    [House Hearing, 118 Congress]
    [From the U.S. Government Publishing Office]

                         BONUS BLUNDER: EXAMINING VA'S
                       IMPROPER DECISION TO AWARD SENIOR
                       EXECUTIVES MILLIONS IN INCENTIVES

    =======================================================================

                                    HEARING

                                   BEFORE THE

                         COMMITTEE ON VETERANS' AFFAIRS

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                             TUESDAY, JUNE 4, 2024

                                   __________

                               Serial No. 118-65

                                   __________

           Printed for the use of the Committee on Veterans' Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                        Available via http://govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    56-207                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                         COMMITTEE ON VETERANS' AFFAIRS

                         MIKE BOST, Illinois, Chairman

    AUMUA AMATA COLEMAN RADEWAGEN,       MARK TAKANO, California, Ranking
        American Samoa, Vice-Chairwoman      Member
    JACK BERGMAN, Michigan               JULIA BROWNLEY, California
    NANCY MACE, South Carolina           MIKE LEVIN, California
    MATTHEW M. ROSENDALE, SR., Montana   CHRIS PAPPAS, New Hampshire
    MARIANNETTE MILLER-MEEKS, Iowa       FRANK J. MRVAN, Indiana
    GREGORY F. MURPHY, North Carolina    SHEILA CHERFILUS-MCCORMICK,
    C. SCOTT FRANKLIN, Florida               Florida
    DERRICK VAN ORDEN, Wisconsin         CHRISTOPHER R. DELUZIO,
    MORGAN LUTTRELL, Texas                   Pennsylvania
    JUAN CISCOMANI, Arizona              MORGAN MCGARVEY, Kentucky
    ELIJAH CRANE, Arizona                DELIA C. RAMIREZ, Illinois
    KEITH SELF, Texas                    GREG LANDSMAN, Ohio
    JENNIFER A. KIGGANS, Virginia        NIKKI BUDZINSKI, Illinois

                           Jon Clark, Staff Director
                      Matt Reel, Democratic Staff Director

    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
    official version. Because electronic submissions are used to prepare
    both printed and electronic versions of the hearing record, the process
    of converting between various electronic formats may introduce
    unintentional errors or omissions. Such occurrences are inherent in the
    current publication process and should diminish as the process is
    further refined.

                             C  O  N  T  E  N  T  S

                                  ----------

                             TUESDAY, JUNE 4, 2024

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Mike Bost, Chairman................................     1
    The Honorable Mark Takano, Ranking Member........................     4

                                   WITNESSES
                                    Panel I

    The Honorable Michael J. Missal, Inspector General, U.S.
      Department of Veterans Affairs.................................     6

                                    Panel II

    The Honorable Denis R. McDonough, Secretary, U.S. Department of
      Veterans Affairs...............................................    17

                                    APPENDIX
                        Prepared Statements Of Witnesses

    The Honorable Michael J. Missal Prepared Statement...............    35
    The Honorable Denis R. McDonough Prepared Statement..............    47

                           Statements For The Record

    Questions for the Record Submitted by Juan Ciscomani for the
      Office of the Inspector General................................    51
    Questions for the Record Submitted by Juan Ciscomani and Jen
      Kiggans for the U.S. Department of Veterans Affairs............    52
    Office of the Inspector General Response to Questions Submitted
      by Juan Ciscomani..............................................    54
    U.S. Department of Veterans Affairs Response to Questions
      Submitted by Juan Ciscomani and Jen Kiggans....................    56

                         BONUS BLUNDER: EXAMINING VA'S
                       IMPROPER DECISION TO AWARD SENIOR
                       EXECUTIVES MILLIONS IN INCENTIVES

                                  ----------

                             TUESDAY, JUNE 4, 2024

                        Committee on Veterans' Affairs,
                                 U.S. House of Representatives,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:18 a.m., in
    room 360, Cannon House Office Building, Hon. Mike Bost
    (chairman of the committee) presiding.
        Present: Representatives Bost, Rosendale, Franklin, Van
    Orden, Luttrell, Self, Takano, Brownley, Pappas, Ramirez, and
    Landsman.

                OPENING STATEMENT OF MIKE BOST, CHAIRMAN

        The Chairman. Good morning. The committee will come to
    order. Now, today I am looking forward to examining why U.S.
    Department of Veterans Affairs (VA) thought it was appropriate
    to give almost every senior executive and VA Health and
    Benefits Administration huge bonuses simply because they were
    senior executives.
        Before we get started, I would like to address the subpoena
    resolution I was planning on calling up for this committee's
    consideration. The resolution would have authorized an issuance
    of a subpoena to secure the appearance at disposition of a VA
    employee directly responsible for ordering, conducting, or
    approving VA's internal investigation into the alleged anti-
    Semitism conduct of Ms. Shekeba Morrad.
        As you may remember, Ms. Morrad is an attorney in the VA's
    Office of General Counsel (OGC) and who VA investigated after
    she posted a social media video mocking those who were asking
    for the return of hostages captured by Hamas.
        Now, although I was happy to learn the VA was investigating
    the matter, I was concerned VA would conduct an inadequate
    investigation like it has for numerous other serious employee
    problems.
        I was specifically concerned VA would not examine how Ms.
    Morrad's blatant anti-Semitism could influence her legal work,
    affecting veterans of Jewish faith. I also am concerned VA
    failed to determine whether Ms. Morrad's conduct made VA
    employees of Jewish faith feel unwelcome at work.
        Because of these concerns, I requested VA provide all
    documents associated with the investigation so I could see if
    the VA was trying to sweep the issue under the rug. After over
    4 months and numerous requests and negotiations, VA finally
    agreed to provide the investigative documents in camera.
        Unfortunately, the documents' contents affirm my concerns.
    Through the committee in camera review, the committee
    identified several troubling aspects of VA's supposed
    investigation. For example, the VA only interviewed one person,
    Ms. Morrad, before determining that there was no wrongdoing.
        Even worse, the interview with Ms. Morrad was not
    documented in any way, which seems to violate VA's own
    regulation for conducting investigations. Additionally, VA's
    investigation did not examine whether Ms. Morrad's work
    produced or OGC practice group were negatively affected by her
    actions and beliefs.
        Further, when VA examined whether Ms. Morad's actions were
    anti-Semitic, VA used Wikipedia to get the definition of anti-
    Semitic definition. Now, let me say that again. They used
    Wikipedia as part of the investigation. Using a website anyone
    can edit as a source is hardly reliable and makes me question
    what other corners were cut.
        Considering these shortfalls and more, the committee has an
    obligation to perform oversight to see if any changes are
    needed to ensure VA only conducts adequate investigations and
    prevents anti-Semitism in all its forms moving forward.
        As such, I request transcribed interviews with the VA
    employees who directed or conducted the investigation and
    approved the investigation's final report. These interviews
    would help the committee better understand the investigative
    process VA used and were there in the room for improvement.
        Although the VA had previously refused to make the relevant
    employees available for interview, VA finally agreed to the
    interviews yesterday morning. I am glad to say that after 4
    months of negotiation VA has decided to stop hindering Congress
    from investigating and will allow the committee to conduct its
    oversight duties.
        However, like I said back in April, if the Secretary
    decides to reverse course and try to hinder my investigation I
    will not hesitate to call up another subpoena. Anti-Semitism
    has and continues to be on the rise around the country, and we
    have a sacred obligation, I believe, to combat it no matter
    what.
        For my part as chairman of this committee, I will continue
    to do on behalf of my fellow Jewish veterans and their families
    and now I will continue to do that. I hope that once our
    investigation concludes that we can ensure that this
    administration will do the same.
        Now, turning to the VA decision to give huge bonuses to
    senior executives. Last year I learned about VA's decision to
    provide these bonuses to senior executives, not because they
    were hard-working or because they were particularly good at
    servicing veterans, but just because they were already VA's
    highest paid top brass, making on average of more than $200,000
    each year.
        Earlier this month, VA Office of the Inspector General
    published a report that made clear this was no mistake but a
    long-calculated plan. The report shows that Secretary McDonough
    purposefully delegated his authority to award critical skill
    incentive bonuses to several of his trusted deputies, all of
    which are political appointees.
        After being delegated authority, his most senior leaders
    including Dr. Elnahal and Mr. Jacobs, started to make plans to
    give every one of their senior executives a bonus.
        Now, I appreciate that everyone loves to give hard workers
    who earn an earned bonus, but 90 percent of VA employees were
    not given a penny. Yet, Dr. Elnahal and Mr. Jacobs decided to
    give each of their senior executives an extra $50,000. If they
    had the pleasure of serving as bureaucrats in the VA's DC
    central office they even got an extra $60,000.
        There are VA nurses in my district in southern Illinois
    whose whole salary is less than $60,000 a year, yet the Biden
    administration ignored the public servants who work and serve
    the veterans daily. Instead, the administration decided pushing
    paper in DC was a critical skill to VA mission that was worthy
    of maximum bonuses.
        Do not be fooled. This money could have been spent on hard-
    working VA employees outside the Beltway who might have used it
    to, oh, let us say, send a son or daughter to college, not to
    buy a new Porsche.
        The Office of Inspector General (OIG) report makes it clear
    that this was not some flash in the pan decision. Senior
    executives at central office took 6 months of paper pushing to
    ensure they got these bonuses with little to no justification.
        Mr. Secretary, in September you called this decision a
    policy error. I call this behavior criminal. In fact, the
    Office of Inspector General agrees, referring nine VA senior
    leaders to the U.S. Attorneys' Office for the District of
    Columbia.
        Unsurprisingly, the Biden administration U.S. Attorneys'
    Office has so far refused to even investigate the self-dealing
    bonuses.
        Mr. Secretary, I specifically did not invite you to testify
    today. You basically invited yourself, but the ball is now in
    your court.
        Now, I know that some of the bonuses have been clawed back,
    but as far as I can see the same leaders who allowed, planned,
    and made these poor decisions remain in power. With the VA's
    current leadership in place I am sure many veterans are
    wondering whether your leadership team is focused on selfless
    service or self-service. I am sure, I am wondering this.
        Mr. Secretary, ultimately the responsibility for the
    failures falls on your shoulders. If the leaders below you fail
    and are not held accountable you must be held accountable.
        Last week my team met with a senior VA official who is a
    selfless servant. He was shocked by VA's decision to pay its
    senior executives first, expressing that in the military
    leaders always eat last.
        He told us that this situation had serious damage to VA
    employees' morale. VA employees feel betrayed and let down.
    Senior executives feel jerked around and left out to dry.
        Ultimately, the employees expressed frustration that they
    do not see VA's culture being fixed under the current
    leadership.
        Mr. Secretary, I look forward to hearing from you today
    about the how the Biden administration plans to hold its
    leaders and not just you accountable for their action. We have
    done a lot of work to change the culture at VA and attract
    veterans who want to serve veterans.
        I know them and you know them. I would hate to see them
    throw that all away.
        With that, I now recognize Ranking Member Takano for his
    opening comments.

