[Senate Report 114-148]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 240
114th Congress      }                                   {       Report
                                 SENATE
 1st Session        }                                   {      114-148

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

 
 A BILL TO REQUIRE THE SECRETARY OF VETERANS AFFAIRS TO REVOKE BONUSES 
 PAID TO EMPLOYEES INVOLVED IN ELECTRONIC WAIT LIST MANIPULATIONS, AND 
                           FOR OTHER PURPOSES

                                _______
                                

               September 28, 2015.--Ordered to be printed

                                _______
                                

         Mr. Isakson, from the Committee on Veterans' Affairs,
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 627]

    The Committee on Veterans' Affairs (hereinafter, ``the 
Committee''), to which was referred the bill (S. 627), to amend 
title 38, United States Code (hereinafter, ``U.S.C.''), to 
prohibit awarding bonuses to employees of the Department of 
Veterans Affairs (hereinafter, ``VA'' or ``Department'') with 
respect to whom an adverse finding has been made by the 
Secretary, and for other purposes, having considered the same, 
reports favorably thereon with amendment and recommends that 
the bill, as amended, do pass.

                              Introduction

    On March 3, 2015, Senator Kelly Ayotte introduced S. 627, a 
bill to require the Secretary of Veterans Affairs to revoke 
bonuses paid to employees involved in electronic wait list 
manipulations. Senators Crapo, Flake, Klobuchar, McCaskill, 
Moran, Shaheen, and Thune are original cosponsors. Senators 
Cassidy and Toomey were later added as cosponsors of the bill. 
The bill was referred to the Committee.
    On June 3, 2015, Senator Bill Cassidy introduced S. 1496, 
the proposed Ensuring Department of Veterans Affairs Employee 
Accountability Act, which would require the Department of 
Veterans Affairs to retain a copy of any reprimand or 
admonishment received by an employee of the Department in the 
permanent record of the employee. The bill was referred to the 
Committee.

                           Committee Hearing

    On May 13, 2015, the Committee held a hearing on pending 
benefits legislation. Testimony on S. 627 as introduced was 
offered by: David R. McLenachen, Acting Deputy Under Secretary 
for Disability Assistance, Department of Veterans Affairs; 
Anthony Kurta, Deputy Assistant Secretary of Defense, Military 
Personnel Policy, Department of Defense; Teresa W. Gerton, 
Deputy Assistant Secretary of Policy, Veterans' Employment and 
Training Service, Department of Labor; Alphonso Maldon, Jr., 
Chairman, Military Compensation and Retirement Modernization 
Commission; Jeffrey E. Phillips, Executive Director, Reserve 
Officers Association; and Aleks Morosky, Deputy Legislative 
Director, National Legislative Service, Veterans of Foreign 
Wars.

                           Committee Meeting

    After carefully reviewing the testimony from the foregoing 
hearing, the Committee met in open session on July 22, 2015, to 
consider, among other legislation, an amended version of 
S. 627, consisting of provisions from S. 627 as introduced and 
S. 1496 and changes suggested during the testimony noted above. 
The Committee voted, by voice vote, to report favorably S. 627 
as amended.

                     Summary of S. 627 as Reported

    S. 627, as reported (hereinafter, ``the Committee bill''), 
consists of two sections, summarized below:

    Section 1 would add a section to title 38, U.S.C., 
providing that, notwithstanding any other provision of law, in 
a case in which the Secretary of Veterans Affairs makes an 
adverse finding relating to a VA employee, the Secretary may 
not award a bonus to that employee until the earlier of:

    1. The date 5 years after the end of the fiscal year in 
which the adverse finding was made; or
    2. The date the finding is found to have been made in 
error.

