[Senate Report 115-127]
[From the U.S. Government Publishing Office]
Calendar No. 167
115th Congress } { Report
SENATE
1st Session } { 115-127
_______________________________________________________________________
STOP IMPROPER FEDERAL BONUSES ACT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 696
TO AMEND TITLE 5, UNITED STATES CODE, TO APPROPRIATELY
LIMIT THE AUTHORITY TO AWARD BONUSES TO FEDERAL EMPLOYEES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 11, 2017.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
69-010 WASHINGTON : 2017
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Courtney J. Allen, Counsel
Margaret E. Daum, Minority Staff Director
Stacia M. Cardille, Minority Chief Counsel
Charles A. Moskowitz, Minority Senior Legislative Counsel
Katherine C. Sybenga, Minority Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 167
115th Congress } { Report
SENATE
1st Session } { 115-127
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STOP IMPROPER FEDERAL BONUSES ACT
_______
July 11, 2017.--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. 696]
[Including cost estimates of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 696) to amend title
5, United States Code, to appropriately limit the authority to
award bonuses to Federal employees, having considered the same,
reports favorably thereon with amendments 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..............................................5
IV. Section-by-Section Analysis......................................5
V. Evaluation of Regulatory Impact..................................6
VI. Congressional Budget Office Cost Estimate........................6
VII. Changes in Existing Law Made by the Bill, as Reported............7
I. Purpose and Summary
The purpose of S. 696, the Stop Improper Federal Bonuses
Act, is to prevent agencies from 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. 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 Office of Inspector General
(OIG) 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 the
misconduct fits the definition of ``adverse finding.''\1\
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\1\On March 14, 2016, the Committee approved S. 742, the Stop
Wasteful Federal Bonuses Act of 2015. That bill is almost identical to
S. 696. Accordingly, this committee report is in large part a
reproduction of Chairman Johnson's committee report for S. 742, S. Rep.
No. 114-226 (2016).
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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) OIG report revealed that $2.8 million was
awarded in bonuses to 2,800 employees with conduct violations
between 2010 and 2012.\2\ Another OIG report found that,
between 2008 and 2013, the IRS gave nearly $145,000 in bonuses
to employees within one year of being disciplined for willful
tax non-compliance.\3\
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\2\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.
\3\Treasury Inspector Gen. for Tax Admin: Review of the Internal
Revenue Service's Process to Address Violations of Tax Law by Its Own
Employees, Ref. No. 2015-10-002 (Apr. 14, 2015), available at https://
www.treasury.gov/tigta/auditreports/2015reports/201510002fr.pdf.
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While the amount of awards distributed to Federal employees
has fluctuated or declined in recent years--awards reached $1.2
billion in fiscal year 2016\4\--the scope of potentially
improper award allocations is still broad.
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\4\Information provided by the Office of Personnel Management to
Committee staff (June 26, 2017).
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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 OIG investigation found that she
attempted to steer more than $2 million in contracts to a firm
that employed her former boss.\5\ Gheen received nearly $35,000
in bonuses while employed at the VA.\6\ Sheila Cullen, director
of the VA's Sierra Pacific Network, received a $21,000 bonus
the year the OIG found that she got the job by using a
fabricated resume,\7\ and a $23,000 bonus the next year.\8\
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\5\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.
\6\Id.
\7\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/.
\8\Id.
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Bonuses awarded by the VA in fiscal years 2014 and 2015,
with the agency plagued by scandals of systematic fraud and
misconduct, indicate that the agency continues to pay bonuses
to employees committing these violations.
The VA distributed over $142 million in bonuses to 156,000
VA employees in fiscal year 2014. One recipient was Dr. David
Houlihan, the chief of staff of the Tomah VA Medical Center
(Tomah VAMC) in Wisconsin. Despite a March 12, 2014 VA OIG
report that found Dr. Houlihan's opioid prescription practices
``raised potentially serious concerns'',\9\ he received a
$4,000 bonus in December 2014.\10\ The Committee investigated
the allegations of over-prescription of opiates and issued a
359-page majority staff report on the systematic failures of
the VA and VA OIG to identify and stop the over-prescription,
veterans' deaths, abuse of authority, and whistleblower
retaliation at the Tomah VAMC.\11\ During this 16-month long
investigation, the Committee found that veterans nicknamed Dr.
Houlihan the ``Candy Man'', because of his reputation for
dispensing narcotics like candy.\12\ The Committee discovered
this nickname for Dr. Houlihan was known to law enforcement
agencies and executive branch agencies since at least 2009.\13\
Dr. Houlihan surrendered his medical license in January 2017
pursuant to an agreement with Wisconsin state regulators to
stop investigating his activities at the Tomah VAMC.\14\
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\9\Dep't of Veterans Affairs Office of Inspector Gen.: Tomah VA
Medical Center Administrative Closure, MCI #2011-04212-HI-0267 (Mar.
