[Senate Report 114-226]
[From the U.S. Government Publishing Office]
Calendar No. 386
114th Congress } { Report
SENATE
2d Session } { 114-226
_______________________________________________________________________
STOP WASTEFUL FEDERAL BONUSES
ACT OF 2015
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 742
TO APPROPRIATELY LIMIT THE AUTHORITY TO AWARD BONUSES TO EMPLOYEES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
March 14, 2016.--Ordered to be printed
_______
U.S. GOVERNMENT PUBLISHING OFFICE
59-010 WASHINGTON : 2016
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Mary Beth Schultz, Minority Chief Counsel
John A. Kane, Minority Senior Governmental Affairs Advisor
Laura W. Kilbride, Chief Clerk
Calendar No. 386
114th Congress } { Report
SENATE
2d Session } { 114-226
======================================================================
STOP WASTEFUL FEDERAL BONUSES ACT OF 2015
_______
March 14, 2016.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 742]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 742) to
appropriately limit the authority to award bonuses to
employees, having considered the same, reports favorably
thereon with an amendment and recommends that the bill, as
amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................4
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............5
I. Purpose and Summary
The purpose of S. 742, the Stop Wasteful Federal Bonuses
Act of 2015, is to ensure agencies are not giving bonuses to
employees that engage in serious misconduct. Specifically, this
bill would prevent a Federal agency from awarding bonuses to an
employee for five years after an adverse finding is made
relating to that employee and require repayment of any bonus
awarded in the year in which an adverse finding is made. An
adverse finding is a finding that the employee violated a
policy for which the employee could be terminated or suspended
for at least fourteen days or violated a law for which the
employee could be imprisoned for more than one year. An adverse
finding may be based on information known by the employee's
supervisor or human resources department, a Government
Accountability Office (GAO) or inspector general (IG) report,
or any other source of information made available to the
employee's chain of command. If a bonus had previously been
awarded in the same year as an adverse finding is made, agency
managers must attempt to recover that bonus, subject to a
notice and opportunity for a hearing. The Merit System
Protection Board (MSPB) can hear appeals about whether
misconduct fits the definition of ``adverse finding.''
II. Background and the Need for Legislation
Federal law governs employee awards and incentives, and
grants agencies authorities to help them manage their
workforce. While performance awards can be a valuable tool for
Federal managers to incentivize and reward good employees, they
are inappropriate in cases where employees have engaged in
serious misconduct or criminal behavior.
The Committee is concerned that bonuses are being awarded
to Federal employees even during periods in which those
employees were engaging in misconduct. For example, an Internal
Revenue Service (IRS) IG report revealed that $2.8 million was
awarded in bonuses to 2,800 employees with conduct violations
between 2010 and 2012.\1\ The IG found that, too often, the IRS
does not consider misconduct when determining bonuses.\2\
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\1\Treasury Inspector Gen. for Tax Admin.: The Awards Program
Complied with Fed. Regulations, but Some Emp. With Tax and Conduct
Issues Received Awards, Ref. No. 2014-10-007 (Mar. 21, 2014), available
at http://www.treasury.gov/tigta/auditreports/2014reports/
201410007fr.pdf.
\2\Id.
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While the amount of awards distributed to Federal employees
has fluctuated or declined in recent years--awards peaked in
2011 at $439 million\3\--the scope of potentially improper
award allocations is still broad. The agencies awarding the
most total bonus compensation each year are the Patent and
Trademark Office ($33.8 million), the Veterans Health
Administration ($27.3 million), and Customs and Border
Protection ($22.1 million).\4\
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\3\See generally Asbury Park Press Data Universe, available at
http://php.app.com/agent/federalemployees/search.
\4\Id.
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Further illustrating the disconnect between bonuses and
actual performance is an IG report finding that large numbers
of Patent and Trademark Office employees did not do any work at
all for weeks at a time and still received bonuses.\5\
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\5\See generally Abuse of USPTO's Telework Program: Ensuring
Oversight, Accountability and Quality: Hearing Before the H. Comm. on
Oversight & Gov't Reform & H. Comm. on the Judiciary, 113th Cong.
(2013) (statement of the Honorable Todd J. Zinzer), available at
https://www.oig.doc.gov/OIGPublications/OIG-15-009-T.pdf.
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Even after being fired for her misconduct, Phoenix Veterans
Affairs Health Care System director Sharon Helman's bonus was
reinstated after a judge ruled that the agency lacked
sufficient authorities to revoke performance awards previously
paid to her.\6\
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\6\See Sharon M. Helman v. U.S. Dep't of Veterans Affairs, P.S.
