector General,
Joseph G. Sullivan, Jr., Deputy Assistant Inspector General for the
Office of Investigations, Office of Inspector General, and Michael R.
Bennett, Attorney Advisor for the Office of Investigations, Office of
Inspector General, at the U.S. House of Representatives Committee on
Veterans' Affairs Subcommittee on Oversight and Investigations hearing
that took place on September 23, 2009 on ``Senior Executive Service
Bonuses and Other Administrative Matters at the U.S. Department of
Veterans Affairs.''Please provide answers to the following questions by
COB on Tuesday, November 3, 2009, to Todd Chambers, Legislative
Assistant to the Subcommittee on Oversight and Investigations.
1. There is a concern that many of the allegations made in the
two reports detailed in the VA OIG testimony may also be
occurring in other offices within the VA. Has the Inspector
General received any other hotline reports or allegations of
abuse within the scope of hiring and personnel practices at the
Department of Veterans Affairs? Are the instances relayed in
the reports from August the most egregious you have seen at the
department?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers. If you have any
questions concerning these questions, please contact Subcommittee on
Oversight and Investigations Majority Staff Director, Martin Herbert,
at (202) 225-3569 or the Subcommittee Minority Staff Director, Arthur
Wu, at (202) 225-3527.
Sincerely,
Harry E. Mitchell
Chairman
David P. Roe
Ranking Republican Member
MH/tc
[An identical letter was sent to Hon. David P. Roe, Ranking
Republican Member, Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs.]
__________
U.S. Department of Veterans Affairs
Office of Inspector General
Washington, DC.
November 2, 2009
Hon. Harry E. Mitchell
Chairman
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
This is in response to your September 25, 2009, letter following
the September 23, 2009, hearing on Senior Executive Service Bonuses and
Other Administrative Matters at the U.S. Department of Veterans
Affairs. Enclosed is our response to the additional hearing question.
This information has also been provided to Congressman David P. Roe,
Ranking Republican Member, Subcommittee on Oversight and
Investigations.
Thank you for your interest in the Department of Veterans Affairs.
Sincerely,
GEORGE J. OPFER
Inspector General
Enclosure
__________
Questions for the Honorable George J. Opfer Inspector General,
U.S. Department of Veterans Affairs Before the Subcommittee
on Oversight and Investigations Committee on Veterans' Affairs
United States House of Representatives Hearing on Senior
Executive Service Bonuses and Other Administrative Matters
at the U.S. Department of Veterans Affairs
Question 1: There is a concern that many of the allegations made in
the two reports detailed in the VA Office of Inspector General (OIG)
testimony may also be occurring in other offices within the VA. Has the
Inspector General received any other hotline reports or allegations of
abuse within the scope of hiring and personnel practices at the
Department of Veterans Affairs? Are the instances relayed in the
reports from August the most egregious you have seen at the department?
Response: In the past 2 years, the OIG opened 34 cases alleging
abuse in hiring and personnel practices. Of the 34 cases opened, 4 were
substantiated. Details on these cases are available to the Subcommittee
upon request. Since we issued the reports on the Office of Information
and Technology in August, we have opened four cases. The instances in
the August reports are the most egregious that we have seen at VA.
Committee on Veterans' Affairs
Subcommittee on Oversight and Investigations
Washington, DC.
September 25, 2009
Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420
Dear Secretary Shinseki:
Thank you for the testimony of the Honorable W. Scott Gould, Deputy
Secretary, U.S. Department of Veterans Affairs, John Gingrich, Chief of
Staff, U.S. Department of Veterans Affairs, the Honorable John U.
Sepulveda, Assistant Secretary for Human Resources and Administration,
U.S. Department of Veterans Affairs, and Willie Hensley, Principal
Deputy Assistant Secretary for Human Resources and Administration, U.S.
Department of Veterans Affairs at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Oversight and
Investigations hearing that took place on September 23, 2009 on
``Senior Executive Service Bonuses and Other Administrative Matters at
the U.S. Department of Veterans Affairs.''
Please provide answers to the following questions by COB on
Tuesday, November 3, 2009, to Todd Chambers, Legislative Assistant to
the Subcommittee on Oversight and Investigations.