12, 2014), available at https://www.va.gov/oig/pubs/admin-reports/
VAOIG-11-04212-127.pdf.
\10\Donovan Slack and Bill Theobald, Veterans Affairs Pays $142
Million in Bonuses Amid Scandals, USA Today (Nov. 11, 2015), available
at https://www.usatoday.com/story/news/politics/2015/11/11/veterans-
affairs-pays-142-million-bonuses-amid-scandals/75537586/.
\11\The Systematic Failures and Preventable Tragedies at the Tomah
VA Medical Center, Majority Staff Report of the Comm. on Homeland
Security & Governmental Affairs, United States Senate (May 31, 2016),
available at https://www.hsgac.senate.gov/
library?PageNum_rs=2&c=114&type=reports.
\12\ Id. at 1.
\13\Id. at vi.
\14\Bill Glauber and Daniel Bice, Fired Tomah VA Chief to Surrender
Medical License, USA Today (Jan. 18, 2017), available at http://
www.jsonline.com/story/news/politics/2017/01/18/fired-tomah-va-chief-
of-staff-surrender-medical-license/96724274/.
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Kimberly Graves, a VA benefits office director, also
received a bonus for 2014, the year in which she improperly
used her authority for personal and financial benefit,
according to a VA OIG report.\15\ The VA OIG found that Graves
``participated personally and substantially in creating [a
position] vacancy and then volunteering for the vacancy.''\16\
The VA provided Graves over $129,000 in relocation expenses for
taking this position that she created for herself.\17\ Yet,
Graves also collected an $8,697 bonus for her performance
during this time.\18\
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\15\Id. See also Dep't of Veterans Affairs Office of Inspector
Gen.: Administrative Investigation: Inappropriate Use of Position and
Misuse of Relocation Program and Incentives in the Veterans Benefits
Administration (Sept. 28, 2015), available at https://www.va.gov/oig/
pubs/VAOIG-15-02997-526.pdf.
\16\ Id.
\17\ Id.
\18\Donovan Slack and Bill Theobald, supra note 11.
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In fiscal year 2015, the VA awarded more than $177 million
in bonuses to more than half of the agency's employees.\19\ VA
employees receiving these bonuses included Dr. Darren Deering,
the former chief of staff at the Phoenix VA Health Care System,
who received a $5,000 bonus just four months before being fired
for ``negligent performance of duties and failure to provide
effective oversight.''\20\ Another bonus recipient, Jack
Hetrick, a VA official at the Cincinnati VA Medical Center,
retired within weeks of collecting a $12,075 bonus after
receiving a notice of pending removal.\21\ The VA proposed
firing Hetrick after a review found that Barbara Temeck, the
acting chief of staff at the Cincinnati VA Medical Center, was
prescribing medications and providing other medical care to
Hetrick's family without a proper license.\22\ Temeck also
received a bonus of $5,000 in January 2016.\23\ Temeck was
later suspended from employment and indicted on three felony
charges of writing drug prescriptions outside the scope of her
government licensing.\24\
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\19\Bill Theobald, More bonuses for VA employees despite ongoing
problems at the agency, USA Today (Oct. 28, 2016), available at https:/
/www.usatoday.com/story/news/politics/2016/10/28/more-bonuses-va-
employees-despite-ongoing-problems-agency/92837218/.
\20\Id.
\21\Id.
\22\Id. See also Dep't of Veterans Affairs, VA Takes Action on
Allegations of Wrongdoing in Cincinnati (Feb. 25, 2016), available at
https://www.va.gov/opa/pressrel/includes/viewPDF.cfm?id=2750.
\23\Id.
\24\Ann Saker, Suspended Cincinnati VA Leader Indicted on Federal
Drug Charges, Cincinnati Enquirer (May 4, 2017), available at http://
www.cincinnati.com/story/news/2017/05/04/suspended-cincinnati-va-
leader-indicted-federal-drug-charges/101289568/.
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The VA is not the only agency to fail to take into account
serious allegations or investigations against employees before
paying them bonuses. In February 2017, the Bureau of Prisons
agreed to a $20 million settlement in a class-action Equal
Employment Opportunity complaint filed by more than 500 female
employees of a Federal prison in Florida.\25\ This complaint
alleged that ``the [BOP] created a hostile work environment
when it failed to correct known egregious sexual harassment
perpetrated by inmates at Federal Correctional Complex (FCC)
Coleman since February 6, 2011.''\26\ Despite this complaint by
hundreds of FCC Coleman employees that was filed in 2011,\27\
four senior executives at FCC Coleman during the course of
these allegations received some of the largest bonuses paid by
the BOP in 2015.\28\ Among them, the then-warden of FCC Coleman
received $34,500 in bonuses during the past two years.\29\
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\25\Jeff Deal, $20 Million to be Paid to Women Claiming Sexual
Harassment, Cover-up at Florida Prison, WFTV9 (Feb. 13, 2017),
available at http://www.wftv.com/news/local/20-million-to-be-paid-to-
women-claiming-sexual-harassment-coverup-at-florida-prison/493884499.
