[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
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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
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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
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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
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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.]
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A P P E N D I X
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Prepared Statements of Witnesses
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Prepared Statement of Michael Missal
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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
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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]