            OPENING STATEMENT OF MARK TAKANO, RANKING MEMBER

        Mr. Takano. Well, thank you, Mr. Chairman.
        Implementation of the The Sergeant First Class Heath
    Robinson Honoring our Promise to Address Comprehensive Toxics
    (PACT) Act as a whole is going well and more and more veterans
    are being connected with the care and benefits they have
    earned. On May 21st, VA announced it had granted 1 million PACT
    Act-related claims.
        More than 880,000 veterans and survivors are now receiving
    new service-connected disability benefits. More than 5.4
    million veterans have received free screenings for toxic
    exposure from VA.
        I commend the Secretary and the Department for the overall
    swift, overall successful, and unprecedentedly swift
    implementation of the PACT Act which will help even more
    veterans access the care and benefits they have earned in the
    future.
        The PACT Act authorized critical skill incentives, or CSIs,
    and I am concerned also about VA's initial missteps in awarding
    some of them. However, it is important to highlight that this
    represents a mere 0.3 percent of the total CSIs awarded under
    PACT Act authorities, underscoring the need for corrective
    measures without undermining the overall effectiveness of the
    program.
        While the Department is successfully utilizing the CSI
    authority to retain employees with high demand skills, the
    Chief Financial Officer (CFO) brought to the Secretary's
    attention concerns about how these incentives are being used at
    the executive level.
        The Secretary then notified Congress and asked the VA
    Office of Inspector General to investigate this matter. The OIG
    reported on how VA officials could have interpreted better and
    carried out the authority to grant CSIs.
        This investigation also revealed that there were employees
    who recognized and questioned whether the issuance of these
    incentives was valid and raised concerns.
        I am grateful to those VA leaders and employees who voiced
    their concerns and I am grateful to Secretary McDonough for
    heeding those warnings, course correcting, and self-reporting
    to the inspector general and promptly informing Congress once
    he became aware of the issues.
        This is how the process should work. However, as the
    inspector general's investigation pointed out, there were
    missed opportunities for leaders to better vet the
    recommendations for critical skills incentives for central
    office executives. Many of those missed opportunities were
    consequences of VA's decentralized oversight functions related
    to governance and risk management.
        As the inspector general noted, ``The VA operations board
    and VA executive board should have reviewed the plan for the
    executive incentives to understand the risk before issuance.''
        I do look forward to VA reviewing its governance policies
    and clarifying roles and responsibilities for all involved in
    improving critical skills incentives to ensure better
    compliance with statute in the future.
        It is clear that VA must put in place strong internal
    controls to ensure congressional intent is followed when new
    authorities are being implemented. One of the deficiencies that
    the inspector general's investigation found was that the VA
    Office of General Counsel was not consulted early or adequately
    enough during the process to identify potential issues with how
    Veterans Health Administration (VHA) and Veterans Benefits
    Administration (VBA) planned to award CSIs to central office
    senior executives.
        When the Office of General Counsel was engaged, VA and VBA
    leaders did not ask questions that would have necessarily
    raised flags for the attorneys responding to those inquiries.
    The general counsel's advice and guidance should be central to
    legislative implementation. Attorneys should be weighing in
    early and often as VA develops plans to carry out congressional
    mandates.
        This investigation has made it abundantly clear that VA
    needs a Senate-confirmed general counsel. The nomination of
    Anjali Chaturvedi has been held up in the Senate for nearly 2
    years. It is long past time for VA to have steady leadership in
    that role to advise the Department and develop processes and
    policies to ensure compliance with the law.
        Now, I want to underscore why we authorize these critical
    skills incentives in the first place and why I will advocate
    for similar retention bonuses in the future. We simply must
    ensure that VA has the robust workforce it needs to care for
    our veterans. We also must ensure VA can be competitive in the
    health care talent marketplace so that they can both attract
    and keep employees.
        Institutional knowledge is invaluable and irreplaceable and
    VA needs flexibility to compete with local markets and meet
    ever-changing needs across different clinical and high demand
    positions.
        In the vast majority of instances when critical skills
    incentives have been used, they have been successful in
    retaining VA employees.
        As I noted, the incentives at issue here represent less
    than half a percent of the total awards made through the PACT
    Act. 99.7 percent of the incentives that are not at issue today
    support occupations that face significant staffing shortages,
    as well as individuals who possess high demand skills.
        Now, these are not only for clinicians but for high demand
    and hard-to-fill occupations like housekeepers, police, and
    human resource professionals. With the increase of new health
    care enrollments and new benefit claims following the PACT Act
    it is vital VA has the staff it needs to support veterans
    already using VA and those newly entering the system.
        The PACT Act is not the first time Congress granted VA
    authorities to keep critical employees. The John S. McCain III,
    Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal
    Systems and Strengthening Integrated Outside Networks Act of
    2018 (MISSION) Act, the Choice Act, Isakson Row, and the VA
    Choice and Quality Employment Act all included staff retention
    tools. These authorities have been used successfully for years
    to bolster the VA workforce.
        While the missteps VA made here are disappointing, I have
    faith that VA can and will use the critical skills incentives
    authorized in the PACT Act as Congress intends as they have
    done for years with the many other authorities we have granted.
        I look forward to hearing from Secretary McDonough about
    how VA is aggressively implementing the inspector general's
    recommendations, and I hope to hear how the Secretary will
    ensure Congress, VA employees, and veterans have confidence in
    how the agency is remedying concerns arising from this
    investigation.
        Thank you, Mr. Chairman, and I yield back.
        The Chairman. Thank you, Ranking Member, and I thank you
    for your opening statement.
        I want to first off by apologizing to everyone. Votes have
    been called, but this would be probably the best place to allow
    us to go and make those votes so we will stand in recess.
        I do apologize to both panels and the witnesses that are
    here today. We will vote. Everyone knows, we have two votes.
    After the second vote we will reconvene within 10 minutes after
    the second vote. Thank you. We are in recess.
        [Recess.]
        The Chairman. We will come back to order.
        At this time our first panel we have Hon. Michael J.
    Missal, inspector general of the U.S. Department of Veterans
    Affairs. Mr. Missal, can you come forward?
        Before you sit down we will do the process of swearing you
    in. How about that?
        [Witness sworn.]
        The Chairman. Thank you. Let the record reflect the witness
    has answered in the affirmative.
        Mr. Missal, you are recognized for your 5-minute opening
    statement.

                      STATEMENT OF MICHAEL MISSAL

        Mr. Missal. Thank you. Chairman Bost, Ranking Member
    Takano, and committee members, on May 9th, the OIG published a
    report on VA's improper award of $10.8 million in critical
    skill incentives to senior executives in the VA central office,
    or VACO.
        The awards were granted to VHA and VBA senior executives at
    the maximum percentage allowed under the PACT Act, 25 percent
    of basic pay. Awards ranged from nearly $39,000 to over
    $100,000 with seven that exceeded $100,000.
        The PACT Act authorized VA to award CSIs to those staff who
    possessed a high-demand skill or skill that is at shortage.
    Unlike the vast majority of CSIs awarded to nonexecutive staff
    in shortage occupations, such as housekeepers and police, the
    CSIs for VACO senior executives were based on possessing high-
    demand skills.
        The only justification provided by VHA to support the CSI
    awards to their 148 senior executives was a short, identical
    paragraph on a single form. This justification cited a much
    more competitive job market resulting in a high demand of
    skills possessed by their experienced executive leadership
    team. There was not much more to it.
        VBA provided a bit more analysis on its form and in the
    supporting memo, compared its senior executives to private
    sector Chief Executive Officers (CEO). The National Cemetery
    Administration declined to award CSIs to its senior executive
    because, as one leader stated, ``They did not believe that they
    had a justifiable reason to do so.''
        Our work found lapses in governance, judgment, due
    diligence, communications, and accountability at multiple
    levels of VA. We made two findings. First, that the award of
    CSIs to nearly all VACO senior executives in VHA and VBA was
    inconsistent the PACT Act and VA policy based on the following.
        VHA and VBA improperly grouped all VACO senior executives
    together, contrary to VA's own policy to narrowly define a
    group for incentive pay. The 148 VHA senior executives held 26
    different occupational series and the 34 VBA executives held 6.
        Next, the amounts awarded were determined without
    considering what was needed for retention. Further, VHA
    provided no market factors in support of its CSIs. VBA's
    justification was based on flawed assumptions without analysis.
        The second OIG finding was that VA's internal controls were
    ineffective to prevent the improper awards. A series of
    failures and missed opportunities included first, VHA did not
    provide the Secretary with its plan to pay CSIs to virtually
    all of its VACO senior executives.
        VHA had prepared a list of potential recipients and costs
    weeks before the Secretary asked for this information. VBA had
    provided the Secretary with the proposed costs of its award but
    did not identify that it was awarding CSIs to virtually all its
    VACO senior executives.
        Second, the Office of Human Resources and Administration
    (HR&A) had to review the awards before issuance. Yet despite
    concerns raised by their own staff about the sufficiency of the
    justifications, HR&A leaders gave undue deference to VHA and
    VBA leaders and signed off on the awards without elevating or
    resolving staff concerns.
        As the former head of HR&A told our team, ``I was just a
    signature along the way.''
        Third, the Office of General Counsel's review missed
    opportunities to identify legal issues apparent before the CSI
    awards were made.
        Fourth, because existing VA governance groups were not
    engaged the Office of Management and other key stakeholders
    were not included in the process for reviewing the proposed
    incentives.
        Secretary McDonough took prompt action and canceled the
    payments to VACO senior executives when he learned of them and
    asked the OIG to investigate the CSI award process. VA
    concurred with the OIG report's eight recommendations.
        The OIG will monitor VA's progress on implementing all
    corrective action plans and efforts to prevent such failings
    and future incentive pay processes.
        Mr. Chairman and members of the committee, I am happy to
    answer any questions that you may have.

        [The Prepared Statement Of Michael Missal Appears In The
    Appendix]