    Section 1 would provide authorization to the Secretary to 
base such an adverse finding on an investigation by, 
determination of, or information provided by the VA Inspector 
General or another senior ethics official from VA or the 
Comptroller General of the United States in connection with 
that official carrying out an official activity, authority, or 
function.
    If the Secretary makes an adverse finding, the Secretary 
must, after notice and an opportunity for a hearing, issue an 
order directing the employee to repay the amount of any bonus 
awarded during the year during which the adverse finding is 
made, unless the finding is found to have been made in error.
    For purposes of that authority, section 1 of the Committee 
bill would set forth the following definitions:

    1. An ``adverse finding'' for these purposes would be 
defined to mean a determination that the conduct of the 
employee:
          a. Violated a VA policy for which the employee may be 
        removed or suspended, or
          b. Violated a law for which the employee may be 
        imprisoned for more than 1 year.
    2. A ``bonus'' for these purposes would be defined to 
include an award under chapter 45 of title 5, U.S.C., an award 
under section 5384 of title 5, U.S.C., and a retention bonus 
under section 5754 of title 5, U.S.C.

    Section 2 would add a section to title 38, U.S.C., 
providing that, if any VA employee receives a reprimand or 
admonishment, the Secretary must retain a copy of the reprimand 
or admonishment in the permanent record of the employee as long 
as the employee is employed by VA.

                       Background and Discussion


Sec. 1. Prohibition on award of bonuses to employees subject to adverse 
        findings.

    Section 1 of the Committee bill, which is derived from 
S. 627 as introduced, would prohibit awarding bonuses to 
employees of the Department of Veterans Affairs with respect to 
whom an adverse finding has been made by the Secretary, by 
amending chapter 7 of title 38, U.S.C., by adding a new 
section, ``Section 714. Prohibition on award of bonuses to 
employees subject of adverse findings.''
    Background. In spring 2014, reports revealed that not only 
were veterans waiting months to receive health care at the 
Phoenix VA Medical Center but VA employees were manipulating 
the medical appointment system to make it appear as though 
timely health care was being provided. The delay had huge 
implications in terms of the health of the veteran and 
negatively impacted timely care. Further, it exposed not just 
an isolated issue but systemic failures throughout the VA 
health care system.
    In response to the scandal, Senator Ayotte introduced 
S. 627, bipartisan legislation aimed at improving 
accountability at VA. In a statement for the record before the 
Committee on May 13, 2015, Senator Ayotte stated, ``To make 
matters worse, in the aftermath of the wait list scandal, the 
VA failed to sufficiently hold those who manipulated the wait 
lists responsible. It is outrageous that VA employees who 
deliberately manipulated wait lists receive bonus pay at 
taxpayers' expense.''\1\
---------------------------------------------------------------------------
    \1\Testimony of the Honorable Kelly Ayotte, during a hearing 
entitled, ``Pending Benefits Legislation,'' before the Senate Committee 
on Veterans' Affairs, May 13, 2015.
---------------------------------------------------------------------------
    In 2013, according to VA, the Secretary issued $2,827,377 
in bonuses to Senior Executive Service employees. VA based 
employee bonuses, among other factors, on wait time metrics 
thereby creating an incentive to misrepresent data in order to 
maximize one's bonus. Many of the employees that received 
performance awards were responsible for the negligence at 
Phoenix and other VA medical facilities around the country.
    During the consideration of the Committee bill, Senator 
Cassidy stated,

        ``Question: Why do we need this bill? When the VA 
        scandal erupted in Phoenix last year, then-VA Secretary 
        Eric Shinseki rescinded the performance award given in 
        2013 to the career Senior Executive who ran the VA's 
        Phoenix Health Care System, a bonus that the Department 
        said was awarded because of an administrative error. 
        The employee appealed and a Federal judge directed the 
        VA to repay the bonus, despite the fact that the 
        employee had improperly accepted more than $13,000 in 
        gifts from lobbyists and failed to report them and 
        manipulated data to conceal excessive wait times for 
        veterans seeking health care. The judge determined, 
        however, that the VA did not have the authority to 
        rescind her bonus.
          ``This is why people do not trust the VA. Here is a 
        woman who, again, took $13,000 in gifts from lobbyists, 
        did not report, and then manipulated data, and 
        nonetheless she gets a bonus. Now, if we want to 
        improve the VA system, we need to focus on the quality 
        of the workforce, and workforce morale is seriously 
        affected by those who have failed to do their jobs, yet 
        nonetheless receive bonuses, or do not have information 
        on reprimands retained in their permanent record.''\2\
---------------------------------------------------------------------------
    \2\Statement by the Honorable Bill Cassidy, during a business 
meeting entitled, ``Business Meeting: Markup of Pending Legislation,'' 
before the Senate Committee on Veterans' Affairs, July 22, 2015.