\26\Taronica White, et al., v. U.S. Dep't of Justice, EEOC Case No.
510-2012-00077X (2013), available at http://www.mcclatchydc.com/latest-
news/article24192091.ece/BINARY/Class%20Certification%20Decision%20on
%20Sexual%20Harassment.
\27\Id.
\28\Kevin Johnson, Execs at Troubled Federal Prisons Received
Bonuses Totaling in the Millions, USA Today (Apr. 9, 2017), available
at https://www.usatoday.com/story/news/politics/2017/04/09/federal-
prison-execs-got-thousands-bonuses-despite-ongoing-problems/
100072938./.
\29\Id.
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Further illustrating the disconnect between bonuses and
actual performance is an OIG 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.\30\
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\30\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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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.\31\ 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.\32\
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\31\Dep't of Justice 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.
\32\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. 696 would help address the most extreme of these
systemic problems by barring employees who commit serious
misconduct from receiving bonuses and would provide a mechanism
to recover previously awarded bonuses when the agency learns of
misconduct after the bonus has already been awarded. An
amendment allows employees to utilize a repayment plan for
returning improper bonuses awards to agencies. 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 OIG, the Comptroller General
of the United States, or another senior ethics official of an
agency.
III. Legislative History
S. 696, the Stop Improper Federal Bonuses Act, was
introduced on March 22, 2017, by Senator Deb Fischer, Ranking
Member Claire McCaskill, and Senator Dean Heller. The bill was
referred to the Committee on Homeland Security and Governmental
Affairs. The Committee considered S. 696 at a business meeting
on May 17, 2017.
During the business meeting, Senator Tom Carper offered an
amendment requiring agencies to allow an employee to repay a
bonus under a repayment plan. The Committee adopted the
amendment by voice vote and ordered the bill, as amended,
reported favorably by voice vote en bloc with Senators Johnson,
McCain, Portman, Paul, Lankford, Enzi, Hoeven, Daines,
McCaskill, Tester, Heitkamp, Peters, Hassan, and Harris
present. Consistent with CommitteeRule 11, the Committee
reports the bill with a technical amendment by mutual agreement of the
Chairman and Ranking Member.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section establishes the short title of the bill as the
``Stop Improper Federal Bonuses Act.''
Section 2. Bonuses
This section provides definitions for ``adverse finding'',
``agency'', ``bonus'', and ``employee''.
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, OIG, 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 fiscal year in
which an adverse finding is made, after notice and opportunity
for a hearing, in addition to appeal rights before the MSPB. An
agency will also be required to allow a bonus to be repaid
under a repayment plan.
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
June 21, 2017.
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. 696, the Stop
Improper Federal Bonuses Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dan Ready.
Sincerely,
Keith Hall.
Enclosure.
S. 696--Stop Improper Federal Bonuses Act
S. 696 would prohibit federal agencies 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 the employee violated the law and could
be imprisoned for more than 1 year. Additionally, any bonuses
given to an employee in the same year as an adverse finding
would be returned to the agency.
Under current law, there are no restrictions on awarding
bonuses to federal employees. Information from the Office of
Personnel Management 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. 696 would not have a significant
effect on the federal budget.
Enacting S. 696 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 CBO does not expect a significant number of
returned bonuses, any net changes in direct spending by those
agencies would likely not be significant. Enacting the bill
would not affect revenues.
Enacting S. 696 would not increase net direct spending or
on-budget deficits in any of the four consecutive 10-year
period beginning in 2028.
S. 696 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Dan Ready. 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
the bill, 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
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART C--EMPLOYEE PERFORMANCE
* * * * * * *
CHAPTER 45--INCENTIVE AWARDS
* * * * * * *
Table of sections.
Subchapter I--Awards for Superior Accomplishments
* * * * * * *
Subchapter IV--Limitations on Bonus Authority
4531. Certain forms of misconduct.
* * * * * * *
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
fiscal 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) Repayment plan.--An agency shall allow an
employee who is required to repay a bonus under
paragraph (1) to repay that bonus using a repayment
plan.
(3) 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 enactment of this section, an employee
shall sign a certification stating that the employee shall
repay the bonus in accordance with a final order issued under
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 submit an appeal to the Merit Systems
Protection Board under section 7701.
* * * * * * *
[all]