Docket No. VA 14-397 (Feb. 25, 2015), available at https://
www.govexec.com/media/gbc/docs/pdfs_edit/031315kl2.pdf.
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The former Deputy Chief Business Officer for Purchased Care
at the Department of Veterans Affairs (VA), Patricia Gheen,
retired in May 2012 after a VA IG investigation found that she
attempted to steer more than $2 million in contracts to a firm
that employed her former boss.\7\ Gheen received nearly $35,000
in bonuses while employed at the VA.\8\ Sheila Cullen, director
of the VA's Sierra Pacific Network, received a $21,000 bonus
the year the IG found that she got the job by using a
fabricated resume,\9\ and a $23,000 bonus the next year.\10\
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\7\Dep't of Veterans Affairs Office of Inspector Gen.: Review Of
Alleged Misuse of VA Funds To Develop the Health Care Claims Processing
Sys., No. 14-00730-126 (Mar. 2, 2015), available at http://www.va.gov/
oig/pubs/VAOIG-14-00730-126.pdf.
\8\Id.
\9\Jim McElhatton, Resume-padding VA Employee Got Big Bonuses,
Washington Times (June 16, 2014), available at http://
www.washingtontimes.com/news/2014/jun/16/resume-padding-va-employee-
got-big-bonuses/?page=all.
\10\Id.
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Some agencies have internal policies related to bonuses for
employees involved in serious misconduct. The Drug Enforcement
Agency (DEA), for example, prohibits employees from receiving
promotions or performance awards for three years after being
disciplined for misconduct or while an investigation is
pending.\11\ However, the DEA did not follow this policy when
it awarded bonuses and time-off awards to employees who were
disciplined for patronizing prostitutes, visiting a brothel
overseas, sexually harassing a Foreign Service National, and
attending sex parties.\12\
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\11\Office of Inspector Gen.: Bonuses and Other Favorable Personnel
Actions for Drug Enforcement Administration Employees Involved in
Alleged Sexual Misconduct Incidents (Mar. 2015), available at https://
oig.justice.gov/reports/2015/e1601.pdf#page=1.
\12\Id.
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This example in particular illustrates that some Federal
managers award bonuses to employees whom they know to have
engaged in serious misconduct. A performance award or bonus
should be reserved for employees who excel at their work for
the American people.
S. 742 would help address the most extreme of these
systemic problems by barring employees who commit serious
misconduct from receiving bonuses and providing a mechanism to
recover previously awarded bonuses when the agency learns of
misconduct after the bonus has already been awarded. The
provisions of this bill are triggered if the head of an agency
makes an ``adverse finding'' that the employee either violated
an agency policy that would warrant removal or suspension of
not less than fourteen days, or violated a law for which the
employee could be imprisoned for more than one year. An adverse
finding may be based on, among other things, information,
investigations, or findings of an IG, the Comptroller General
of the United States, or another senior ethics official of an
agency.
III. Legislative History
Senator Kelly Ayotte (R-N.H.) introduced S. 742 on March
16, 2015 with Senators Claire McCaskill (D-Mo.) and Deb Fischer
(R-Neb.).\13\ The bill was referred to the Committee on
Homeland Security and Governmental Affairs.
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\13\This bill was previously introduced in the 113th Congress by
Senator Ayotte as S. 2263.
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The Committee considered S. 742 at a business meeting on
June 24, 2015. During the business meeting, Senator Ayotte
offered a modified substitute amendment that strengthened due
process procedures and restricted ``adverse findings'' to be
those that can carry a penalty of suspension for two weeks or
more. The modified substitute amendment was adopted by
unanimous consent. The Committee ordered the bill, as amended
by the Ayotte Substitute Amendment as modified, reported
favorably by voice vote. Members present for the vote were
Senators Johnson, McCain, Lankford, Ayotte, Ernst, Sasse,
Carper, Tester, Baldwin, Heitkamp, and Peters. Senator Tester
was recorded for the record as voting ``No''.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section provides the bill's short title, the ``Stop
Wasteful Federal Bonuses Act of 2015.''
Section 2. Bonuses
This section provides definitions for ``adverse finding'',
``agency'', and ``bonus''.
Under this section, the head of an agency shall not award a
bonus to an employee of the agency for a period of five years
after the head of an agency makes a qualifying adverse finding
against that employee. An adverse finding is a finding that the
employee violated a policy of the agency for which the employee
may be removed or suspended for at least fourteen days, or that
the employee violated a law for which the employee could be
imprisoned for longer than one year.