    The problems that plague VA go beyond wait lists 
manipulation; therefore, the Committee bill prohibits the 
awarding of bonuses for any adverse finding relating to a VA 
employee. The Committee worked closely with Senator Ayotte to 
ensure a prospective solution to prevent VA from awarding 
bonuses to employees who are negligent in their duties. The 
Committee bill does not give the Secretary the authority to 
retroactively revoke bonuses but upon enactment of the 
legislation provides the authority to revoke bonuses from 
employees for which an adverse finding was made. The Committee 
believes that prospectively, if a VA employee undermines the 
mission of the Department and violates its policies then at the 
very least, the employee should be directed to repay the amount 
of the bonus he/she received. Malfeasance at VA cannot be 
tolerated, much less rewarded.
    Committee Bill. Section 1 would add a section to title 38, 
U.S.C., providing that, notwithstanding any other provision of 
law, in a case in which the Secretary of Veterans Affairs makes 
an adverse finding relating to a VA employee, the Secretary may 
not award a bonus to that employee until the earlier of:

    1. The date 5 years after the end of the fiscal year in 
which the adverse finding was made; or
    2. The date the finding is found to have been made in 
error.

    Section 1 would provide authorization to the Secretary to 
base such an adverse finding on an investigation by, 
determination of, or information provided by the VA Inspector 
General or another senior ethics official from VA or the 
Comptroller General of the United States in connection with 
that official carrying out an official activity, authority, or 
function.
    If the Secretary makes an adverse finding, the Secretary 
must, after notice and an opportunity for a hearing, issue an 
order directing the employee to repay the amount of any bonus 
awarded during the year during which the adverse finding is 
made, unless the finding is found to have been made in error.
    For purposes of that authority, section 1 of the Committee 
bill would set forth the following definitions:

    1. An ``adverse finding'' for these purposes would be 
defined to mean a determination that the conduct of the 
employee:
          a. Violated a VA policy for which the employee may be 
        removed or suspended, or
          b. Violated a law for which the employee may be 
        imprisoned for more than 1 year.
    2. A ``bonus'' for these purposes would be defined to 
include an award under chapter 45 of title 5, U.S.C., an award 
under section 5384 of title 5, U.S.C., and a retention bonus 
under section 5754 of title 5, U.S.C.

    The Committee has heard from veterans, VA employees, and 
the American taxpayer on the need for employee accountability 
at VA. These are common sense solutions that should be enacted 
to protect taxpayer dollars from wasteful bonuses and put an 
end to the practice of rewarding bad behavior at VA.

Sec. 2. Retention of records of reprimands and admonishments received 
        by employees of the Department of Veterans Affairs.