        The Chairman. We would like to open up for questions at
    this time. I now recognize myself for 5 minutes.
        Mr. Missal, the CSI scandal is not a case of a few bad
    apples. It is a complete organizational failure. Can you
    explain what went into your decision to recommend the Secretary
    consider taking administrative action if he finds it necessary?
        Then the follow up on that is that is that recommendation
    something that you do lightly?
        Mr. Missal. Answering the last question, it is not a
    recommendation that we do lightly. Under the Inspector General
    (IG) Act we do not have any authority to take any kind of
    disciplinary action or even to recommend specific disciplinary
    action. That is why in some of our reports if we see potential
    wrongdoing by individuals we may include a recommendation for
    the appropriate person to consider taking any action based on
    the work in our report.
        The Chairman. Okay. How big of a role do you think office
    politics, not Republican and Democrat, office politics, played
    in the senior executive bonuses? Your report discussed Mr.
    Jacobs wanting to keep up with Dr. Elnahal's health
    administrative bonuses. Is that correct?
        Mr. Missal. That is correct. It did look like looking at
    what others were doing played a really important role instead
    of saying what is the intent of Congress and is this meeting
    the intent of Congress?
        Rather first, it was determined that the field executives
    for VHA were going to get a bonus. Then they started discussing
    giving VHA executives at VACO that same bonus. When VBA heard
    about it they said, well, if VHA is giving it maybe we should
    consider it. Next thing you know it was all done.
        The Chairman. What are the three conditions, according to
    the PACT Act, that must be met for VA to award CSI bonuses?
        Mr. Missal. You must possess a high-demand skill or a skill
    that is that shortage, one of the two of those.
        Second, that skill has to be part of your duties and
    responsibilities.
        Three, retaining that person or hiring that person serves a
    critical mission-related need for VA. You have three elements
    there.
        The Chairman. Okay. How would you rate VA's ability to meet
    those criteria and how they propose moving forward with these
    bonuses?
        Mr. Missal. They did not meet those criteria, and I will
    just add that is the legislation. VA then issued policies to
    implement the legislation.
        Like, for instance, they said you can group individuals but
    you must group them narrowly according to what they do. If you
    are going to be using a high demand skill you have to show a
    market analysis of why this really does it.
        VA grouped them. VHA and VBA grouped them improperly. They
    were way too wide. They did not provide any market analysis as
    to why these incentives should be paid.
        The Chairman. Which probably, I think, you may have
    answered it already, but to my final question here, how did the
    VA justify every single health benefit administrator senior
    executive receive a bonus? Every one?
        Mr. Missal. They gave the same explanation for each and
    every one. They had one explanation for all the VBA executives,
    one explanation for all the VHA.
        That is taking all those people who have different roles
    and responsibilities, grouping them all together and saying we
    think they should get them because of this reason. Same thing
    on the other for another reason. Neither one of the
    explanations for why was adequate.
        The Chairman. As far as communication between both the VA
    and VHA, there was actual email communications, kind of,
    putting this that they are basically talking together to decide
    how to do this. Is that correct?
        Mr. Missal. That is correct.
        The Chairman. Okay. All right. I have no other questions,
    and I will yield to the ranking member.
        Mr. Takano. Thank you, Mr. Chairman.
        Inspector General, thank you for being here today and thank
    you to you and your staff who are investigating the
    circumstances around these improper payments. While there were
    many missteps leading to the approval of these CSIs for central
    office executives, the lack of involvement from the VA Office
    of General Counsel seems central to many of the issues that
    arose throughout the processes of issuing these incentives.
        What steps should VA take to require leaders to engage with
    the Office of Inspector General so to require leaders to engage
    with the Office of General Counsel in the beginning of the
    process to interpret and implement important legislation such
    as the PACT Act?
        Mr. Missal. I would note that in this situation the VA
    policy did not require the Office of General Counsel to review
    it. For the then-acting deputy secretary saying that he wanted
    Office of General Counsel to review it, the Office of General
    Counsel likely would not have reviewed it.
        This was a new authority and you would think you would want
    to look at it very carefully as you are implementing it,
    including having people with legal expertise review it.
        They did review it. We found that they missed opportunities
    and did not give the proper advice here.
        To answer your question on what can be done, one of our
    recommendations does call for OGC to be more involved in these
    kind of situations. We will follow up to make sure that is
    done.
        Mr. Takano. You are saying that current policy did not
    require OGC to be involved from the beginning, but in light of
    what this situation has brought to the surface, there should be
    reforms there is what you are saying?
        Mr. Missal. That is one of our recommendations----
        Mr. Takano. One of your recommendations.
        Mr. Missal [continuing]. to have OGC involved.
        Mr. Takano. From your investigation it seems like the OGC
    was engaged at various points in the process for granting CSIs.
    They were not necessarily given the full scope of information
    or asked the right questions that would have raised red flags
    for attorneys about how leaders planned to award them.
        My question is what steps can VA leaders take to ensure
    that their staff are providing the full scope of information
    and asking the right questions to OGC attorneys when engaging
    for advice?
        Mr. Missal. VA leaders need to remind their staff that when
    engaging with OGC you need to provide them all the information.
    I will say that OGC, although they did not have everything, had
    enough information that should have identified the issues here
    and should have caused the OGC to ask more questions.
        It is a two-way street. VA should be providing information
    but if OGC does not think they have everything or has other
    questions, then they need to respond back. That was not done in
    this situation.
        Mr. Takano. OGC itself could have been more diligent is
    what you are saying here.
        Mr. Missal. The information was there for OGC to identify
    the issues.
        Mr. Takano. Well, Inspector General, while there were many
    offices required to review or approve the issuance of these
    CSIs your report noted that there was a lack of effective
    internal controls to effectively evaluate the approvals for the
    bonuses and ultimately stop the improper payments.
        How should VA redesign its review and approval process for
    CSIs and other retention bonuses to ensure compliance with
    statute and legislative intent?
        Mr. Missal. Our recommendations in the report do look just
    exactly to what you are talking about. We have four
    recommendations that we believe would be appropriate to
    redesign it so an issue like this does not occur again.
        Mr. Takano. All right. Who should be conducting the final
    review to ensure a requested CSI is justified and complies with
    VA policy?
        Mr. Missal. The way the process worked is you have a
    proposing official. It then is reviewed by the Office of Human
    Resources and Administration and then it goes to an approving
    official.
        That approving official when he or she puts her signature
    on, they should have the information necessary to make that
    decision.
        Mr. Takano. Who should be the ultimate approval authority
    for an employee to receive a CSI?
        Mr. Missal. Under the statute the Secretary can delegate to
    whoever he believes is appropriate to do so. He did this in
    this situation so whoever the approving authority is as
    delegated should be signing off.
        Mr. Takano. In this case it appears that there were some
    clear conflicts of interest, as some of the leaders that were
    charged with providing technical reviews of the CSI packages
    received these awards themselves.
        What are some steps that VA should consider adding to the
    CSI approval process to ensure that there is not a bias or
    self-interest involved in determining who receives a bonus?
        Mr. Missal. That is another recommendation that we have in
    the report to have the OGC ethics group look at this and make
    any changes as appropriate. We will follow up to make sure that
    is done.
        Mr. Takano. Well, thank you for your testimony.
        I yield back, Mr. Chairman.
        The Chairman. Thank you, Ranking Member.
        Mr. Rosendale.
        Mr. Rosendale. Thank you very much, Mr. Chair, and thank
    you very much for holding this hearing.
        Inspector General Missal, thank you for testifying today
    and for the work done by your agency that you lead. The OIG
    does important work to serve veterans and the public by
    conducting meaningful, independent oversight of the Department
    of Veterans Affairs.
        Mr. Missal, the OIG report stated that Undersecretary
    Elnahal said at a conference that ``The Veterans Integrated
    Service Network (VISN) directors and medical center directors
    would be receiving a critical skills incentive at 25 percent
    across the board.''
        This contrasted with a signed memorandum that previous day
    outlining the two-tiered approach, 25 percent for CSIs and for
    VISN directors and 20 percent for CSIs for medical center
    directors and not a flat 25 percent at all.
        Then VHA human resources staff changed the memorandum to
    reflect the CSI of 25 percent across the board. Can you please
    elaborate on this further? Did the undersecretary misspeak at
    the conference result in a 5 percent increase for the medical
    center directors or was the initial signed memorandum
    incorrect?
        Mr. Missal. The initial signed memorandum was 20 percent
    for medical center directors, 25 percent for VISN directors. He
    told us in testimony that he did not recall that and that he
    just announced the 25 percent for everybody.
        Nobody on his staff that we could find told him that they
    already have this signed paper. Rather what they did is they
    created another document which then gave a 25 percent across
    the board for medical center directors and VISN directors.
        Mr. Rosendale. First of all, I find that the memorandum was
    put out to award a flat fee like that without evaluation is
    improper anyway. Is not there supposed to be an evaluation on
    each person receiving a critical skill incentive to include,
    and I am reading from the language, ``The employee possesses a
    high demand skill or skill that is in a shortage, such skill is
    directly related to the duties and responsibilities of the
    employee's position, and employment of an individual in such a
    position services a critical mission-related need of the
    Department.''
        Mr. Missal. That is correct. What VA policy did is they
    added to that to say in certain situations it may be
    appropriate to group employees. The policy went further to say
    they must be narrowly grouped to make sure they have the same
    job series and same position. All housekeepers, et cetera.
        In this situation the executives both at VBA and VHA had
    very different job series and so, therefore, it was not
    appropriate to group them all together, to get to your point.
        Mr. Rosendale. Sure. My other question is that this would
    be these bonuses, these critical skills incentives are supposed
    to be for retention and to make sure that we keep the finest
    quality employees here.
        Yet when I look at the records it shows that VBA executives
    have a 2.4 percent turnover rate and 60 percent of VBA Senior
    Executive Services (SES) have worked at the VA for over 15
    years. We are not losing employees. Is that correct?
        Mr. Missal. That is what we found. We found there was no
    analysis as to whether or not it was necessary for these
    incentives for individuals or why they decided on 25 percent
    for each and every one.
        Mr. Rosendale. Do you know who explicitly approved the
    updated memorandum in regards to what was referenced in the
    conference?
        Mr. Missal. Dr. Elnahal signed it.
        Mr. Rosendale. Okay. How much did this change in just that
    5 percent? Do you know how much that change cost the taxpayers?
        Mr. Missal. From my memory, I think that was an extra $1
    million. I may be a little off, but I believe it was $1
    million.
        Mr. Rosendale. Okay. The report outlined examples of
    employees working behind the scenes pushing for bonuses that
    were the same employees who received a bonus. Ranking Member
    Takano already referenced the same thing.
        Now could you give us just some basic information about
    what recommendations you are making to make sure that this
    situation does not arise again?
        Mr. Missal. Yes. One of our recommendations is to make sure
    that the Office of General Counsel has rules within their
    ethics group to make sure anybody who could have a role in a
    policy that could benefit them financially is not involved and
    that they have a specifics on how to do that. That is one of
    our recommendations, and we will follow up to make sure it is
    done.
        Mr. Rosendale. Very good, thank you very much.
        Mr. Chairman, I would yield back.
        The Chairman. Thank you.
        Representative Brownley.
        Ms. Brownley. Thank you, Mr. Chairman.
        To me I am trying to get to at the very, very, very
    beginning of this and how it sort of all happened. I am just
    wondering could the legislation have been written differently
    so that the interpretation of the legislation would have been
    are clear?
        Mr. Missal. It is possible. The legislation gives a lot of
    authority and discretion to VA to determine things like what is
    a critical skill? What is high demand?
        VA did issue policies to try to interpret some of that,
    like, for instance, for high demand they said we need market
    analysis, and that was not done in this situation. The
    legislation does give VA a lot of discretion.
        Ms. Brownley. I do not want to oversimplify this, but it
    just seems to me that the criteria was pretty clear in terms of
    who should or who should not, you know, receive a bonus and yet
    somehow the powers to be who were making these decisions seemed
    to be pretty unclear about that criteria.
        It seems as though what your investigation comes up with is
    that there was really, and correct me if I am wrong, but there
    was really no malintent here or abuse of the process. It was
    just, you know, between the layers of decision-making there
    was, you know, the oversight was not there or the communication
    was not there somehow, some way. Is that still your conclusion?
        Mr. Missal. Well----
        Ms. Brownley. It just seems to me that if I was the
    decision-maker and I was giving bonuses just across the board
    to everyone, understanding that these are taxpayer dollars, I
    would think, hmm, maybe I should be--you know, I should fine
    tune this a little bit. That this is not going to have a good
    look. That did not seem to be the case.
        Mr. Missal. We did not see that at the decision-maker
    level. They wanted to get the 25 percent bonus. Then they tried
    to justify it. There were controls in place.
        The Human Resources Office had to review them. They did
    review it. Staff within human resources had real concerns,
    identified the problems here, elevated it to then-head of the
    office who then essentially ignored the concerns and just moved
    forward.
        The controls that were in place just did not work here.
    There were large failures there.
        Ms. Brownley. The general counsel, one of your
    recommendations is that, yes, you know, they play a larger
    oversight role in this process. It makes me wonder, you know,
    around other issues and other things that are happening in the
    VA and where the general counsel should play a role. Is this
    consistent in other areas where it is unclear what the role of
    the general counsel is?
        Mr. Missal. We have seen that on occasion and that is why
    one of our recommendations is to make sure the right lawyer
    looks at it. In this situation you had more junior lawyers
    reviewing it who just missed the issues.
        Our recommendation is to make sure for things that have
    reputational or financial risk, to make sure you have a senior
    lawyer looking at this to make sure things are done properly.
        Ms. Brownley. The idea of the Secretary having the ability
    to delegate these responsibilities. I understand that came
    directly from the legislation. Is that a good idea?
        Mr. Missal. I think to have it as broadly used as it is, it
    would be really difficult for one person to sign off on
    everybody. You need somebody who is closer to the recipient to
    understand if they deserve this kind of award.
        Ms. Brownley. My staff, it is kind of clear is giving me
    some notes here, but so the head of HR that you mentioned
    ultimately did not heed the warnings of their staff that these
    bonuses may be improper. Who was that?
        Mr. Missal. It was former Assistant Secretary Gina Grosso
    as well as her then deputy Jeffrey Mayo.
        Ms. Brownley. Is she still employed with the Department?
        Mr. Missal. She is not.
        Ms. Brownley. She is not. Did she resign or----
        Mr. Missal. I do not know the specific circumstances why
    she is no longer there.
        Ms. Brownley. She is no longer there after this became
    public information?
        Mr. Missal. I believe she left at the end of last year.
        Ms. Brownley. At the end of last year. Thank you.
        I yield back.
        The Chairman. Representative Van Orden.
        Mr. Van Orden. Thank you, Mr. Chairman.
        Thank you for coming today. I really appreciate it. I just
    want to run a couple things by you real quick here. What did
    Secretary Elnahal say to you specifically about how this took
    place? Did he get an email with the list of folks?
        Mr. Missal. He did not recall. He said he got the email of
    the list of folks.
        Mr. Van Orden. Yes.
        Mr. Missal. He then said he was on an airplane.
        Mr. Van Orden. Yes, very busy, chat across. Okay.
        Mr. Missal. The email had three tabs.
        Mr. Van Orden. Yes.
        Mr. Missal. The first tab had about 20 names, the other tab
    had the rest, and then the third tab was the total.
        Mr. Van Orden. Would this be the first tab?
        Mr. Missal. I believe that is correct.
        Mr. Van Orden. It would be. I ask unanimous consent to
    enter that into the record. Would this be the other tab? Can we
    just by volume----
        Mr. Missal. I think that looks----
        Mr. Van Orden. Yes, it is----
        Mr. Missal. I cannot see it but that does look like it.
        Mr. Van Orden. I ask unanimous consent to enter this into
    the record. This is the one that----
        The Chairman. Without objection.
        Mr. Van Orden. Thank you. Dr. Elnahal checked on this tab.
        Mr. Missal. That is what he told us.
        Mr. Van Orden. He seemed to have missed this one, right?
        Mr. Missal. He said he did not open it.
        Mr. Van Orden. Yes, Okay. What is the average retirement
    salary of a E-7 that has served their country in training, in
    peacetime, in combat over 20 years?
        Mr. Missal. I do not know that information.
        Mr. Van Orden. I do. The answer is $34,810. An E-7 that has
    served their country for over 20 years will receive a pension
    of $34,810.
        If I look at Tab 1 here, every single one of these bonuses
    exceeds that by at least $13,000. If I look at this tab here,
    the one, and I go all the way down, right, every single one of
    these bonuses exceeds an E-7 who served their country in
    combat's retirement.
        The lowest one you have got here is $38,584. That E-7's
    retirement, male, female, does not matter who they are,
    $34,810. Okay. Could you agree that something is wrong here?
        Mr. Missal. Our report found lots of things that were wrong
    here.
        Mr. Van Orden. Okay. What I am going to do, I just want to
    make sure that this is cleared up because I spoke to Secretary
    Elnahal last night and today. I spoke to the Secretary today.
    You are not really the person I want to talk to. I want to talk
    to the Secretary personally and publicly.
        I would like to also speak to Undersecretary Dr. Elnahal
    publicly, but he is not here.
        I want to commend you for your work. You have done a good
    thing and I believe that your Department is putting the
    benefit--or excuse me, the welfare of veterans above their
    bureaucracy. This is ironclad proof that the Veterans Affairs
    bureaucracy is putting themselves above our veterans.
        With that, sir, again, thank you so much for your work and
    I will be standing by to speak to the Secretary when he is
    here.
        Mr. Missal. Thank you.
        Mr. Van Orden. With that, Mr. Chairman, I yield back.
        The Chairman. Okay. Ranking Member.
        Mr. Takano. Mr. Chairman, I understand the point that the
    gentleman is making by entering information into the record,
    but I just want to make sure, Mr. Chairman, that the documents
    entered in the record are appropriately redacted to remove
    personal identifiable information.
        The Chairman. We will make sure that they are, absolutely.
        Mr. Van Orden. Mr. Chairman, can I respond? I may?
        The Chairman. Go ahead. Sorry.
        Mr. Van Orden. I would say this to the ranking member. Part
    of the reason this problem keeps happening is because we keep
    covering up people. We keep covering up their identification,
    sir.
        This is publicly available information with every single
    person's name and Department that received these bonuses that
    far exceeds the retirement, annual retirement for a person at
    the rank of E-7 that served in combat. Unless this is illegal,
    I am asking to have this and this entered into the permanent
    record with these people's names. Time to end this, Mr. Takano.
        The Chairman. The committee will use proper appropriate
    legal things that we have to cover up.
        Thank you, Mr. Chairman.
        The Chairman. Mr. Luttrell. No. Okay.
        Mr. Self.
        Mr. Self. Thank you, Mr. Chairman.
        First of all, you recommended at the end of your executive
    summary administrative actions as the Secretary deemed
    necessary. You also told us that you will be following up. Does
    that include following up on whatever administrative actions
    the Secretary takes?
        Mr. Missal. That is correct.
        Mr. Self. Okay, thank you. Earlier you were asked the
    question how much did that add to the bill here and you said
    about $1 million. I submit to you and to this committee that is
    not really the issue. Dollars are the foundation of this issue,
    but we are discussing a leadership issue.
        We also heard earlier, and I am not sure who said it, we
    are only talking about 0.3 percent are in this discussion.
    Again I say, that is not the heart of the matter. This is a
    leadership issue from the beginning.
        Now, a question for you. We hear often that departments and
    agencies develop rules that are diametrically opposed to the
    will of Congress. Is that the case here or was it just either
    ignorance or ignoring the policies? Please characterize the
    policies of the VA versus what happened here for us.
        Mr. Missal. I do not think the policies that VA established
    in this situation were inconsistent with the legislation. What
    happened here was certain people in VA did not follow those
    policies and thus the CSIs were awarded improperly.
        Mr. Self. Thank you. I suspected that would be your answer,
    so everybody listen to what he said. This is not VA policy.
    This is VA leadership.
        There have been mentions of recouping, and I understand
    that there was a whole campaign to fight the recouping of these
    improper payments. I know that you say that it is not your job
    to follow the recouping. You do not know how it is going.
        Do you see evidence that there is recouping going on in the
    VA?
        Mr. Missal. We have heard that a significant amount of the
    funds that were paid out have been recouped, but as stated in
    the report, it was outside our scope so that was just
    information we got beside the work we were doing.
        Mr. Self. What does it take to make that inside your scope?
        Mr. Missal. We could make a decision that we can follow up
    with it to ensure it is done.
        Mr. Self. They violated the policies, I would suggest that
    it is probably within your purview to do that because it is
    also in your recommendation. I would suggest that that is
    within your purview and I would ask that you do that.
        I will echo Mr. van Orden. You are not the one I want to
    talk to. I appreciate that.
        I yield back, Mr. Chairman.
        The Chairman. Thank you.
        Mr. Luttrell, you do not want to be recognized? Okay.
        I am going to follow up and then if any others have
    questions, I have got a couple here still.
        Did the OIG review any evidence that VACO SESes continued
    to push out these bonuses after they were canceled by the
    Secretary?
        Mr. Missal. I do not know if it was after they were
    canceled. There was a process that the Secretary provided where
    people could appeal it, but we do know that after the Secretary
    became aware of it and was concerned about it, that there was
    an effort by some within VHA to provide other justifications so
    that some of the senior executives at VHA could get a CSI. That
    effort did not go very far and nothing came of it.
        The Chairman. Okay, this is a question that, if Dr. Elnahal
    and Jacobs worked for you, would you have confidence in them?
        Mr. Missal. In this situation I would not have confidence
    in what they did. They were not on top of the issues as they
    should have been.
        The Chairman. Thank you. Thank you.
        Ranking Member, do you have anything else for this witness?
        Mr. Takano. No, sir.
        The Chairman. All right.
        Thank you and we will go to the second panel.
        Mr. Missal. Thank you.
        The Chairman. Stay standing. The witness is now for our
    second panel we have Hon. Denis R. McDonough, Secretary of the
    U.S. Department of Veterans Affairs.
        Mr. Secretary, if you would, can you please raise your
    right hand?
        [Witness sworn.]
        The Chairman. Thank you and let the record reflect the
    witness has answered in the affirmative.
        Mr. Secretary, you are recognized for your opening
    statement.

