[House Report 118-613]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      118-613

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

 
          PERSONNEL INTEGRITY IN VETERANS AFFAIRS ACT OF 2024

                                _______
                                

 July 30, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 7734]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 7734) to amend title 38, United States Code, to 
require a notation in the personnel record file of certain 
employees of the Department of Veterans Affairs who resign from 
Government employment under certain circumstances, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     3
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
Hearings.........................................................     5
Subcommittee Consideration.......................................     5
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................     6
Statement of General Performance Goals and Objectives............     6
Earmarks and Tax and Tariff Benefits.............................     7
Committee Cost Estimate..........................................     7
Budget Authority and Congressional Budget Office Estimate........     7
Federal Mandates Statement.......................................     9
Advisory Committee Statement.....................................     9
Applicability to Legislative Branch..............................     9
Statement on Duplication of Federal Programs.....................     9
Section-by-Section Analysis of the Legislation...................     9
Changes in Existing Law Made by the Bill, as Reported............    10
Minority Views...................................................    20

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Personnel Integrity in Veterans 
Affairs Act of 2024''.

SEC. 2. SUBMISSION TO CONGRESS OF ANNUAL PERFORMANCE PLANS FOR 
                    DEPARTMENT OF VETERANS AFFAIRS POLITICAL 
                    APPOINTEES.

  Section 725 of title 38, United States Code, is amended--
          (1) by redesignating subsection (c) as subsection (d); and
          (2) by inserting after subsection (b) the following new 
        subsection (c):
  ``(c) Submission to Congress.--Not later than 30 days after the date 
of the completion of an annual performance under subsection (a), the 
Secretary shall submit the plan to the Committees on Veterans' Affairs 
of the Senate and House of Representatives.''.

SEC. 3. NOTATION IN DEPARTMENT OF VETERANS AFFAIRS EMPLOYEE PERSONNEL 
                    RECORD FILE OF PERSONNEL INVESTIGATION REQUIRED.

  (a) In General.--Subchapter I of chapter 7 of title 38, United States 
Code, is amended by adding at the end the following new section:

``Sec. 729. Notation in Department of Veterans Affairs employee 
                    personnel record file of eligible personnel 
                    investigation