    Section 2 of the Committee bill, which is derived from 
S. 1496, would require the Secretary to retain a copy of any 
reprimand or admonishment received by an employee of the 
Department in the permanent record of the employee, by amending 
chapter 7 of title 38, U.S.C., by adding a new section, 
``Section 715. Record of reprimands and admonishments.''
    Background. Federal agencies have a number of ways, 
including reprimands and admonishments, to address misconduct 
among their employees and ensure a high quality workforce. 
According to VA, a reprimand is a ``written statement of 
censure given to an employee for misconduct'' while an 
admonishment is a ``written statement of censure given to an 
employee for a minor act of misconduct.''\3\ Under VA policy, 
if an employee receives a ``reprimand'' for a certain offense, 
it remains in his/her employee file for 3 years and, if an 
employee receives an ``admonishment,'' it remains in his/her 
file for 2 years.\4\ By only temporarily maintaining records of 
misconduct, it creates a blind spot for the Department and 
reduces its ability to hold employees accountable. The 
Committee bill is a common sense solution to ensure that 
complete records of offenses are kept and any continued pattern 
of misconduct is easily identifiable.
---------------------------------------------------------------------------
    \3\Department of Veterans Affairs, VA Handbook 5021, Employee/
Management Relations, http://www1.va.gov/vapubs/
viewPublication.asp?Pub_ID=778&FType=2
    \4\VA Handbook 5021, http://www.va.gov/vapubs/
viewPublication.asp?Pub_ID=686&FType=2
---------------------------------------------------------------------------
    Committee Bill. Section 2 of the Committee bill would amend 
chapter 7 of title 38, U.S.C., to require the Secretary to 
retain any reprimand or admonishment received by an employee in 
his/her permanent record as long as the employee is employed by 
VA.
    The Committee believes that maintaining a permanent record 
of a VA employee's previous misconduct serves as a powerful 
deterrence mechanism for future misconduct. Further, if an 
employee's misconduct warrants removal, a record may help to 
substantiate the case and increase accountability.

                      Committee Bill Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office 
(hereinafter, ``CBO''), estimates that enactment of S. 627 as 
amended would, relative to current law, not affect direct 
spending or revenues. Enactment of the Committee bill would not 
affect the budget of state, local, or tribal governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                               Congressional Budget Office,
                                     Washington, DC, July 30, 2015.
Hon. Johnny Isakson,
Chairman,
Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 627, a bill to 
require the Secretary of Veterans Affairs to revoke bonuses 
paid to employees involved in electronic wait list 
manipulations, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                                Keith Hall,
                                                          Director.

  Enclosure.

S. 627--A bill to require the Secretary of Veterans Affairs to revoke 
        bonuses paid to employees involved in electronic wait list 
        manipulations, and for other purposes

    S. 627 would prohibit the Department of Veterans Affairs 
(VA) from paying awards and bonuses to employees who have 
violated certain laws or VA policies. In addition, such 
employees would be required to repay any awards or bonuses 
received during a year in which VA makes a determination of 
such a violation.
    The bill also would require VA to retain records of all 
admonishments and reprimands in employees' permanent records 
for the duration of their employment by the department. CBO 
estimates that implementing S. 627 would increase spending 
subject to appropriation by less than $500,000 over the 2016-
2020 period; such spending would be subject to the availability 
of appropriated funds.
    Enacting S. 627 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 627 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Dwayne M. 
Wright.
    The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that S. 627 would not entail any regulation of 
individuals or businesses or result in any impact on the 
personal privacy of any individuals and that the paperwork 
resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the following is a tabulation of 
votes cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its July 22, 2015, meeting. One amendment 
was offered by Senator Brown to modify the bonus prohibition 
language and strike the section on retaining reprimands. This 
amendment was not agreed to by a roll call vote.

 
----------------------------------------------------------------------------------------------------------------
                Yeas                                 Senator                                 Nays
----------------------------------------------------------------------------------------------------------------
                                     Mr. Moran                                                                X
                                     Mr. Boozman                                                              X
                                     Mr. Heller                                                               X
                                     Mr. Cassidy                                                              X
                                     Mr. Rounds                                                               X
                                     Mr. Tillis                                                               X
                                     Mr. Sullivan                                                             X
                                 X   Mr. Blumenthal
                                 X   Mrs. Murray
                                 X   Mr. Sanders
                                 X   Mr. Brown
                                 X   Mr. Tester
                                 X   Ms. Hirono
                                 X   Mr. Manchin
                                     Chairman Isakson                                                         X
----------------------------------------------------------------------------------------------------------------
                                 7   TALLY                                                                    8
----------------------------------------------------------------------------------------------------------------


    On that date, the Committee voted by voice vote to order 
favorably reported with amendments S. 627, a bill to prohibit 
the Secretary of Veterans Affairs from awarding bonuses to 
employees of the Department of Veterans Affairs with respect to 
whom an adverse finding has been made by the Secretary, and for 
other purposes.