                      STATEMENT OF DENIS MCDONOUGH

        Secretary McDonough. Mr. Chairman, thanks so much for the
    opportunity to appear today I think we submitted a statement
    last night. I am happy to go straight to questions.

        [The Prepared Statement Of Denis McDonough Appears In The
    Appendix]

        The Chairman. Wonderful. We will go right to questions. I
    will recognize myself for 5 minutes.
        Mr. Secretary, in your press conference last week you said
    despite the fact that Dr. Elnahal and Mr. Jacobs still have
    your confidence, but at our January hearing that examined the
    VA's HR sexual harassment scandal, you testified you lost
    confidence in former Assistant Secretary Grasso and asked her
    to resign. What is the difference?
        Secretary McDonough. What I said at the time and the
    testimony here in this room and in February was that among the
    issues I was concerned about the performance of our assistant
    secretary included the CSIs issue.
        I have also said and I have said this publicly and I have
    said as much to the inspector general, that even though I
    recognize that this was a series of massive mistakes, in fact,
    it was me who called you----
        The Chairman. Yes, it was.
        Secretary McDonough [continuing]. to tell you about it. It
    was me who asked the inspector general to investigate, and it
    was me who stopped and recouped now at this date about 92
    percent of those payments.
        That I continue to have confidence in our undersecretaries
    because of their strong performance and the performance of
    their team on the implementation of the many authorities that
    we have and because of the forthright way we have handled this
    scandal, naming it, owning it, learning from it, including
    appearing before you today.
        The Chairman. Okay. That is going to lead to my second
    question. I think you answered part of it, but you asked Ms.
    Grasso to resign last year shortly after you became aware of
    her scandal.
        It seems that she is the only one person being held
    accountable for this. What we the investigation looks like it
    was a calculated effort and so should no one else be held
    accountable?
        Secretary McDonough. Yes. Look, I think it is a fair
    question so I thank you for it. As I said, I had a range of
    concerns about the assistant secretary's performance.
        Second, this issue pursuant to the recommendations that you
    have just heard of from the inspector general is continuing to
    be reviewed by the Office of Accountability and Whistleblower
    Protection and by the ethics team at OGC.
        Third, this entire process is an effort for us to get
    better at how we manage what we consider a sacred obligation to
    our veterans and the fiduciary responsibilities we have to the
    taxpayer. This hearing, the IG inspection, the entire effort is
    part of that accountability.
        Third and last, ultimately these issues happened on my
    watch. As I testified to you in March, I should be held to
    account for them.
        The Chairman. I think it was Representative Brownley asked
    about the legislation. Maybe it was not clear. With the VA's
    abuse of the CSI authority in record time, mind you, would you
    support congressional legislative control over VA from here on
    out when handing out CSIs? We should draft the language that is
    very, very, very clear so that this does not happen in the
    future?
        Secretary McDonough. Look, you know, I recognize that as
    part of the oversight effort and this is why among the first
    calls I made, as I understood this, was to you, Mr. Chairman. I
    said to you when I took this job that I had hoped we would not
    make mistakes.
        I anticipated that we might and that you would learn about
    those from me. I think overwhelmingly I have been true to that
    with you.
        If you all think that it is appropriate to take a hard look
    at how we administer these, we would like to work with you on
    that. That said, we are engaged in a very important effort as
    outlined in the recommendations from the inspector general to
    look closely at all of the CSIs. I hope that we could have an
    opportunity to talk to you about that.
        The Chairman. Before I finish up here with my questioning,
    and I do appreciate you calling as soon as you did, but the
    committee is also waiting on some other responses. Like, I have
    got eight outstanding letters at this time. These are important
    topics, including the Atlanta situation with the police
    leadership down there and a sexual harassment charge.
        Secretary McDonough. Definitely.
        The Chairman. Second Amendment rights, some of those
    things, and so I am needing to get those in.
        Secretary McDonough. I hear you.
        The Chairman. Okay.
        Secretary McDonough. Yes. Like I said, you have got my
    commitment on that. I think we have responded to a lot of
    letters.
        The Chairman. No, you have.
        Secretary McDonough. I get it, and we are going to endeavor
    every day to be better. We will continue to do the same.
        The Chairman. We may have another round, but Ranking
    Member, you are recognized for questioning.
        Mr. Takano. Mr. Chairman, thank you.
        Mr. Secretary, I was glad to see that you issued a new
    directive in September that requires your approval for senior
    executive CSIs.
        Secretary McDonough. Correct.
        Mr. Takano. Now, how will this process create better
    accountability for future CSI awards across the VA enterprise?
        Secretary McDonough. Well, in that instance basically any
    senior executive CSI has to come to me, but as is outlined in
    the testimony that the inspector general just made, we are also
    at his recommendation looking at the policies in place to
    ensure the use of CSIs in the future advances the core goal of
    the law in the first instance.
        Making sure that there is appropriate justifications for
    who qualifies, ensuring that there is appropriate
    justifications for the market forces that we are up against,
    ensuring that the Office of General Counsel is at the table
    involved in those decisions. Those are three examples of
    particular changes that we are building on.
        We also have a body of other CSIs, including field CSIs,
    that will inform that policymaking. Each of these efforts are
    designed to ensure that we hold ourselves to account to you, to
    the Inspector General and his important report, and to the rest
    of the VA workforce who is impacted, obviously, by how this was
    handled and ultimately, most importantly, to veterans.
        Mr. Takano. Thank you. This new process will require a
    delicate balance. I just want to know how you are designing
    this process so that there is enough oversight to ensure that
    you are awarding these incentives to the employees who really
    deserve them, while also streamlining approvals so that the
    incentive is issued in a timely manner to prevent the employee
    from seeking a job elsewhere?
        Maybe you can see that tension there? Do you think you
    achieve that?
        Secretary McDonough. I think that we will achieve that. I
    think if one were to just look at the overall awarding of CSIs
    outside of this very specific, very badly handled set of CSIs
    for senior executives in headquarters. through April 30th of
    this year we have awarded 41,289 CSIs.
        That is for a total spend of about $340 million of
    incentive.
        The average award is about $8,319. Overwhelmingly, that was
    provided to housekeepers, to food service workers, to police,
    and to HR specialists.
        Consequently, retention rates are the highest they have
    been in years, quit rates at the lowest they have been in
    years. We have demonstrated our ability to find that balance.
        However, we have to make sure that we learned a lesson on
    this so that we invest those taxpayer resources carefully and
    that we advance the interests of the veteran, because at the
    end of the day that is what this is about is having the
    personnel onboard to carry out high-quality care and timely
    access to benefits for our veterans.
        Mr. Takano. Well, thank you. I am just going to add that
    the human resources specialists, in my view, have been that
    sort of super critical area, that they have been a lynchpin of
    whether or not we are able to onboard people in a timely manner
    or we lose them. I mean, that is real critical and so I am glad
    to hear that this has been useful in retaining those employees.
        Do you feel as though your agency not having a Senate-
    confirmed general counsel contributed to the misinterpretation
    of Congress's legislative intent?
        Secretary McDonough. In candor, I do not. I think that
    what--I hope that we are creating a atmosphere in VA where when
    somebody sees something that does not make sense that they
    speak up. I think that had happened in the case in September
    13th when I received a call from the Financial Service Center
    through our chief financial officer who was home with COVID
    that day.
        They blew the whistle because they saw these large payments
    going out of the Financial Service Center. That was speaking
    truth to power. That was calling out a challenge. That was an
    important internal check, one we rely on the regular basis.
        I hope that I do a better job of creating an atmosphere
    where everybody can speak their mind.
        In this case I think Mike spelled out in his very, I am
    sorry, the inspector general spelled out in his very important
    report the fact that lawyers did get notified and could have
    spoken up. At the end of the day there is blame to go around
    here, but the blame rests with me. I should have put this into
    the governance structure that I have built, that I have
    insisted on since I got into VA. Ultimately, that is why I feel
    it is important to be here with you today.
        Mr. Takano. Well, thank you. Thank you for that answer.
        I yield back, sir.
        The Chairman. Mr. Rosendale.
        Mr. Rosendale. Thank you very much, Mr. Chair.
        Secretary McDonough, thanks so much for being here today.
        Secretary McDonough. Yes, sir.
        Mr. Rosendale. I have to tell you that out of all the
    committees that I serve on and all the people that come before
    us, I give you credit. You always come in here and take the
    licks when we are asking the difficult questions. Even whether
    we agree or not you are always here.
        I appreciate you taking ownership and testifying before the
    committee, however, I wish we had an opportunity to hear
    directly from Undersecretary Elnahal and Undersecretary Jacobs
    as their actions raised the most questions. When do you think
    that we will be able to have them before us?
        Secretary McDonough. Look, I thought it was important for
    me to come because for the reasons I have just spelled out,
    which is I feel responsible for this. I, you know----
        Mr. Rosendale. I appreciate that. I truly do. However, the
    members on this committee, I assure you, they have the direct
    questions for Undersecretary Elnahal. They want to hear
    directly from the horse's mouth.
        Obviously, being in charge of the Veterans Administration
    then you ultimately have to have to direct everything----
        Secretary McDonough. Right.
        Mr. Rosendale [continuing]. bit they are the ones that took
    the actions and directed what took place. That is why we really
    need to have them in here.
        Secretary McDonough. You know, look, I think our entire
    agency we have tried to be available to the committee. We have
    tried to be responsive to and transparent with the committee. I
    get it that we have some back and forth where we are, you know,
    we fight about that but I think the Founders had that in mind
    when they created the Articles I and Articles II of the
    Constitution.
        I have every expectation that they will continue to come up
    here before this committee. I have noticed that you never
    withhold on your questions, so I thought it was very important
    for me to be here to----
        Mr. Rosendale. Again, we just want to make sure that the
    people who took those actions are here to answer the questions.
        Secretary McDonough. We will continue to----
        Mr. Rosendale. Well, as soon as you can urge them to be
    before us it would be greatly appreciated.
        Secretary McDonough. We will continue to be transparent
    with this committee and engage with this committee absolutely.
        Mr. Rosendale. Okay. The OIG report states that you did not
    learn about the central offices executives had received the
    CSIs until alerted by VA CFO on September 13th, 2023, despite
    specific requests regarding the planned use of incentives in
    the months before they were awarded.
        This is the second time that there has been a major
    incident that you were unaware of, but to your credit both
    times you did start trying to put some actions in place to
    address it.
        I understand there are approximately 400,000 employees at
    the VA and you cannot know everything. However, has there been
    any consideration in changing some of the internal processes to
    ensure that you are made aware of these things earlier to
    prevent issues like this from even happening?
        Secretary McDonough. Like, I think this is why we changed
    the delegation in September. The chairman pointed that out
    several minutes ago. This is why we are reviewing the entire
    process on these and this is why I am trying to create--I want
    to create--this is why I think it is important for me to be
    here today to demonstrate to our workforce that I own this.
        I want to be in a position where I am hearing directly from
    them because I am here accountable to you.
        Mr. Rosendale. My understanding is that you canceled the
    CSI to 182 VHA and VBA VACO SESes, but did not cancel the CSIs
    to the 197 field executives?
        Secretary McDonough. Correct.
        Mr. Rosendale. Why did you not cancel the CSIs for the 197
    field executives? Why did we not at a minimal not reevaluate
    them utilizing the formal procedure that was put in place?
        Secretary McDonough. Thank you for the question, Mr.
    Rosendale. You know, we are obviously reviewing this. This is
    one of the recommendations that the inspector general has put
    to us.
        By the same token, we have begun to review and had begun to
    review those fields CSIs.
        Mr. Rosendale. Had they been notified that the 197, that we
    have not rescinded those bonuses, had they been notified that
    those bonuses and the procedure that was utilized to award them
    is being reviewed?
        Secretary McDonough. Remember that these were two different