  ``(a) Notation Required.--Notwithstanding section 3322 of title 5 or 
chapter 74 of this title, with respect to a covered employee who is the 
subject of an eligible personnel investigation and who resigns, 
retires, transfers, or otherwise separates from employment with the 
Department prior to the resolution of such eligible personnel 
investigation, the Secretary shall--
          ``(1) continue such eligible personnel investigation until it 
        is completed; and
          ``(2) not later than 40 days after the date such eligible 
        personnel investigation is completed, make a permanent notation 
        of such eligible personnel investigation in the official 
        personnel record file of such covered employee.
  ``(b) Certain Consideration Prohibited.--In carrying out an eligible 
personnel investigation, the Secretary may not consider the 
resignation, retirement, transfer, or any other separation from 
employment with the Department of the covered employee subject to such 
eligible personnel investigation.
  ``(c) Notification Required.--Prior to making a permanent notation in 
the official personnel record of a covered employee under subsection 
(a), the Secretary shall--
          ``(1) notify the employee in writing within 5 days of the 
        resolution of the eligible personnel investigation and provide 
        such covered employee a copy of the adverse finding and any 
        supporting documentation;
          ``(2) provide the covered employee with a reasonable time, 
        but not less than 30 days, to respond in writing and to furnish 
        affidavits and other documentary evidence to show why the 
        adverse finding was unfounded (a summary of which shall be 
        included in any notation made to the personnel file of such 
        employee under subsection (e)); and
          ``(3) provide a written decision and the specific reasons 
        therefore to the employee at the earliest practicable date.
  ``(d) Right to Appeal.--A covered employee is entitled to appeal the 
decision of the Secretary to make a permanent notation under subsection 
(a) to--
          ``(1) the Merit Systems Protection Board under section 7701 
        of title 5; and
          ``(2) a Disciplinary Appeals Board under section 7464 of this 
        title.
  ``(e) Notation of Appeal.--(1) If a covered employee files an appeal 
with the Merit Systems Protection Board pursuant to subsection (c), the 
Secretary shall make a notation in the official personnel record file 
of the covered employee indicating that an appeal disputing the 
notation is pending not later than 2 weeks after the date on which such 
appeal was filed.
  ``(2) If the Secretary is the prevailing party on appeal, not later 
than 2 weeks after the date that the Board issues the appeal decision, 
the Secretary shall remove the notation made under paragraph (1) from 
the official personnel record file of the covered employee.
  ``(3) If the covered employee is the prevailing party on appeal, not 
later than 2 weeks after the date that the Board issues the appeal 
decision, the Secretary shall remove the notation made under paragraph 
(1) and the notation of an adverse finding made under subsection (a) 
from the official personnel record file of the covered employee.
  ``(f) Definitions.--In this section:
          ``(1) The term `covered employee' means an employee in the 
        competitive service, the excepted service, or the Senior 
        Executive Service within the Department.
          ``(2) The term `eligible personnel investigation'--
                  ``(A) means a personnel investigation that commences 
                not later than 60 days after the date on which the 
                covered employee subject to such personnel 
                investigation resigns, retires, transfers, or otherwise 
                separates from employment with the Department; and
                  ``(B) includes--
                          ``(i) an investigation by an Inspector 
                        General; and
                          ``(ii) a prospective investigation that may 
                        recommend an adverse personnel action as a 
                        result of alleged performance, misconduct, or 
                        for such cause as will promote the efficiency 
                        of the service under--
                                  ``(I) chapter 43 of title 5;
                                  ``(II) chapter 75 of such title;
                                  ``(III) chapter 74 of this title; or
                                  ``(IV) section 501 of this title;
                          ``(iii) an adverse personnel action as a 
                        result of performance, misconduct, or for such 
                        cause as will promote the efficiency of the 
                        service under the provisions specified in 
                        subclauses (I) through (IV) of clause (ii);
                          ``(iv) an internal investigation carried out 
                        by the Secretary, including through--
                                  ``(I) the Office of Accountability 
                                and Whistleblower Protection of the 
                                Department;
                                  ``(II) the Office of the Medical 
                                Inspector of the Veterans Health 
                                Administration; and
                                  ``(III) the General Counsel of the 
                                Department; and
                          ``(v) an investigation carried out by the 
                        head of any other Federal agency responsible 
                        for investigation allegations of employee 
                        misconduct, including the head of--
                                  ``(I) the Office of the Special 
                                Counsel; and
                                  ``(II) the Equal Employment 
                                Opportunity Commission.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
728 the following new item:

        ``729. Notation in Department of Veterans Affairs employee 
                        personnel record file of personnel 
                        investigation.''.

SEC. 4. MODIFICATION OF CERTAIN HOUSING LOAN FEES.

  The loan fee table in section 3729(b)(2) of title 38, United States 
Code, is amended by striking ``November 15, 2031'' each place it 
appears and inserting ``November 29, 2031''.

                          Purpose and Summary

    H.R. 7734, the ``Personnel Integrity in Veterans Affairs 
Act of 2024,'' was introduced by Representative Scott Franklin 
of Florida on March 20, 2024. The bill as amended would require 
the Secretary of the U.S. Department of Veterans Affairs (VA) 
to submit to the Committees on Veterans' Affairs of the Senate 
and House of Representatives the annual performance plans of VA 
political appointees no later than 30 days after the 
performance plan's completion. The bill would also require the 
VA Secretary (Secretary) to complete personnel investigations 
and make permanent notations of such investigations in the 
official personnel record files of VA employees who are the 
subjects of the personnel investigations and who resign, 
retire, transfer, or otherwise separate from VA employment 
prior to the investigations' resolution.
    Finally, the bill, as amended, would provide an offset for 
the costs of these requirements by extending current rates for 
VA home loan funding fees.