                             Agency Report

    On May 13, 2015, David R. McLenachen, Acting Deputy Under 
Secretary for Disability Assistance, Veterans Benefits 
Administration, appeared before the Committee on Veterans' 
Affairs and submitted testimony on, among other things, S. 627. 
Excerpts from this statement are reprinted below:

    PREPARED STATEMENT OF DAVID R. McLENACHEN, ACTING DEPUTY UNDER 
   SECRETARY FOR DISABILITY ASSISTANCE, U.S. DEPARTMENT OF VETERANS 
                                AFFAIRS

    Chairman Isakson and Members of the Committee, thank you 
for the opportunity to present VA's views on several bills that 
are pending before the Committee. As you just mentioned, Mr. 
Chairman, I am accompanied by Ms. Szybala. She is our Assistant 
General Counsel. She will address any questions that you may 
have with regard to S. 627 on revocation of bonuses.

           *       *       *       *       *       *       *


                                 S. 627

    S. 627 would require VA to identify VA employees who, 
during fiscal years 2011 through 2014, contributed to the 
purposeful omission of the name of one or more Veterans from a 
VA medical facility's electronic wait list or supervisors of 
these employees who knew or reasonably should have known about 
the employee's actions and received a ``bonus'' in part as a 
result of the purposeful omission. The bill would further 
require VA to identify these responsible individuals within 180 
days after VA's Office of the Inspector General (OIG) submits a 
report to Congress about inappropriate scheduling practices at 
VA medical facilities, if such report is based on 
investigations carried out by the OIG in calendar year 2014. VA 
would also be required, after providing notice and an 
opportunity for a hearing, to order that these individuals 
repay bonuses that they received as a result of a purposeful 
omission. An individual who has been ordered to repay a bonus 
may appeal that order to the Merit Systems Protection Board 
(MSPB).
    VA has numerous constitutional concerns about the bill, 
including concerns arising under the Fifth Amendment Takings 
Clause, the Due Process Clause, and the Ex Post Facto Clause. 
VA also has policy and procedural concerns about the bill. VA 
looks forward to working with the Committee in order to address 
these concerns.
    S. 627 is a bill for which there is no precedent. No 
Federal agencies have the authority to require employees to 
repay past monetary performance awards or bonuses that were 
given in accordance with law and without conditions or 
contractual obligations. This legislation threatens a number of 
core constitutional rights related to property and due process 
that the Framers of the Constitution sought to protect,--and 
the bill would likely give rise to litigation. VA believes that 
employees should not be penalized by legislation that attaches 
new penalties on the basis of past behavior and transactions 
and should have protection from deprivation of life, liberty, 
or property without due process of law. Further, performance 
awards are intended to be a key tool in motivating employees to 
provide outstanding service to Veterans, and the value of that 
tool should not be undermined by measures that would limit 
employee confidence in the performance award system. By 
singling out VA employees for punitive measures, the 
legislation would likely serve to demoralize a workforce 
dedicated to serving Veterans and hurt VA's efforts to recruit 
and retain high performing employees. VA is concerned that 
S. 627, if passed, would give rise to numerous lawsuits 
challenging the constitutionality of the provisions and VA's 
actions pursuant to it.
    For these reasons, and as further explained in the below 
discussion, VA strongly opposes this legislation.
    Implementing the bill, as written, would also be 
impractical for the government. First, the bill does not define 
the term ``bonus'' as a ``performance award.'' In accordance 
with law, VA does not give ``bonuses,'' but rather awards an 
employee based on his or her performance. Second, the type of 
hearing that needs to be provided to an employee before a 
repayment order must be issued is not specifically addressed in 
the bill. While the bill states that hearings ``shall be 
conducted in accordance with regulations relating to hearings 
promulgated by the Secretary under chapter 75 of title 5, 