    procedures. Okay? That is the point I was just about to make--
    --
        Mr. Rosendale. Okay.
        Secretary McDonough [continuing]. which is that the
    justifications for the field CSI overwhelmingly, just now I am
    not ready to opine on this completely because the review is
    ongoing, but the evidence to date suggests they were handled in
    a process much more consistent with the policy that we laid out
    in 2023.
        Meaning with individual justifications based on those
    individuals with specific market analyses to make the case that
    this is a particular skill in those markets to keep those
    personnel, and this is, broadly speaking a category of
    executive that we have been talking to the committee about as
    an agency for many years, including years before I got here
    because we have churn among network directors and VAMSI
    directors.
        I think I have believed and continue to believe that those
    investments are important to keep that critical leadership
    cadre. In fact, we have also invested in additional executives,
    not through incentives but by creating additional executives in
    the field so that there are deputy network directors so that
    the network director in 19, for example, Sunaina, was able to
    be elevated with a firm succession plan after our earlier
    network director, Mr. Gallucci, retired.
        Our ability to----
        Mr. Rosendale. My time has expired, Mr. Secretary, and I am
    going to yield back before I get myself in----
        Secretary McDonough. Sorry.
        Mr. Rosendale [continuing]. trouble with the chairman.
        Secretary McDonough. Sorry.
        The Chairman. Representative Brownley.
        Ms. Brownley. Thank you, Mr. Chairman.
        Good to see you, Mr. Secretary.
        Secretary McDonough. Ma'am.
        Ms. Brownley. The inspector general report says that the VA
    concurred with both findings and all recommendations and has
    provided acceptable action plans and completion timelines.
        Secretary McDonough. Yes.
        Ms. Brownley. What are the timelines?
        Secretary McDonough. Well, the timeline is in that report.
    I think he asked by the end of September. Is that it? I can ask
    the inspector general, but we have had much of this work under
    way so we anticipate we will be rolling with that back with
    answers to the inspector general's recommendations.
        I have said to him in the event that there is any
    deviations on this that we will, obviously, be continuing to
    converse with him throughout this process.
        It is not like a, you know, one final test. It is going to
    continue to try to meet the goals laid out in the--requirements
    laid out in the report.
        Ms. Brownley. You mentioned that 92 percent of the bonuses
    have been returned to the VA. What about the 8 percent? What is
    going on there?
        Secretary McDonough. Yes, I might just walk down this, if
    you do not mind? Now, we have a slightly different number here
    because the inspector general included for his analysis those
    CSIs that had been awarded but that I stopped before the award
    was paid out. If you hear different numbers you will understand
    why.
        Right now the finance agency, Defense Finance Accounting
    Service (DFAS), which we use to pay our salaries, has collected
    $ 9.1 million of the $9.9 million in CSI debts. Those are debts
    that have been--those are $9.9 million in payments to those 175
    executives. Okay?
        We have recouped 191--I am sorry, we have recouped $9.1
    million. Seven executives requested restructured biweekly
    repayment plans and of those, three executives are being
    actively collected against and four are on hold pending a
    hearing because the employees have rights there.
        Three executives did not request a debt hold or
    restructured repayment plan and have the automatic 15 percent
    net disposable income being deducted biweekly.
        17 executives had collection on hold pending their hearing.
    There was 12 requests for a hearing, and three had requests
    for--or sorry, five had a request for waivers.
        Those hearings and those waiver decisions have recently
    been completed, so those additional 17 individuals will begin
    the recoupment process. That gives you how we get to the full
    amount of the incentive payments that were made.
        Ms. Brownley. There were no outright refusals to return
    bonuses?
        Secretary McDonough. No. There was requests for hearings
    and we published the process by which we had those hearings,
    and there was a request for waivers. Those waivers were
    reviewed, those hearings were conducted.
        As I said, we have 92 percent of the outlain dollars
    returned and we are working through the final 8 percent.
        Ms. Brownley. Once, you know, everything has sort of been
    corrected, are you planning on going back and to evaluate those
    management folk and give them a bonus based on what the
    criteria truly was?
        I would imagine you sort of have a morale problem based on
    some of this. I do not know how widespread that might be, but--
    --
        Secretary McDonough. Yes. Well, I mean, I thought it was. I
    noted in a letter that we got from Mr. Self and I heard
    Chairman Bost's opening statement that they had the benefit of
    hearing from one of our employees. I think that is good that
    our employees feel that they have an outlet.
        I spend a lot of time with our teams. You know, and I do
    not want to characterize it one way or the other. I want to
    underscore one more time that I think our workforce is the best
    workforce in the Federal Government. I think they are doing
    really important work.
        I think absent our headquarters SES we would right now be
    paying out about one presumptively service-connected disability
    associated with the PACT Act. In fact, we are paying out many
    more than 30.
        Without our SES and headquarters we would not be providing
    access to VA healthcare absent to service-connection under
    Section 103 of the act until 2032. We have been doing it for 6
    months.
        I think that is a good team. I think they are doing good
    work. Included in there are leaders who continue to see
    patients, including psychologists, for example. I am proud of
    their work.
        If we were to go back to look at CSIs we would do it in the
    light of the day with the full visibility of any new policies
    informed by our conversations with this committee and its
    important oversight responsibilities.
        Ms. Brownley. Well, I agree with you that, you know, there
    are a lot of good people in the VA that are doing a great job.
    I guess, you know, I am asking the question.
        There was a purpose in this policy of which I thought was a
    good purpose.
        Secretary McDonough. Okay.
        Ms. Brownley. Certainly I have experienced that turnover
    with that LA Medical Center or my own Community-Based
    Outpatient Clinic (CBOC) within my district, and so I
    understand the consequences of those turnovers.
        I think it is a good policy.
        Secretary McDonough. Yes.
        Ms. Brownley. All I am asking is would not you want to go
    back and evaluate to honor those people that we want to keep
    onboard who are doing a good job and they should not be victims
    of bad decision-making?
        Secretary McDonough. Definitely, but what I have said, I
    think the inspector general referred to town halls that I had
    with the workforce last September and October, and I continue
    to have these conversations in the field with the workforce.
        What I have said to people is it is hard for me to read the
    statute and conclude that there is no executives in
    headquarters that could qualify for a CSI. Consistent with that
    we will look at that if there are places we need a CSI.
        Similarly, there is no way to read the statute to conclude
    that every senior executive in headquarters----
        Ms. Brownley. Yes, absolutely.
        Secretary McDonough [continuing]. deserved one. Again, if
    we go back to look at it will be very specific, individual and
    skill-driven, and it will be pursuant to the new policies that
    we are putting in place as a result of the inspector general's
    report and all of our learnings since last summer.
        Ms. Brownley. I yield back.
        The Chairman. Representative Van Orden.
        Mr. Van Orden. Thank you, Mr. Chairman.
        I just want to frame this thing in a way that people can
    understand, the relationship between you, the VA, veterans,
    this committee, the American people, and me.
        You were President Obama's--or you are President Obama's
    former chief of staff, correct?
        Secretary McDonough. Yes. That is correct.
        Mr. Van Orden. I was the first Republican challenger in the
    Nation that Donald Trump endorsed in 2022. You cannot really
    get further apart than that.
        Secretary Elnahal has called me personally multiple times
    when there has been issues with the VA, particularly with the
    Tomah VA because that is in my district, everything from
    laboratory equipment not being calibrated properly to a
    personal issue with one of my constituents, who, unfortunately,
    died due to something that happened with the VA.
        You have personally called me when there have been issues
    with housing stipends for veterans, multiple other issues. You
    have called me personally.
        I am going to say something now publicly that has been
    private for a long period of time so that people truly
    understand who you are. My daughter died this summer. Several
    Members of Congress, Aaron Bean, Mike Collins, Kevin McCarthy,
    and Mark Alford from Missouri came.
        We were all sitting there and that funeral was about to
    start and there was a bit of a kerfuffle and you walked in the
    church.
        You did not tell me, you did not tell anybody. You came to
    my daughter's funeral unannounced, as just a civilian and as a
    man, and that speaks to your character. It does and I respect
    that tremendously. I will never forget that. This is why what I
    am going to say is so incredibly painful to me personally.
        The average E-7 gets $37,810 a year retirement. Your
    Department awarded these folks, this entire list of people,
    more than that in one fell swoop and that is wrong.
        Secretary McDonough. I agree with that.
        Mr. Van Orden. You said earlier, ``I should be held
    accountable.'' I took the opportunity to write a resignation
    letter for Mr. Elnahal and it is addressed to you and it is
    about this issue.
        I spoke to him last night. I spoke to him again this
    morning. I spoke to you. Isaiah 1:18 says, ``Come now let us
    reason together,'' right? It is time that we talk.
        I cannot justify Mr. Elnahal serving in the capacity that
    he does now. I cannot. All these things are very important
    questions and whatnot, but I cannot justify his employment any
    longer.
        Mr. Secretary, I am going to give you the opportunity to do
    what you just asked to do: to be held accountable. I am going
    to change this from Dr. Elnahal to Secretary Denis McDonough. I
    am going to change it from Secretary Denis McDonough to
    President Biden because this is a systemic problem and I do not
    think that you are capable of serving in this capacity any
    longer.
        That breaks my heart to say that, but I believe that to be
    true. I say that with the utmost respect.
        With that, I yield back.
        The Chairman. The gentleman yields back.
        Representative Landsman.
        Mr. Landsman. Thank you, Mr. Chair.
        Secretary, thank you for being here.
        Secretary McDonough. Sir.
        Mr. Landsman. Mr. Rosendale mentioned this earlier, but you
    do come when necessary and answer questions taking
    responsibility, and clearly we all appreciate that. Trust is a
    big part of what we are talking about here and it is at the
    core of whether or not veterans are going to come to the VA.
        Whether they come to the VA may determine a whole host of
    things, including their own lives, right? They get not just job
    opportunities and education opportunities, but healthcare and
    those supports, and so we want to ensure that our veterans are
    coming.
        When I was a teacher on my first day of teaching somebody
    pulled me aside, a veteran teacher who said, look, you can, you
    know, have all the pedagogy in the world in terms of how to
    teach, but if the students do not trust you they are not going
    to learn anything.
        She likened it to a teacher who has a fire hose and the
    students all have raincoats on and that is the job is to get
    them to take the raincoats off so that they can, you know,
    understand and learn.
        It was a really profound story, and I was glad she did it
    on the first day because from that day and that day forward, I
    focused on building those relationships. Clearly, this gets a
    trust and, obviously, there are folks who, you know, are going
    to have to be held accountable. To your point, it starts with
    you.
        The inspector general has laid out these recommendations.
    Can you talk us through the timeline and what we should expect
    and as a committee member who is really interested in ensuring
    that we, sort of, get on the other side of this having built
    more trust, what that would look like from our standpoint?
        Secretary McDonough. Yes. Look, I think it is really
    important and I appreciate the question. I just want to give
    you three facts and then I will answer the question.
        One, trust in VA right now is measured out any number of
    vectors is the highest it is been since we began measuring
    trust in VA.
        Two, we have each of the last 3 years had filed and
    resolved historically large numbers of claims because veterans
    are choosing to file claims with us.
        Three, in the last year we have enrolled more new veterans
    month by month than we have in a number of years because
    veterans are choosing to come to a place that they trust to get
    their care.
        You are absolutely right that trust is an important,
    absolutely important metric of whether we are succeeding or
    not.
        As it relates to me holding our agency to account to you,
    to the inspector general, and to our veterans, on his report,
    which I asked for, you have my commitment that we will get
    those eight recommendations done this year. That is a
    commitment I have made to Mike.
        We will stay in touch with your staffs and with you
    personally to the extent that you want to as we implement those
    policies to be responsive to him.
        Mr. Landsman. Yes. I do not think, you know, that the House
    will know to--know it will happen this year, all of it.
        Secretary McDonough. Yes.
