[Senate Report 116-152]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 273
116th Congress }                                      {      Report  
 1st Session   }                                      {      116-152





                              R E P O R T

                                 of the


                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2119



                October 24, 2019.--Ordered to be printed

 99-010              WASHINGTON : 2019                

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    GARY C. PETERS, Michigan
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah                    KAMALA D. HARRIS, California
RICK SCOTT, Florida                  KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming             JACKY ROSEN, Nevada

                Gabrielle D'Adamo Singer, Staff Director
                   Joseph C. Folio III, Chief Counsel
 Courtney Allen Rutland, Deputy Chief Counsel for Governmental Affairs
               David M. Weinberg, Minority Staff Director
               Zachary I. Schram, Minority Chief Counsel
                    Anne E. Nelson, Minority Fellow
              Marie E. Talarico, Minority Staff Assistant
                     Laura W. Kilbride, Chief Clerk

                                                       Calendar No. 273
116th Congress    }                                            {   Report
 1st Session      }                                            {  116-152




                October 24, 2019.--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. 2119]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2119) 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 without 
amendment and recommends that the bill do pass.


  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. 2119, 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 14 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 Systems 
Protection Board (MSPB) can hear appeals about whether the 
misconduct fits the definition of ``adverse finding.''\1\
    \1\On May 17, 2017, the Committee approved S. 696, the Stop 
Improper Federal Bonuses Act of 2017. That bill is identical to S. 
2119. Accordingly, this committee report is in large part a 
reproduction of Chairman Johnson's committee report for S. 696, S. Rep. 
No. 115-127 (2017).

              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 performance, 
they are inappropriate in cases where employees have engaged in 
serious misconduct or criminal behavior. The total amount of 
awards distributed to Federal employees has fluctuated in 
recent years--awards reached $1.2 billion in fiscal year 
2016.\2\ The Committee is concerned that, in some cases, 
bonuses are awarded to Federal employees during periods in 
which those employees engaged in misconduct.
    \2\Information provided by the Office of Personnel Management to 
Committee staff (June 26, 2017).
    One Internal Revenue Service (IRS) 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\ Another IRS OIG report revealed that, 
between 2010 and 2012, $2.8 million was awarded in bonuses to 
2,800 employees with conduct violations--1,449 of which the OIG 
found were ``substantiated serious conduct issues.''\4\ The 
problem is ongoing--a 2018 report found that between fiscal 
years 2016 and 2017, 159 IRS employees identified in a prior 
audit as inappropriately receiving bonuses after committing 
misconduct again received bonuses, totaling $239,000, after 
being subject to additional disciplinary actions for re-
committing the same misconduct.\5\
    \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://
    \4\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/
    \5\Treasury Inspector Gen. for Tax Admin: The Internal Revenue 
Service Has Implemented Some Screening Procedures, but Employees with 
Recent Tax and Conduct Issues Continue to Receive Awards, Ref. No. 
2018-10-005 (Feb. 13, 2018), available at https://www.treasury.gov/
    Several cases of improper bonuses have been documented at 
the Department of Veterans Affairs (VA). The former Deputy 
Chief Business Officer for Purchased Care at the 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.\6\ Gheen received 
nearly $35,000 in bonuses while employed at the VA.\7\ 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 
falsely claiming that she had a master's degree in medicine,\8\ 
and she received a $23,000 bonus the next year.\9\
    \6\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/
    \8\Jim McElhatton, Resume-padding VA Employee Got Big Bonuses, 
Washington Times (June 16, 2014), available at http://
    Cases of 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 continued to pay 
bonuses to some employees who committed 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'',\10\ he received a 
$4,000 bonus in December 2014.\11\ 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.\12\ 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.\13\ The Committee discovered 
this nickname for Dr. Houlihan was known to law enforcement 
agencies and executive branch agencies since at least 2009.\14\ 
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.\15\
    \10\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/
    \11\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-
    \12\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.
    \13\Id. at 1.
    \14\Id. at vi.
    \15\Bill Glauber and Daniel Bice, Fired Tomah VA Chief to Surrender 
Medical License, USA Today (Jan. 18, 2017), available at http://
    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.\16\ The VA OIG found that Graves 
``participated personally and substantially in creating [a 
position] vacancy and then volunteering for the vacancy.''\17\ 
The VA provided Graves over $129,000 in relocation expenses for 
taking this position that she created for herself.\18\ Yet, 
Graves also collected an $8,697 bonus for her performance 
during this time.\19\
    \16\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/
    \19\Donovan Slack and Bill Theobald, supra note 11.
    In fiscal year 2015, the VA awarded more than $177 million 
in bonuses to more than half of the agency's employees.\20\ VA 
employees receiving these bonuses included Dr. Darren Deering, 
the former chief of staff at the Phoenix VA Health Care System, 
received a $5,000 bonus just four months before being fired for 
``negligent performance of duties and failure to provide 
effective oversight.''\21\ 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.\22\ 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.\23\ Temeck also 
received a bonus of $5,000 in January 2016.\24\ Temeck was 
later suspended from employment and indicted on three felony 
charges of writing drug prescriptions outside the scope of her 
government licensing.\25\
    \20\Bill Theobald, More bonuses for VA employees despite ongoing 
problems at the agency, USA Today (Oct. 28, 2016), available at https:/
    \23\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/
    \25\Ann Saker, Suspended Cincinnati VA Leader Indicted on Federal 
Drug Charges, Cincinnati Enquirer (May 4, 2017), available at http://
    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.\26\ 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.''\27\ Despite this complaint by 
hundreds of FCC Coleman employees that was filed in 2011,\28\ 
four senior executives at FCC Coleman during the course of 
these allegations received some of the largest bonuses paid by 
the BOP in 2015.\29\ Among them, the then-warden of FCC Coleman 
received $34,500 in bonuses during the previous two years.\30\
    \26\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-
    \27\Taronica White, et al., v. U.S. Dep't of Justice, EEOC Case No. 
(2013), available at http://www.mcclatchydc.com/latest-news/
    \29\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-
    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.\31\
    \31\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 
    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.\32\ 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.\33\
    \32\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.
    These cases illustrate that some Federal managers awarded 
bonuses to employees who engaged in serious misconduct. A 
performance award or bonus should be reserved for employees who 
excel at their work for the American people.
    S. 2119 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. The bill 
allows employees to utilize a repayment plan for returning 
improper bonus 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 14 
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. 2119, the Stop Improper Federal Bonuses Act, was 
introduced on July 15, 2019, by Senator Deb Fischer. The bill 
was referred to the Committee on Homeland Security and 
Governmental Affairs. The Committee considered S. 2119 at a 
business meeting on July 24, 2019, and ordered the bill 
reported favorably by voice vote en bloc with Senators Johnson, 
Portman, Paul, Lankford, Romney, Scott, Enzi, Hawley, Peters, 
Carper, Hassan, Sinema and Rosen present.