                  Background and Need for Legislation


Section 1: Short title

    This Act may be cited as the ``Personnel Integrity in 
Veterans Affairs Act of 2024.''

Section 2: Submission to Congress of Annual Performance Plans for 
        Department of Veterans Political Appointees

    Currently, per the VA Choice and Quality Employment Act of 
2017 (P.L. 115-46), the Secretary must conduct annual 
performance plans for VA political appointees. The plans must 
include assessments as to whether appointees are meeting the 
following goals: (1) recruiting, selecting, and retaining well 
qualified individuals for VA employment; (2) engaging and 
motivating employees; (3) training and developing employees and 
preparing those employees for future VA leadership roles; and 
(4) holding each VA employee that is a manager accountable for 
addressing performance issues, particularly performance issues 
related to the manager's subordinates.
    The House Committee on Veterans' Affairs (the Committee), 
has repeatedly heard from concerned VA employees that VA 
leaders do not adequately hold their supervisees accountable 
for substantiated misconduct. The Committee has also heard 
concerns that VA rubber stamps performance reviews. This 
section would address these concerns by increasing the 
Committee's ability to conduct oversight of VA's political 
appointees, individuals who are in senior leadership positions, 
and to conduct oversight of VA's performance review process in 
general. The Committee believes this is important as the 
section would allow the Committee to review performance plans 
to see VA's compliance with Public Law (P.L.). 115-46 and see 
what political appointees, if any, are not meeting VA's 
accountability and performance goals.

Section 3: Notation in Department of Veterans Affairs Employee 
        Personnel Record File of Personnel Investigation Required

    Currently, VA must record the outcomes of disciplinary 
investigations in the personnel record files of the employees 
who were investigated. However, there is no legal requirement 
mandating VA complete disciplinary investigations. Thus, 
employees under investigation due to alleged misconduct can 
decide to resign or retire before the investigation is complete 
and a notation is required.
    This section would fix this gap in existing law by 
mandating the Secretary finish investigations of employees who 
decide to resign, retire, transfer, or otherwise separate from 
VA employment prior to the investigations' conclusion, and 
mandate the Secretary make permanent notations of such 
investigations on the employees' official personnel record 
file. The Committee believes fixing this gap in existing law is 
important because it will prevent employees who committed 
substantiated wrongdoing from evading an adverse permanent 
notation on their personnel file. This will reduce the chances 
such employees will obtain employment with another federal 
agency without the agency knowing about the employees' previous 
substantiated conduct.
    Importantly, this section would also ensure employees are 
given notice and appeal rights throughout the personnel record 
notation process. The Committee believes giving these notice 
and appeal rights to VA employees is important so VA employees 
have due process prior to a permanent notation being made on 
their personnel files.

Section 4: Modification of Certain Housing Loan Fees

    Currently, veterans who take advantage of the VA home Loan 
Program pay a small fee that is included in their monthly 
mortgage payment. This section would cover the costs of the 
other sections of this bill by extending the current rates for 
VA home loan funding fees by two weeks to November 29, 2031. 
Extending the funding fee increases a veteran's monthly costs 
by about five dollars on top of the monthly mortgage. Disabled 
veterans do not pay the funding fee and would not be affected 
by this extension of the home loan fees. The Committee believes 
this short-term extension of current funding fee rates is a 
reasonable way to cover the costs associated with the other 
sections of this bill.