1. Have any OI&T employees implicated in the OIG report,
Administrative Investigation Nepotism, Abuse of Authority,
Misuse of Position, Improper Hiring, and Improperly
Administered Awards, OI&T, Washington, DC, Report Number 09-
01123-196 (8/18/2009), recently been promoted?
a. If so, has Assistant Secretary Sepulveda been made
aware of this promotion?
2. Will you commit to do a top down audit throughout the
entire VA system to scrutinize whether other overt acts of
nepotism exist?
a. If so, when can this Subcommittee expect the audit
to commence, and when can we expect to read this
result?
3. The Subcommittee is troubled by the fact that Assistant
Secretary Sepulveda does not have direct line authority to the
other heads of Human Resources (HR) from the other
Administrations within VA. In your opinion, does this
organizational structure pose a problem?
a. If so, please explain the challenges that the
current HR organizational structure poses.
b. If not, please defend your position as to why the
current HR structure, Assistant Secretary Sepulveda not
having direct line authority to other heads of HR
system-wide, is adequate.
4. How many FTEs does the office of the Assistant Secretary
for Human Resources and Administration currently have
available?
a. Out of these positions, how many are currently
filled?
b. Do they currently possess the expertise,
resources, and support to conduct an audit system-wide
of how pervasive nepotism is in VA?
5. Regarding minority hiring trends in VA, please articulate
the strategic plan you have in place that you will implement to
recruit and include more minorities in middle and upper
management, and within the Senior Executive Service.
a. When will this plan be executed?
b. When do you foresee seeing tangible improvements?
6. VA-wide, how many minorities currently are SES certified?
a. Please list information by percentages; break down
by race/ gender, and departments within VA.
7. In VA OIG's recent report, Administrative Investigation
Nepotism, Abuse of Authority, Misuse of Position, Improper
Hiring, and Improperly Administered Awards, OI&T, Washington,
DC, Report Number 09-01123-196 (8/18/2009), the IG criticized
the Federal Career Intern Program (FCIP). What assurances can
you articulate to give this Subcommittee confidence that these
programs, as well as others similarly situated, are not being
abused?
a. What oversight measures do you have in place to
ensure that the FCIP and other programs similarly
situated are not being abused?
b. What oversight improvements will you initiate, if
any?
8. In the two reports issued in August, there were a total of
45 recommendations by the Office of Inspector General. Eleven
of these recommendations were expected to be addressed and
completed by September 19, 2009; the other thirty-four
recommendations were expected to be completed by October 15,
2009. Has VA addressed the first eleven recommendations, and is
VA on target to address the remaining recommendations on time?
9. Federal Regulation [5 CFR 430.301] establishes the
guidelines in which an agency is required to establish a
performance management system. How many members are normally
chosen to sit on the Performance Review Board (PRB) and how
many PRB's are selected to advise the Secretary?
10. What criteria are given to the board, in order to
establish the 5-20 percent performance award?
11. If a senior executive meets fully successful criteria but
does not perform beyond their executive duties, why is a
performance award given?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers. If you have any
questions concerning these questions, please contact Subcommittee on
Oversight and Investigations Majority Staff Director, Martin Herbert,
at (202) 225-3569 or the Subcommittee Minority Staff Director, Arthur
Wu, at (202) 225-3527.
Sincerely,
Harry E. Mitchell
Chairman
David P. Roe
Ranking Republican Member
MH/tc
__________
DEPARTMENT OF VETERANS AFFAIRS RESPONSE TO ADDITIONAL
QUESTIONS FROM SEPTEMBER 23, 2009 HEARING, SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS, HOUSE COMMITTEE ON VETERANS' AFFAIRS
Question 1: Have any OI&T employees implicated in the OIG report,
Administrative Investigation Nepotism, Abuse of Authority, Misuse of
Position, Improper Hiring, and Improperly Administered Awards, OI&T,
Washington, DC, Report Number 09-01123-196 (8/18/2009), recently been
promoted? If so, has Assistant Secretary Sepulveda been made aware of
this promotion?
Response: Since the beginning of the investigation, VA has
carefully reviewed personnel and payroll data and confirmed that no
employee implicated in this Office of Inspector General (OIG) report
has been promoted.
Question 2: Will you commit to do a top down audit throughout the
entire VA system to scrutinize whether other overt acts of nepotism
exist? If so, when can this Subcommittee expect the audit to commence,
and when can we expect to read this result?