        Mr. Landsman. I think it would be great to, and you may
    already be doing that, but laying out the eight
    recommendations----
        Secretary McDonough. Yes.
        Mr. Landsman [continuing]. and sort of how you are
    approaching the pursuit of those recommendations----
        Secretary McDonough. Yes.
        Mr. Landsman [continuing]. and what we should expect. Then
    maybe it is biweekly or monthly updates.
        Secretary McDonough. Sure, I would be happy to do that.
    That is in my submitted testimony the specific steps we are
    taking on each of the eight. We can get into which of our
    senior leaders is leading each of those as you want.
        Mr. Landsman. I think that piece would be great so that we
    know who to reach out to if there are questions or concerns.
        Secretary McDonough. Yes.
        Mr. Landsman. Anyway, thank you very much for everything
    you do.
        Secretary McDonough. Thank you.
        Mr. Landsman. With that, I yield pack.
        The Chairman. Okay. The gentleman yields back.
        Mr. Luttrell.
        Mr. Luttrell. Thank you. Thank you, Mr. Chairman.
        Mr. Secretary----
        Secretary McDonough. Sir.
        Mr. Luttrell [continuing]. good to see you today, sir. To
    Mr. Landsman's point, I am just curious, do the
    undersecretaries, I am sure they have to appreciate--I mean,
    you are the one--and again, the rest of the committee members
    have said this. I mean, you, buddy, you saddle up.
        I mean, every single time there has been a bloodshot to the
    VA you are showing up and you are taking it right on the chin
    and I commend that. That is the absolute definition of a
    leader. You are not walking away from this.
        I am curious. Does it feel like that if you are going down
    inside the organization because of the breadth and scale of
    this issue that we are talking about today, have they come to
    you and said hey, look, we really jacked up. We are sorry.
        Or has there been any kind of----
        Secretary McDonough. Absolutely, and they have gone to
    their teams to make the same acknowledgements. Importantly,
    they are not just saying it, but they are living it and I
    admire their candor on that.
        Mr. Luttrell. Okay. Can we talk about all these kind of
    consequences of actions in here? I do not see Mr. Crane in here
    yet, but I am sure if he comes in when we round this corner you
    are going to get an earful.
        Secretary McDonough. I have every----
        Mr. Luttrell. Just try to get ready. I want to talk about
    so you and I are on the same page 100 percent when suicide and
    suicide prevention is the number one issue in the VA----
        Secretary McDonough. Yes.
        Mr. Luttrell [continuing]. right? We lose sleep over that
    at night.
        Secretary McDonough. Yes.
        Mr. Luttrell. As much as I have been reading on this issue
    that we are talking about right now here, I want to try to put
    this in perspective for--I am sure you have it, sir.
        In the mental health and suicide prevention in the office
    in the Department, in VA, so the director of continuous care
    and general health makes around $300,000 a year, right? The CSI
    was $76,000-ish that was paid out.
        Now, here is my problem. What was the suicide rate at last
    year for veterans?
        Secretary McDonough. Well, we had more than 6,500 suicides
    so I do not remember the rate.
        Mr. Luttrell. The numbers are continuously going up. They
    are not decreasing.
        Secretary McDonough. They had been going down I think last
    year.
        Mr. Luttrell. They went down in 2020----
        Secretary McDonough. Yes.
        Mr. Luttrell [continuing]. but they jumped back up.
        Secretary McDonough. Right.
        Mr. Luttrell. We had this conversation.
        Secretary McDonough. Correct. Correct.
        Mr. Luttrell. The system itself is failing. I do not have a
    problem saying that. The system itself is absolutely failing
    our veterans, and I do not walk away from the challenges of
    emotional distress and cognitive instabilities. I do not. It is
    a very hard pulse to catch.
        Secretary McDonough. Yes.
        Mr. Luttrell. The executive director for suicide prevention
    received 49,000, almost 50,000 in CSI. The deputy director for
    field support and analytics, which has been in office since
    2016, got $48,000. Then the deputy director received almost
    $50,000.
        Now, I am pretty sure you probably yanked all this back,
    but my point is we just rewarded these people for failure.
        Secretary McDonough. Look, I----
        Mr. Luttrell. I am sure that if you are trying to explain
    this to me, it is----
        Secretary McDonough. No, no, I mean, look, I get it. I
    guess I want to say the following, which is all the CSIs that
    went to senior executives have been taken back.
        Mr. Luttrell. Okay. Thank you.
        Secretary McDonough. Two, the people in these jobs are
    people--not every one of them and that was my point earlier,
    which is that you cannot read the statute and say that this was
    an acceptable use of that statute. However, there are people
    with very critically important skills to veterans. A senior
    psychologist who has dedicated his life to taking care of these
    veterans----
        Mr. Luttrell. I am tracking that 100 percent, Mr.
    Secretary----
        Secretary McDonough. Right, so----
        Mr. Luttrell [continuing]. I am going to argue with you all
    day long if the numbers will continue to go up over the decade
    after decade, that particular individual is not doing a good
    enough job for our veterans. Giving them bonus money for that
    is a slap in the proverbial face of all the veterans walking
    around outside and the families that are left behind period.
        Secretary McDonough. Yes, except each of them--I am not
    going to try to defend that we are succeeding here, but I am
    going to tell you that we have a team that is working this
    extraordinarily hard and they could walk away from this and go
    as a psychologist, psychiatrist, be remunerated at 3X somewhere
    else. They are choosing because of their love of this mission
    and because of their love for those veterans and their
    survivors, they are investing that skill here.
        Now, does that mean I am comfortable that we are
    succeeding? I am not. I am not comfortable with that, but we
    will not succeed without them.
        Mr. Luttrell. We are not succeeding with them.
        Secretary McDonough. I am telling you that those guys----
        Mr. Luttrell. This is an end. Sir, this is a round. This is
    we are 15 rounds on this one.
        Secretary McDonough. I understand.
        Mr. Luttrell. These numbers are what I have to explain to
    my veterans and the families back home plain and simple, and
    this is what I am hearing.
        I wish those two were sitting here in front of me and not
    you, sir, because they are the ones I need to be talking to.
    You are up here sweeping it up. You are trying to do best with
    your Department and make it the best Department ever. Hands
    down I think arguably the best Secretary Mr. Biden has. I say
    that out in front of God and everybody, all right?
        But if----
        Secretary McDonough. I hear you.
        Mr. Luttrell. I yield back, sir.
        Secretary McDonough. I hear you.
        Mr. Luttrell. Mr. Chairman.
        Mr. Van Orden. [Presiding.] The chair now recognizes Mr.
    Self from Texas for 5 minutes.
        Mr. Self. Thank you, Mr. Chairman.
        Secretary, you are a very affable fellow, very polished,
    but I will quote one of our space missions, ``We have a
    problem.''
        The last hearing you were at that we had a conversation,
    you and I had a conversation about Secretary Shinseki. You
    called him a hero. I ask what response you were going to have
    to that scandal.
        Here we are again. Here we are again. Everything that you
    say and everything that Mr. Luttrell credits to you about
    trying, it only takes one to ruin morale in a unit. It only
    takes one.
        We have had at least two major ones here, scandals. All of
    the good work can be undone in a moment of time.
        I want to go to the executive summary of the OIG. Dr.
    Elnahal deceived you. Let us just be honest. You ask for
    additional information from both Elnahal and Jacobs about their
    plans to pay CSIs to senior executives.
        You expressed concerns about the cost of the incentives and
    your desire to make sure the authorities were used with care.
        In response, and I am quoting now from the OIG report,
    ``Dr. Elnahal did not disclose to the Secretary,'' that is you,
    ``the plan for VHA central office executives,'' the central
    point of this discussion, ``but rather provided information
    solely on the CSIs for field executives.''
        He deceived you. There is no other way. You were just
    talking about trust. It confounds me how you can have trust
    after the OIG recorded that the man deceived you.
        I want to ask what administrative--it is probably not
    proper for me to ask what administrative actions you have, but
    you have told us that you plan to implement, that you plan to
    enact the recommendations by the OIG.
        One of them toward the end is, ``any administrative actions
    that you deem necessary,'' I think was the words that they
    used.
        You have a commitment. You just made a commitment to this
    committee that you are going to follow through on them. Again,
    I will not ask you what your administrative actions that you
    have planned are, but it looks to me like today you should have
    brought us either the resignation letter or the termination
    letter for Elnahal, Jacobs, and I hope I get this name
    pronounced right, Bonjorni, HR, because she is the one that
    actually instigated the payment to the central office.
        Last, I will bring up the fact that at least three of the
    assistant secretaries that got these CSIs have been the target
    of committee investigations. One was trying to ban the VJ Day
    Kiss photo received a $57,000 bonus. The executive that
    retaliated against a subordinate whistleblower has received a
    $52,000 bonus. The chief of Office of Disability and Medical
    Assessment, who your own investigations found harassed
    subordinates, received a bonus of $53,000.
        I am not sure I have any questions. I just would ask you
    what are the hearing decisions and we will leave it at this.
    First of all, did you bring us those letters?
        Secretary McDonough. I did not.
        Mr. Self. Okay. I do not--I think I would yield back. Thank
    you, Chairman.
        Secretary McDonough. I might just say if it is--can I
    respond or?
        Mr. Van Orden. Yes, Mr. Secretary, please do so.
        Secretary McDonough. In the case at OMBI we have found and
    the committee also found three individuals to have been engaged
    in that misconduct. Those three individuals we began
    proceedings to separate them from VA. They are no longer at VA.
    There are three other individuals who were involved in that
    activity that are no longer with VA.
        In the case of the CSIs, none of the executives is keeping
    the CSI payment. Ninety-two percent of those payments have been
    recouped in their entirety, and we will get the other 8
    percent.
        Moreover, for example, this is why I think the
    accountability efforts are so important. You cited one
    individual who was cited in press reports as being involved in
    the issue about the photo. She was not. She was absent on leave
    when that decision was made and her name was attached to that
    decision, which when I learned of it I rescinded immediately.
    That photo is still up at VA facilities.
        It is true we make mistakes. Nobody makes more of them than
    me. When I make them I come here. I alert you to them and I own
    them. We have a very dedicated workforce at VA in the field and
    in headquarters. Did we make mistakes here? We did.
        Mr. Self. Mr. Secretary, I did not ask for your
    resignation. I asked for the resignation of three other--or
    termination of three other members.
        Mr. Van Orden. I asked my Democrat colleagues and
    Republicans if they would like a second round of questioning
    and they do not. We are going to close here.
        I just have to say some things here. I want to reiterate
    what Mr. Luttrell said about veteran suicide. This committee
    has allocated $120 billion since 9-11 for veteran suicide
    prevention, $1.6 billion this last fiscal year, and the suicide
    rate is increasing, and you are responsible for giving a bonus
    to the person that is in charge of increasing veteran suicide.
        That is reality. Platitudes do not count. We go to
    funerals. We look at kids whose parents are dead in the eye
    because of your failure of leadership at the VA. That is
    reality.
        You said that we are not going to succeed without the folks
    that you have. Mr. Luttrell aptly pointed out you are failing
    with them, so what is the difference?
        You guys have taken the ``my bad'' defense. You said 92
    percent of all of these payments have been recouped. The reason
    92 percent have been recouped is because you guys got busted.
    You got rolled up hard.
        Zero percent of all of these moneys would have been
    recouped if you were not caught red-handed. That is also a
    fact.
        Secretary McDonough. I stopped them.
        Mr. Van Orden. Mr. McDonough, you have a choice and it is
    binary. You and Mr. Elnahal can become the face of everything
    that everybody hates about Washington, DC, corruption, cocktail
    parties, institutions above individuals, literally paying
    millions of dollars to each other for failing.
        Or you can stand up like the man that I know you are
    personally. You are a man of character. So is Mr. Elnahal.
        You can stand up now or speak to your subordinates and have
    them tenure their resignation and you can turn a new leaf. You
    can start a new chapter in government accountability.
        You do come up here and you take heavies all the time. It
    means nothing. It means nothing because our veterans are
    killing themselves, drug and alcohol addiction skyrocketing,
    spousal abuse skyrocketing, mental health issues skyrocketing,
    all under your watch, sir, and Mr. Elnahal's watch.
        The binary choice is this: Be remembered in history as
    someone who has abjectly failed or be the new start. Recreate
    the government and be accountable and stand up for the person
    that I know you are.
        I ask unanimous consent that all members shall have 5
    legislative days in which to revise and extend their remarks
    and include any extraneous material. Hearing no objection, so
    ordered. This hearing is now adjourned.
        [Whereupon, at 12:43 p.m., the committee was adjourned.]