                                Hearings

    On Thursday, March 21, 2024, the Subcommittee on Oversight 
and Investigations held a legislative hearing on H.R. 7734 and 
other bills that were pending before the subcommittee.
    The following witnesses testified:
          Mr. John W. Boerstler, Chief Veterans Experience 
        Office, Office of Human Resources and Administration/ 
        Operations, Security, and Preparedness (HRA/OSP), U.S. 
        Department of Veterans Affairs; Ms. Tracey Therit, 
        Chief Human Capital Officer, HRA/OSP, U.S. Department 
        of Veterans Affairs; Mr. David Perry, Chief Officer, 
        Workforce Management and Consulting, Veterans Health 
        Administration, U.S. Department of Veterans Affairs; 
        Mr. Charles Worthington, Chief Technology Officer, 
        Office of Information Technology, U.S. Department of 
        Veterans Affairs; and Ms. Joycelyn Westbrooks, 
        Registered Nurse, Secretary-Treasurer, American 
        Federation of Government Employees Local 1633, U.S. 
        Department of Veterans Affairs.
    The following individuals and organizations submitted 
statements for the record:
          American Association of Nurse Anesthesiology, 
        National Federation of Federal Employees, Service 
        Employees International Union, Paralyzed Veterans of 
        America, Representative Brandon Williams (NY-22), 
        Senior Executives Association, Representative Mike 
        Turner (OH-10), and United Nurses Association of 
        California/Union of Health Care Professionals.

                       Subcommittee Consideration

    On Wednesday, April 17, 2024, the Subcommittee on Oversight 
and Investigations held a markup on the legislation included in 
the text of this bill.
    An amendment in the nature of a substitute to H.R. 7734, 
offered by Subcommittee Chairwoman Kiggans, was adopted by 
voice vote. The amendment in the nature of a substitute would 
add a short title under a new section one. The amendment in the 
nature of a substitute would also, in a new section two 
(section one as introduced), clarify notation requirements 
would apply to covered employees who resign, retire, transfer, 
or otherwise separate from VA employment, would add a 
requirement the Secretary continue personnel investigations 
until they are complete, would add the requirement the 
Secretary make a notation in an employee's personnel file 
within 40 days of the investigation's completion, and would 
clarify the Secretary cannot consider an employee's 
resignation, retirement, transfer, or any other separation from 
VA employment in carrying out the investigation. Further, the 
amendment in the nature of a substitute would, in the new 
section two, add notice and appeal rights for covered employees 
and would add a definition section.
    A motion by Representative Bergman to report H.R. 7734, as 
amended, was favorably forwarded to the Full Committee on 
Veterans' Affairs.

                        Committee Consideration

    On Wednesday, May 1, 2024, the Full Committee met in open 
markup session, a quorum being present, and ordered H.R. 7734, 
as amended, be reported favorably to the House of 
Representatives by voice vote. During consideration of the 
bill, the following amendments were considered:
    1. An amendment in the nature of a substitute offered by 
Representative Bergman that would make corrections to the base 
bill, would make necessary offsets, and would include the text 
H.R. 7713, the VA Political Performance Disclosure Act. The 
amendment passed by voice vote.
    2. An amendment to the amendment in the nature of a 
substitute offered by Ranking Member Takano that would remove 
the requirement the Secretary complete an investigation when an 
employee leaves the Department while under investigation. The 
amendment to the amendment in the nature of a substitute would 
also remove H.R. 7713 text from the amendment in the nature of 
a substitute. The amendment failed by voice vote.
    A motion by Representative Bergman to report H.R. 7734, as 
amended, favorably to the House of Representatives was agreed 
to by voice vote.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, no recorded votes were taken on 
amendments or in connection with ordering H.R. 7734, as 
amended, reported to the House.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives of H.R. 7734, as amended, are to increase 
accountability and transparency at VA by increasing Congress's 
ability to perform effective oversight of VA's performance 
review process for political appointees and by ensuring 
misconduct violations are completed and annotated on the 
personnel files of employees who leave VA to prevent such 
employees from evading responsibility.

                  Earmarks and Tax and Tariff Benefits

    H.R. 7734, as amended, does not contain any Congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
7734, as amended, prepared by the Director of the Congressional 
Budget Office.