Response: At this time, the Department does not believe that an
audit is necessary, as this was an unusual, isolated incident
precipitated by a senior aide to the previous Assistant Secretary.
There is no evidence or information that suggests that this is a
widespread problem; in fact, the Department's Human Resources Office
was already reviewing the Office of Information and Technology's hiring
practices, including allegations of possible nepotism and other
prohibited personnel practices, when it was asked by the OIG to provide
the results of inquiries for review by OIG investigators. VA takes this
matter seriously and will continue to address any possible prohibited
personnel actions. We continue to work with field human resources staff
to train, educate, and inform them of prohibited personnel practices
and the importance of monitoring and identifying prohibited actions.
The Department will look at bolstering its human resources oversight
and compliance program.
Question 3: The Subcommittee is troubled by the fact that Assistant
Secretary Sepulveda does not have direct line authority to the other
heads of Human Resources (HR) from the other Administrations within VA.
In your opinion, does this organizational structure pose a problem? If
so, please explain the challenges that the current HR organizational
structure poses. If not, please defend your position as to why the
current HR structure, Assistant Secretary Sepulveda not having direct
line authority to other heads of HR system-wide, is adequate.
Response: The Department's Office of Human Resources and
Administration staff coordinate with human resource leaders in each
Administration and field office to accomplish the human resources goals
and objectives of the Department. Before considering changing current
organizational structure, the Department will implement training for
human resources professionals to create consistency and standardization
in the application of personnel programs; strengthen its audit and
compliance review processes; and enhance the working relationships with
human resources leaders from each of the Administrations. We will
monitor and assess the effectiveness of these efforts before
instituting organizational changes or alignments. In addition, the
Department's present Human Resources program is heavily manual/paper-
based with outdated personnel systems. Ongoing automation initiatives
will provide integrated human resources systems. Such systems are
essential to a consolidated, standardized, cost effective human
resources program.
Question 4: How many FTEs does the office of the Assistant
Secretary for Human Resources and Administration currently have
available? Out of these positions, how many are currently filled? Do
they currently possess the expertise, resources, and support to conduct
an audit system-wide of how pervasive nepotism is in VA?
Response: The Office of Human Resources and Administration is
currently budgeted for 534 FTE, and the most recent data reflects 522
positions filled. The audit team within the Office of the Assistant
Secretary for Human Resources and Administration possesses the
expertise and experience to conduct audits and review hiring practices.
While it has the capability to do audits each year, it cannot conduct a
system-wide audit with existing resources. However, the Department does
not believe a system-wide audit into nepotism is necessary, as this was
an unusual, isolated incident precipitated by a senior aide to the
previous Assistant Secretary.
Question 5: Regarding minority hiring trends in VA, please
articulate the strategic plan you have in place that you will implement
to recruit and include more minorities in middle and upper management,
and within the Senior Executive Service. When will this plan be
executed? When do you foresee seeing tangible improvements?
Response: The VA issued its first 5-year Department-wide Diversity
and Inclusion Strategic Plan in February of 2009. It is one of the
first and few such diversity-focused strategic plans in Federal
Government. The plan contains specific goals, objectives, strategies,
and performance targets and metrics aimed at eradicating barriers to
equal opportunity and promoting diversity and inclusion at all levels
of the VA workforce, including middle and senior management. A
framework for monitoring the implementation of this Plan was
incorporated in the VA's Annual EEO Report, required by EEOC Management
Directive 715. The Department has already taken proactive steps to
implement these strategies and hold every senior executive accountable
through a mandatory performance element in all senior executive
performance plans expressly linked to the Diversity and Inclusion
Strategic Plan.
The Department is making steady progress in eliminating potential
barriers to women and minorities in its workforce. From Fiscal Year
1999 to Fiscal Year 2009, the on-board representation of minorities
grew from 36.3 to 38.6 percent, a difference of almost 35,000
employees. Our analysis showed no statistically significant disparity
in promotion rates among women and minority groups. Finally, minority
representation in the leadership ranks grew from 11.7 to 17.8 percent
over the same 10-year period. To continually improve on our commitment
to diversity and inclusion, we are developing executive talent in the
Department through our Senior Executive Service (SES) Candidate
Development Program. This is a formally structured 18-to-24 month
program that prepares high performing non-SES employees at the GS-14
and GS-15 levels for future positions in the SES corps. We also have
established leadership development programs for the next level in the
organization to develop a diverse group of employees and prepare them
to compete for SES positions. We have implemented targeted outreach
initiatives, and we participate in several internship programs as a way
to identity potential talent, bring them into the workforce pipeline at
the lower level, and groom them for potential opportunity in the SES.