    =======================================================================

                             A  P  P  E  N  D  I  X

    =======================================================================

                        Prepared Statements of Witnesses

                                  ----------

                      Prepared Statement of Michael Missal

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                     Prepared Statement of Denis McDonough

        Good morning, Chairman Bost, Ranking Member Takano, and Members of
    the Committee. Thank you for inviting me here today to discuss VA's use
    of critical skill incentives (CSI).
        CSI payments, established under the Sergeant First Class Heath
    Robinson Honoring our Promise to Address Comprehensive Toxics (PACT)
    Act of 2022, are a new authority and important tool that helps VA close
    mission-critical skills gaps that are in short supply or high-demand.
    As we informed you last Fall, VA erred in the way this CSI authority
    for career senior executives working at VA Central Office (VACO) was
    implemented and executed. Upon realizing the error in mid-September
    2023, I promptly called each of you and explained this error. At my
    direction, the VA immediately canceled and began recoupment for all CSI
    payments made to these VACO career senior executives. The VA also began
    instituting additional reviews and stronger controls for all CSIs
    awarded to VACO career senior executives, paused all future awards to
    senior executives, and referred the matter to VA's Office of Inspector
    General (OIG). OIG issued a report last month that described its review
    of the matter and made findings and recommendations. VA concurred with
    OIG's findings and the Inspector General's recommendations and
    immediately began implementing them. This work is still underway.