            Budget Authority and Congressional Budget Office
                             Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 7734, as amended, provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 7734 would require the Department of Veterans Affairs 
(VA) to continue personnel investigations of employees who 
separate from employment during such investigations. The bill 
also would require VA to submit to the Congress the annual 
performance plans for its political appointees. Finally, the 
bill would increase the fees that VA charges borrowers for its 
home loan guarantees.
    Spending Subject to Appropriation. The bill would increase 
discretionary authorizations by requiring VA to continue and 
complete personnel investigations of employees who separate 
from the department during the course of the investigation and 
to enter the results of the investigation in the separated 
employee's personnel records. The bill also would require VA to 
notify separated employees of the resolution of any 
investigation and provide affected employees the opportunity to 
respond with documentation to support their position. Separated 
employees also may appeal the results of the investigation. 
Using information from the agency, CBO estimates VA would need 
$3 million to modify the department's human resources systems. 
VA also would require two full-time employees to implement the 
bill. Their annual compensation and related costs would average 
$1 million. CBO estimates that, in total, the bill's 
requirement to continue personnel investigations and make 
permanent notice of such investigations would cost $12 million 
over the 2024-2034 period. Such spending would be subject to 
the availability of appropriated funds.
    CBO estimates that the bill's requirement to provide the 
Congress with the annual performance plans for VA's political 
appointees would increase spending subject to appropriation by 
insignificant amounts.
    The costs of the legislation, detailed in Table 1, fall 
within budget function 700 (veterans benefits and services).

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 7734
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2024    2025    2026    2027    2028    2029    2030    2031    2032    2033    2034   2024-2029  2024-2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization...................       *       3       1       1       1       1       1       1       1       1       1         7         12
Estimated Outlays.........................       *       2       2       1       1       1       1       1       1       1       1         7         12
 
                                                            DECREASES (-) IN DIRECT SPENDING
 
Estimated Budget Authority................       0       0       0       0       0       0       0       0     -22       0       0         0        -22
Estimated Outlays.........................       0       0       0       0       0       0       0       0     -22       0       0         0        -22
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.

    Direct Spending. H.R. 7734 would increase the fees that VA 
charges borrowers for its loan guarantees. VA provides loan 
guarantees to lenders that allow eligible borrowers to obtain 
better loan terms--such as lower interest rates or smaller down 
payments--to purchase, construct, improve, or refinance a home. 
VA typically pays lenders up to 25 percent of the outstanding 
mortgage balance if a borrower's home is foreclosed upon. Those 
payments, net of fees paid by borrowers and recoveries by 
lenders, constitute the subsidy cost for loan guarantees.\1\ 
That subsidy is reflected in the budget as direct spending.
---------------------------------------------------------------------------
    \1\Under the Federal Credit Reform Act of 1990, the subsidy cost of 
a loan guarantee is the net present value of estimated payments by the 
government to cover defaults and delinquencies, interest subsidies, or 
other expenses offset by any payments to the government, including 
origination or other fees, penalties, and recoveries on defaulted 
loans. Such subsidy costs are calculated by discounting those expected 
cash flows using the rate on Treasury securities of comparable 
maturity. The resulting estimated subsidy costs are recorded in the 
budget when the loans are disbursed or modified. A positive subsidy 
indicates that the loan results in net outlays from the Treasury; a 
negative subsidy indicates that the loan results in net receipts to the 
Treasury.
---------------------------------------------------------------------------
    Under current law, the rates for most of the fees that 
borrowers pay to VA for loans guaranteed after November 15, 
2031, will drop from a weighted average of about 2.3 percent to 
about 1.2 percent of the loan amount. The bill would extend the 
higher rates through November 29, 2031, thereby reducing the 
subsidy cost of loans guaranteed during that period. Using its 
forecast of loan volume based on data provided by VA, CBO 
estimates that extending the higher rates would decrease direct 
spending by $22 million over the 2024-2034 period.
    The CBO staff contacts for this estimate are Logan Smith 
(for other VA costs) and Paul B.A. Holland (for home loans). 
The estimate was reviewed by Christina Hawley Anthony, Deputy 
Director of Budget Analysis.
                                            Mark P. Hoeller
    (For Phillip L. Swagel, Director, Congressional Budget Office).