United States Code,'' chapter 75 references various types of 
hearings. Consequently, the type of hearing that would need to 
be provided is not addressed in the bill. Third, the bill 
raises a number of tax questions. For example, should the 
Department of Treasury treat a repayment of a performance award 
as adjustments to prior year compensation, even though the 
award may have been paid a number of years ago? This tax 
question, while not addressed in the bill, would have to be 
addressed.
    As noted above, the bill would raise a number of 
constitutional issues. First, the bill may run afoul of the 
Fifth Amendment's Takings Clause by requiring employees to 
return property that was given to them unconditionally by the 
government. The Takings Clause prevents the government from 
``depriving private persons of vested property rights except 
for a ``public use'' and upon payment of ``just compensation.'' 
Landgraf v. USI Film Products, 511 U.S. 244, 266 (1994). In the 
case of an employee who has already been paid a bonus by the 
government, that bonus is the property of the employee. The 
taking would occur if the government collects the bonus or even 
a portion thereof without just compensation. See, e.g., Nat'l 
Educ. Bd. v. Ret. Bd. of R.I., 172 F.3d 22, 30 (1st Cir. 1999) 
(the Takings Clause protects ``[p]ension payments actually made 
to retirees'').
    The bill may have a ``retroactive effect'' by increasing an 
employee's liability for conduct that preceded the enactment of 
the bill. See Landgraf, 511 U.S. at 280 (a bill has a 
``retroactive effect'' if it ``increases a party's liability 
for past conduct''). ```The retroactive aspects of legislation, 
as well as the prospective aspects, must meet the test of due 
process, and the justifications for the latter may not suffice 
for the former.''' Pension Ben. Guar. Corp. v. R.A. Gray & Co., 
467 U.S. 717, 730 (1984) (quoting Usery v. Turner Elkhorn 
Mining Co., 428 U.S. 1, 16-17 (1976)). Under the bill, an 
employee must repay a bonus based on conduct that preceded the 
enactment of the bill. Because the employee was not aware that 
he or she would have to repay the bonus at the time of the 
conduct, the bill may have a ``retroactive effect'' and may 
implicate the employees' due process rights to fair notice. See 
BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 570 (1996) 
(``Elementary notions of fairness enshrined in our 
constitutional jurisprudence dictate that a person receive fair 
notice not only of the conduct that will subject him to 
punishment, but also of the severity of the penalty that a 
State may impose.'').
    Finally, the legislation may raise constitutional Ex Post 
Facto Clause concerns. The Ex Post Facto Clause prohibits laws 
that ``impose[] a punishment for an act which was not 
punishable at the time it was committed; or impose[] additional 
punishment to that then prescribed.'' Cummings v. Missouri, 71 
U.S. (4 Wall.) 277, 325-26 (1867). In Hiss v. Hampton, 338 F. 
Supp. 1141, 1147-48 (D.D.C. 1972), a three judge panel in the 
U.S. District Court for the District of Columbia held that a 
law denying payment of pensions to former employees who falsely 
testified with respect to Government service was an ex post 
facto law as it pertained to the conduct of those employees 
which preceded the passage of the law. Id. at 1148. According 
to the court in Hiss, ``[t]he proper function of [law] is to 
guide and control present and future conduct, not to penalize 
former employees for acts done long ago.'' Id. at 1148-49; see 
also Peugh v. United States, 133 S. Ct. 2072, 2085 (2013) 
(noting that ``the [Ex Post Facto] Clause ensures that 
individuals have fair warning of applicable laws and guards 
against vindictive legislative action''). As currently drafted, 
the bill could potentially raise some of the same issues as the 
provision at issue in Hiss.
    Based on the implementation concerns discussed above, VA is 
unable to determine the costs for this bill. It is important to 
note, however, that apart from costs to investigate and 
identify the employees, as required by the bill, VA would also 
have to expend significant resources to conduct a hearing prior 
to issuing a repayment order, defend its repayment order before 
the MSPB, and assist the Department of Justice in defending the 
order before the U.S. Court of Appeals for the Federal Circuit.