We anticipate measurable improvement in all these areas within 3 years.
Question 6: VA-wide, how many minorities currently are SES
certified? Please list information by percentages; break down by race/
gender, and departments within VA.
Response: All of VA's SES are certified. Currently, 10 percent of
our Senior Executives are Black, 1 percent American Indian, 3 percent
Asian/Pacific Islander, 2 percent Hispanic, 2 percent identified with
Nation origins, and 82 percent are White. Please see additional details
in the attached chart. [The chart has been retained in the Committee
files.]
Question 7: In VA OIG's recent report, Administrative Investigation
Nepotism, Abuse of Authority, Misuse of Position, Improper Hiring, and
Improperly Administered Awards, OI&T, Washington, DC, Report Number 09-
01123-196 (8/18/2009), the IG criticized the Federal Career Intern
Program (FCIP). What assurances can you articulate to give this
Subcommittee confidence that these programs, as well as others
similarly situated, are not being abused? What oversight measures do
you have in place to ensure that the FCIP and other programs similarly
situated are not being abused? What oversight improvements will you
initiate, if any?
Response: The Department has established a comprehensive policy
that covers the Federal Career Intern Program (FCIP), 5 CFR
Sec. 213.3202(o). The VA policy is explained in VA Handbook 5005,
Appointments, Part II, Chapter 2. Human resources professionals have
been reminded of their responsibility to advise management officials on
the policies and procedures governing FCIP. HR field officials have
also been tasked to monitor the use of the FCIP and other hiring
authorities. Currently, compliance with FCIP policies is one of many
hiring authorities that are reviewed during human resources audits. As
an oversight improvement, we are looking to bolster the number of
oversight and compliance reviews conducted annually.
Question 8: In the two reports issued in August, there were a total
of 45 recommendations by the Office of Inspector General. Eleven of
these recommendations were expected to be addressed and completed by
September 19, 2009; the other thirty-four recommendations were expected
to be completed by October 15, 2009. Has VA addressed the first eleven
recommendations, and is VA on target to address the remaining
recommendations on time?
Response: An updated response is being sent under separate cover
due to the sensitivity and confidentiality of the material. [The
information was received by the Committee staff and will be retained in
the Committee files.]
Question 9: Federal Regulation [5 CFR 430.301] establishes the
guidelines in which an agency is required to establish a performance
management system. How many members are normally chosen to sit on the
Performance Review Board (PRB) and how many PRB's are selected to
advise the Secretary?
Response: VA has 3 PRBs (Veterans Affairs (VA), Veterans Benefits
Administration (VBA), and Veterans Health Administration (VHA)). The VA
PRB (with 11 current members) is the overarching board that provides
instructions and guidelines to the VBA (8 current members) and VHA PRBs
(20 current members).
Question 10: What criteria are given to the board, in order to
establish the 5-20 percent performance award?
Response: In accordance with 5 CFR Sec. 534.405(c), a performance
award may not be less than 5 percent nor more than 20 percent of a
career senior executive's base pay. Board members receive training on
performance management which includes balancing organizational results
against individual accomplishments; a briefing on the Department's
performance for the fiscal year; and a copy of the performance plan and
appraisal for each senior executive recommended for an award. Using
this information, board members make recommendations on the ratings,
award percentages within statutory limits, and pay adjustments for
senior executives. Board members cannot participate in discussions
related to their own ratings, awards, and pay adjustments.
Question 11: If a senior executive meets fully successful criteria,
but does not perform beyond their executive duties, why is a
performance award given?
Response: Although 5 U.S.C. Sec. 5384 encourages the recognition of
executives whose performance is at the fully successful level, VA's
policy restricts performance awards to senior executives who exceed the
fully successful criteria. Therefore, the Department only considers
performance awards for those senior executives who have exceeded the
fully successful criteria by receiving either an Excellent or
Outstanding rating.