    Importance of CSIs

        In 2022, VA worked closely with the House and the Senate to craft
    Title IX of the PACT Act, giving VA additional authorities and tools
    that had been longstanding priorities to greatly enhance our ability to
    attract and retain talent in a competitive labor market to meet the
    expected increase in demand for care and benefits to Veterans and
    survivors. These authorities include: use of contract buy-out authority
    to attract healthcare professionals to rural and highly rural
    facilities, higher limits for recruitment, relocation and retention
    incentives, special contribution awards, and student loan repayments,
    flexibility to designate more positions as critical pay, and use of a
    new critical skills incentives to address longstanding shortage
    occupations. Since PACT Act became the law, VA has vigorously deployed
    these various authorities, and we have publicly posted monthly updates
    on their usage, including sharing each edition with both House and
    Senate Committees, in our PACT Act Workforce Dashboard.
        Although VA had flexibilities such as recruitment, relocation, and
    retention incentives available to address hiring and retention
    difficulties prior to the PACT Act, these authorities are not
    specifically designed to target skills in short supply within the labor
    market or in high demand. VA's OIG, as required by the VA Choice and
    Quality Employment Act of 2017, reports annually on occupations within
    the Veterans Health Administration (VHA) for which there is a severe
    shortage. CSI is a pay flexibility VA uses to specifically target these
    and other shortage and high demand skill occupations within VA. The new
    pay flexibility assists VA in closing mission-critical skills gaps and
    supports employee reskilling efforts. CSI is for employees who possess
    a high-demand or shortage skill directly related to the duties and
    responsibilities of their positions and that serves a critical mission-
    related need and is also intended to encourage employees to obtain or
    maintain the required skill(s) needed to perform the duties and
    responsibilities of the position, and to better meet the demand for
    these skills.
        As such, the CSI has been an important tool in VA's national
    workforce strategy. Through April 30, 2024, VA has awarded 41,289 CSIs.
    Overall spend on CSIs as of April 21, 2024, excluding those under
    recoupment, is $340.7 million, and the average award amount is
    $8,316.86. The leading professions for CSIs are:

          Housekeeping--12,858 CSIs

          Food Service--4,683 CSIs

          Police--4,061 CSIs

          HR Specialists--7,377 CSIs

        To date, 99.7 percent of the total number of CSI payments VA
    distributed have gone to non-executives, representing 98 percent of the
    total dollar amount distributed for CSIs.
        In all of these cases, using CSIs has led to higher onboard rates
    for these occupations and reductions in losses of VA personnel across
    these positions. On average, VHA has seen a 5 percent increase in
    onboards and losses under 3 percent. For some occupations such as
    housekeeping aides and food service workers, there had been no growth
    prior to using CSIs and loss rates as high as 10 percent. The ability
    to award CSIs has played an important role in allowing us to hire and
    retain employees in high demand and shortage skill occupations
    essential to VA's mission. This expanded workforce has allowed us to
    provide important results for Veterans:

              In 2023, VA delivered more disability compensation
            benefits to more Veterans than ever before, and we are on pace
            to break that record in 2024. VA just granted its millionth
            PACT Act-related disability compensation claims to Veterans and
            survivors, and has delivered more than $5.7 billion in earned
            benefits to these Veterans and survivors.

              For new patients in April 2024, there was an 11
            percent decrease in average wait times for VA primary care and
            a 7 percent decrease in average mental health wait times
            compared to same time last year. These improved wait times come
            at a time when VA is delivering more care to more Veterans than
            ever before. Compared to the same time period last year (which
            was a record-breaking year for appointments), VA completed 11
            percent more new patient appointments - including nearly 13
            percent more new patient mental health appointments.

              More Veterans are choosing VA health care, with VA
            enrolling more than 400,000 Veterans in VA health care over the
            past 365 days--27 percent more than the 307,831 we enrolled the
            previous year.

              Veterans trust VA at record rates, with 91.8 percent
            of VA's Veteran patients now trusting VA health care, a level
            unmatched in the private sector and an increase of 6 percent
            over 2018 (when the survey began). Additionally, overall
            Veteran trust in VA has reached an all-time high of 80.4
            percent--up 25 percent since 2016. Both of these are all time
            highs.
        CSIs, along with these other authorities, have enabled VA to
    provide more care and more benefits to more Veterans than ever before.
    Consequently, we thank you for this important authority.

    CSIs Awarded to Senior Executives at VACO

        Last Fall, VA's Financial Services Center raised issues about the
    substantial payments being made under this new authority. A review
    caused us to realize that VA's implementation and execution of the PACT
    Act's CSI authority for career senior executives who work at VACO had
    been imprecise. This led to 182 career senior executive employees (SES)
    at VACO being awarded a total of $10.8 million in CSI pay in September
    2023.
        As soon as we identified this error, VA immediately canceled
    pending CSI payments that had not yet been paid out and canceled CSI
    payments that had already been made to VACO career senior executives
    and began recoupment for those payments. We also instituted additional
    reviews and stronger controls for all CSIs awarded to all career senior
    executives, paused all CSI awards to senior executives at VACO, and
    referred the matter to VA's OIG.
        In its report issued on May 9, 2024, VA's OIG made several
    findings. VA's OIG found that the blanket award of CSIs to VACO
    executives in VHA and the Veterans Benefits Administration was
    inconsistent with the PACT Act and VA policy. VA's OIG further found
    that VA's internal controls were ineffective in preventing these
    improper CSI awards to VACO senior executives. The report pointed to
    insufficient transparency in response to the Secretary's request for
    information about CSI plans; an apparent reluctance of the Office of
    Human Resources and Administration/Operations, Security, and
    Preparedness (HRA/OSP) leaders to thoroughly vet or question the CSI
    plans; missed opportunities by the Office of General Counsel (OGC); and
    a failure to leverage the governance process to subject the CSI
    proposals to a more robust VA-wide review.
        The Inspector General's (IG) oversight consistently makes VA
    better, and we concur with all findings in the report.

    VA OIG Recommendations

        VA's OIG had eight recommendations to improve VA's implementation
    of the CSI authority and prevent this from happening again. VA has
    fully concurred on all of these recommendations and is working
    vigorously to accomplish them.

            1. VA's HRA/OSP Assistant Secretary is revising and updating
            VA's Policy Notice 23-03, Department of Veterans Affairs
            Sergeant First Class Heath Robinson Honoring our Promise to
            Address Comprehensive Toxics (PACT) Act, Critical Skill
            Incentive Implementation, and VA Form 10017-A, Authorization of
            Critical Skill Incentives, to address the deficiencies noted in
            the IG's report, including the overly broad definitions of
            groups and lack of needs analysis for recruitment and
            retention.

            2. VA is reviewing the CSIs that have been paid to SES
            personnel, SES-equivalent, or other senior leaders for the
            deficiencies identified in the IG report and to ensure
            compliance with all applicable statutory criteria and VA
            policy. VA will take any corrective action needed based on the
            results of this review.

            3. VA is reviewing the CSIs that have been paid to non-
            executive groups of employees for the deficiencies identified
            in the OIG report and to ensure compliance with all applicable
            statutory criteria and VA policy. VA will take any corrective
            action needed based on the results of this review.

            4. VA's Office of Accountability and Whistleblower Protection
            (OAWP), in consultation with the OGC Ethics Specialty Team, is
            determining whether any senior leaders involved in the
            decision-making process for awarding CSIs had any actual or
            apparent conflicts of interest and if so, whether
            recommendations for disciplinary or non-disciplinary action are
            appropriate. VA is also reviewing its updated policies and
            processes to ensure all decision-makers are free from conflict
            when awarding future CSIs.

            5. The HRA/OSP Assistant Secretary is revising and updating
            policy regarding CSIs to ensure that recommending and approving
            officials are accountable for their determinations that each
            CSI recipient meets all established criteria and that the roles
            and responsibilities of technical reviewer and human resources
            reviewer are clearly established.

            6. VA is reviewing and revising its enterprise processes to
            clarify OGC's role in providing legal advice before or during
            the implementation of any new authority that carries the
            potential for significant reputational or financial harm to VA.
            The General Counsel also is reviewing internal processes to
            ensure that a senior attorney with sufficient expertise is
            assigned to these reviews.

            7. VA is reviewing and revising existing governance policies to
            strengthen VA's process for reviewing proposals for
            implementing new pay authorities affecting senior executive
            compensation.

            8. VA's OAWP is investigating to determine if any
            recommendations for disciplinary or non-disciplinary action are
            appropriate. After receiving OAWP's report and recommendations,
            the Secretary or his designee will take any appropriate
            administrative actions.

        In many instances, this work began soon after the issue regarding
    CSIs was identified last Fall. VA expects to complete all of these
    tasks relating to the OIG's recommendations by September 30, 2024.
        After learning about the problem with CSIs paid to VACO senior
    executives, beginning the recoupment process of all moneys paid to
    these executives was one of the first steps taken. To date, VA has
    collected more than 92 percent of the CSI debts from the career senior
    executives at VACO. Several other executives are on restructured
    biweekly repayment plans. While several executives have requested
    hearings or waivers, all hearings to date have confirmed that the debt
    and amount are valid.

    Conclusion

        VA has used CSI payments as an important tool to help attract
    employees who possess high-demand and shortage skills that serve a
    critical need. However, as we recognized and informed you, Veterans
    Service Organizations, the press, and VA's OIG in September 2023, we
    made serious mistakes in the way we implemented and executed the PACT
    Act's CSI authority for VACO career senior executives. We appreciate VA
    OIG's report identifying the flaws in our systems and processes and are
    working hard to address its recommendations. Moving forward, we will
    continue to work to ensure that everyone who receives a CSI meets the
    criteria to do so. This authority is critical to retaining and hiring
    VA public servants, especially at a time when we are delivering more
    care and more benefits to more Veterans than ever before--and we will
    make sure that we are using it effectively, correctly, and as
    responsible stewards of taxpayer money.

                           Statements for the Record

                                  ----------

    Questions for the Record Submitted by Juan Ciscomani for the Office of
                             the Inspector General

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Questions for the Record Submitted by Juan Ciscomani and Jen Kiggans
                  for the U.S. Department of Veterans Affairs

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Office of the Inspector General Response to Questions Submitted by Juan
                                   Ciscomani

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    U.S. Department of Veterans Affairs Response to Questions Submitted by
                         Juan Ciscomani and Jen Kiggans

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]