           *       *       *       *       *       *       *


 MINORITY VIEWS OF HON. RICHARD BLUMENTHAL, RANKING MEMBER, HON. PATTY 
MURRAY, HON. BERNARD SANDERS, HON. SHERROD BROWN, HON. JON TESTER, AND 
 HON. MAZIE K. HIRONO ON S. 627, AS REPORTED BY THE VETERANS' AFFAIRS 
                               COMMITTEE

    On July 22, 2015, the Senate Committee on Veterans' Affairs 
(hereinafter, ``the Committee'') voted, by voice vote, to 
approve S. 627, as amended, a bill to prohibit awarding bonuses 
to employees of the Department of Veterans Affairs 
(hereinafter, ``VA'' or ``Department'') subject to adverse 
findings (hereinafter, ``S. 627''). We fully support bringing 
greater accountability to VA, and that includes ensuring that 
an employee does not receive a bonus as a result of misconduct. 
We have concerns, however, with S. 627 as reported out of 
Committee, which we will outline in these supplemental views.
    Section 1(a)(1) of S. 627 would provide that in a case in 
which the VA ``Secretary makes an adverse finding relating to 
an employee of the Department, the Secretary may not award a 
bonus'' to a VA employee. Section 1(a)(2) of S. 627 would 
provide that the Secretary of Veterans Affairs ``may'' base an 
``adverse finding'' on an investigation by, a determination of, 
or information provided by the VA Office of the Inspector 
General, a senior VA ethics official, or the Comptroller 
General of the United States. We are concerned that section 1 
of S. 627 does not require the Secretary to base an adverse 
finding on the determination of an independent decisionmaker. 
Moreover, S. 627's definition of ``adverse finding'' includes 
conduct inconsistent with ``a policy of the Department for 
which the employee may be removed or suspended.'' We are 
concerned that this definition is vague and could lead to 
abuse. To cure these two defects, Senator Brown offered an 
amendment during the Committee's July 22, 2015 business 
meeting. Senator Brown's amendment, which was supported by all 
the Minority Members of the Committee, would set appropriate 
limits on section 1 of S. 627 by requiring that the Secretary 
base an adverse finding on the determination of an independent 
decisionmaker and by requiring that an independent 
decisionmaker also determine whether the employee violated a 
policy of the Department. These two technical corrections would 
ensure that bonus bans are not arbitrarily imposed by VA 
managers. Unfortunately, the Brown amendment was rejected.
    In addition to setting appropriate limits to section 1 of 
S. 627, the Brown amendment would have struck section 2 of 
S. 627. Section 2 of S. 627 would require VA to retain a copy 
of admonishment or reprimand by a VA employee in the employee's 
permanent record as long as the employee is employed by VA. 
Currently, letters of reprimand and admonishment are only held 
in a VA employee's record for a limited time: letters of 
admonishment normally remain in an employee's Official 
Personnel File (hereinafter, ``OPF'') for two years, and 
letters of reprimand normally remain in the employee's OPF for 
three years.\1\ In testimony before the House Committee of 
Veterans' Affairs, VA noted that it is the standard practice 
across the Federal Government, including the Department of 
Defense, for letters of reprimand and/or admonishment to be 
retained on a time-limited basis.\2\ According to VA, making 
letters of reprimand or admonishment permanent would prevent VA 
managers from ``settling workplace grievances with employees 
with terms that would limit the amount of time these documents 
remain in the employee's permanent record,'' and it would 
restrict VA managers from removing these documents as a ``term 
of settlement.''\3\ Both of these tools are frequently used by 
VA managers to ``resolve complaints before they go into costly 
and high-risk'' litigation.\4\ These tools also allow VA 
managers to promote good performance of employees ``because 
they are usually conditioned upon no further misconduct of the 
type that initially led to the reprimand or admonishment.''\5\ 
Moreover, making letters of reprimand or admonishment permanent 
in an employee's OPF may:
---------------------------------------------------------------------------
    \1\See testimony of Robert Worley, Director, Education Service, 
Veterans Benefits Administration, during a legislative hearing before 
the Subcommittee on Economic Opportunity of the House Committee of 
Veterans Affairs, March 24, 2015, available at http://
veterans.house.gov/sites/republicans.veterans.house.gov/files/
Testimony%20WorleyIIUSAFR.pdf
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        `` * * * have an unintended chilling effect on managers 
        who, when faced with a decision to issue a letter of 
        admonishment or reprimand for a minor infraction or to 
        let the matter drop with just an oral warning, may 
        elect to choose the lesser action in order to avoid 
        leaving the employee with a permanent stain on his or 
        her record.''\6\
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    Besides the substantive issues with the provision that we 
have identified, section 2 of S. 627 was derived from S. 1496, 
a bill that has not been considered in a legislative hearing. 
For a significant and controversial provision like section 2 of 
S. 627, the Committee should have held a legislative hearing to 
give all Members the opportunity to hear from witnesses and 
fully understand the consequences of this provision.