        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 

                   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

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 9, 2019.
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. 2119, 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 Matthew 
                                                 Phillip L. Swagel.


    S. 2119 would prohibit federal agencies from awarding a 
bonus to an employee for five years following an adverse 
finding against that employee. The bill defines an adverse 
finding as a determination that an employee either has violated 
agency policy for which the employee could be removed or 
suspended from employment for 14 or more days, or has broken 
the law and could be imprisoned for more than one year. Under 
S. 2119, any employee who received a bonus in the same year as 
an adverse finding would need to repay the bonus to the agency.
    Under current law, there are no restrictions 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, recent memorandums issued by the 
Office of Personnel Management direct agencies to reward the 
highest performing employees using rigorous standards. While 
CBO expects that the bill would make it more difficult to award 
bonuses to employees with performance issues it would not 
change the total amount of bonuses that could be awarded nor 
add any significant administrative costs to agencies. 
Therefore, CBO estimates that implementing S. 2119 would not 
have a significant budgetary effect.
    Enacting S. 2119 could affect direct spending by some 
agencies that are allowed to use fees, receipts from the sale 
of goods, and other collections to cover operating costs. CBO 
estimates that any net changes in direct spending by those 
agencies would be negligible because most of them can adjust 
amounts collected to reflect changes in operating costs.
    The CBO staff contacts for this estimate are Matthew 
Pickford and Dan Ready. The estimate was reviewed 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):


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Subpart C--Employee Performance

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Chapter 45--Incentive Awards

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    Table of sections.

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    4531. Certain forms of misconduct.

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Subchapter IV--Limitations on Bonus Authority

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    (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 
                          (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 
          (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.

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