This section also lists some sources of information that
may be the basis for such a finding, including reports prepared
by the GAO, IG, and senior ethics officials. This is not
intended to be an exhaustive list.
This section further requires the head of an agency to
recover bonuses already paid to an employee in a year in which
an adverse finding is made, after notice and opportunity for a
hearing, in addition to appeal rights before the MSPB.
Finally, this section requires that as a condition of
receiving a bonus awarded after the date of enactment, a
Federal employee must sign a certification stating that the
employee will repay the bonus if so compelled under this
section.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
July 13, 2015.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 742, the Stop
Wasteful Federal Bonuses Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
S. 742--Stop Wasteful Federal Bonuses Act of 2015
S. 742 would amend federal law to prohibit a federal agency
from awarding a bonus to an employee for five years after an
adverse finding against the employee. The bill defines an
adverse finding as a determination that an employee violated
agency policy for which the employee could be removed or
suspended from employment for 14 or more days or that an
employee violated the law and could be imprisoned for more than
1 year. Under the bill all bonuses given to employees in the
same year as an adverse finding would be returned to the
agency.
Under current law, there is no prohibition on awarding
bonuses to federal employees. Information from the Department
of Veterans Affairs and the Internal Revenue Service indicates
that some employees with conduct and performance issues have
received bonuses. However, while the legislation would slightly
diminish the pool of people eligible for bonuses, CBO expects
it would not change the total amount of bonus money that could
be awarded. Therefore, CBO estimates that implementing S. 742
would not have a significant effect on the federal budget.
Enacting S. 742 could affect direct spending by some
agencies (such as the Tennessee Valley Authority) because they
are authorized to use receipts from the sale of goods, fees,
and other collections to cover their operating costs;
therefore, pay-as-you-go procedures apply. Because most of
those agencies can make adjustments to the amounts collected
and because we do not expect a significant number of returned
bonuses, CBO estimates that any net changes in direct spending
by those agencies would not be significant. Enacting the bill
would not affect revenues.
S. 742 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 742 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):
UNITED STATES CODE
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
CHAPTER 45--INCENTIVE AWARDS
* * * * * * *
Subchapter IV_Limitations on Bonus Authority
* * * * * * *
SEC. 4531. CERTAIN FORMS OF MISCONDUCT.
(a) Definitions.--In this section:
(1) Adverse finding.--
(A) In general.--The term `adverse finding'
means a determination by the head of the agency
employing an employee that the conduct of the
employee--
(i) violated a policy of the agency
for which the employee may be removed
or suspended for a period of not less
than 14 days; or
(ii) violated a law for which the
employee may be imprisoned for more
than 1 year.
(B) Basis.--A determination described in
subparagraph (A) may be based on an
investigation by, determination of, or
information provided by the Inspector General
or another senior ethics official of an agency
or the Comptroller General of the United
States, as part of carrying out an activity,
authority, or function of the Inspector
General, senior ethics official, or Comptroller
General, respectively, under a provision of law
other than this section.
(2) Agency.--The term `agency' has the meaning given
that term under section 551.
(3) Bonus.--The term `bonus' means any performance
award or cash award under--
(A) section 4505a;
(B) section 5384; or
(C) section 5754.
(b) Prohibition.--The head of an agency shall not award a
bonus to an employee of the agency until 5 years after the end
of the fiscal year during which the head of an agency makes an
adverse finding relating to the employee.
(c) After Bonus Awarded.--
(1) In general.--For a bonus awarded to an employee
after the date of enactment of this section, if the
head of the agency employing the employee makes an
adverse finding relating to the employee during the
year during which the bonus is awarded, the head of the
agency, after notice and an opportunity for a hearing,
shall issue an order directing the employee to repay
the amount of the bonus.
(2) Hearings.--A hearing under this paragraph shall
be conducted in accordance with regulations relating to
hearings promulgated by the head of the agency under
chapter 75.
(d) Condition of Receipt.--As a condition of receiving a
bonus awarded after the date of enactment of this section, an
employee of an agency shall sign a certification stating that
the employee shall repay the bonus in accordance with a final
order issued in accordance with subsection (c).
(e) Appeal.--An employee determined to be ineligible for a
bonus under subsection (b) or against whom an order is issued
under subsection (c) may appeal to the Merit Systems Protection
Board under section 7701.
[all]