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                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman).

Title 38. Veterans' Benefits

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Part I. General Provisions

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                          Chapter 7. Employees

SEC.

701. PLACEMENT OF EMPLOYEES IN MILITARY INSTALLATIONS.

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[712. REPEALED.]

713. SENIOR EXECUTIVES: REMOVAL BASED ON PERFORMANCE OR MISCONDUCT.

714. PROHIBITION ON AWARD OF BONUSES TO EMPLOYEES SUBJECT OF ADVERSE 
                    FINDINGS.

715. RECORD OF REPRIMANDS AND ADMONISHMENTS.

           *       *       *       *       *       *       *


SEC. 714. PROHIBITION ON AWARD OF BONUSES TO EMPLOYEES SUBJECT OF 
                    ADVERSE FINDINGS

    (a) Prohibition.--(1) Notwithstanding any other provision 
of law, in a case in which the Secretary makes an adverse 
finding relating to an employee of the Department, the 
Secretary may not award a bonus to such employee until the 
earlier of--
          (A) the date that is five years after the end of the 
        fiscal year in which the adverse finding was made; or
          (B) the date that the finding is found to have been 
        made in error.
    (2) The Secretary may base an adverse finding under 
paragraph (1) on an investigation by, determination of, or 
information provided by the Inspector General of the Department 
or another senior ethics official of the Department or the 
Comptroller General of the United States in connection with the 
carrying out by such official of an activity, authority, or 
function under a provision of law other than this section.
    (b) Previously Awarded Bonuses.--If the Secretary makes an 
adverse finding relating to an employee under subsection (a), 
the Secretary, after notice and an opportunity for a hearing, 
shall issue an order directing the employee to repay the amount 
of any bonus awarded to the employee during the year during 
which the adverse finding is made, unless such finding is found 
to have been made in error.
    (c) Definitions.--In this section:
          (1) The term ``adverse finding'' relating to an 
        employee means a determination that the conduct of the 
        employee--
                  (A) violated a policy of the Department for 
                which the employee may be removed or suspended; 
                or
                  (B) violated a law for which the employee may 
                be imprisoned for more than 1 year.
          (2) The term ``bonus'' means any bonus or cash award, 
        including--
                  (A) an award under chapter 45 of title 5;
                  (B) an award under section 5384 of such 
                title; and
                  (C) a retention bonus under section 5754 of 
                such title.

SEC. 715. RECORD OF REPRIMANDS AND ADMONISHMENTS

    If any employee of the Department receives a reprimand or 
admonishment, the Secretary shall retain a copy of such 
reprimand or admonishment in the permanent record of the 
employee as long as the employee is employed by the Department.

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