                       Federal Mandates Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4 is inapplicable to H.R. 7734, as 
amended.

                      Advisory Committee Statement

    No advisory committees within the meaning of Section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
7734, as amended.

                  Applicability to Legislative Branch

    The Committee finds that H.R. 7734, as amended, does not 
relate to the terms and conditions of employment or access to 
public services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

              Statement on Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee finds no provision of 
H.R. 7734, as amended, would establish or reauthorize a program 
of the Federal Government known to be duplicative of another 
Federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of P.L. 111-39, or a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1: Short title

    This section would establish the short title of the bill as 
the ``Personnel Integrity in Veterans Affairs Act of 2024.''

Section 2: Submission to Congress of annual performance plans for 
        Department of Veterans political appointees

    This section would amend 38 United States Code (U.S.C.) 
Sec. 725 by redesignating subsection (c) as subsection (d) and 
by inserting after subsection (b) a new subsection (c).
    The new subsection (c) would require the Secretary to 
provide the annual performance plans of VA's political 
appointees to the Committees on Veterans' Affairs of the Senate 
and House of Representatives within 30 days of the performance 
plans' completion.

Section 3: Notation in Department of Veterans Affairs employee 
        personnel record file of personnel investigation required

    Section 3(a) would amend 38 U.S.C. by adding a new section, 
Sec. 729 with six subsections. The new 38 U.S.C. Sec. 729(a) 
would, with respect to covered VA employees who are the 
subjects of eligible personnel investigations who resign, 
retire, transfer, or otherwise separate from VA employment 
prior to the resolution of such personnel investigations, 
require the Secretary to complete the personnel investigations 
and within 40 days of the investigations' completion, make 
permanent notations of such investigations in the covered 
employees' official personnel record files.
    The new 38 U.S.C. Sec. 729(b) would make clear the 
Secretary cannot consider resignations, retirements, transfers, 
or any other employment separation while carrying out personnel 
investigations.
    The new 38 U.S.C. Sec. 729(c) would require the Secretary, 
prior to making a permanent notation in employees' official 
personnel records, to: (1) notify employees in writing within 
five days of an investigation's resolution and provide 
employees a copy of the adverse finding with supporting 
documentation; (2) provide employees with reasonable time to 
respond in writing to show why the adverse finding is 
unfounded; and (3) provide a written decisions with specific 
reasons explaining the decision to employees as early as 
practicable.
    The new 38 U.S.C. Sec. 729(d) would provide employees the 
right to appeal the Secretary's decision to make a permanent 
notation in the employees' personnel file to the MSPB and 38 
U.S.C. Sec. 7464 Disciplinary Appeals Boards.
    The new 38 U.S.C. Sec. 729(e) would require the Secretary, 
if employees appeal to the MSPB, to make a notation in the 
employees' official personnel records indicating an appeal 
disputing the notation is pending within two weeks of the 
appeal. If the Secretary prevails in the appeal, the Secretary 
would have to remove the appeal notation from the official 
personnel records within two weeks of the appeal decision. If 
covered employees prevail in the appeal, the Secretary would 
have to remove the appeal and adverse finding notations within 
two weeks of the appeal decision.
    Finally, the new 38 U.S.C. Sec. 729(f) would define terms 
used throughout Section 3(a).
    Section 3(b) would make a clerical amendment to Title 38 by 
inserting the above described Sec. 729 after 38 U.S.C. 
Sec. 728.

Section 4: Modification of certain housing loan fees

    This section would amend the loan fee table in 38 U.S.C. 
Sec. 3729(b)(2) by striking November 15, 2031, in each place it 
appears and inserting November 29, 2031.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, 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 proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, 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 italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                          CHAPTER 7--EMPLOYEES

                 SUBCHAPTER I--GENERAL EMPLOYEE MATTERS

Sec.
     * * * * * * *
729. Notation in Department of Veterans Affairs employee personnel 
          record file of personnel investigation.

           *       *       *       *       *       *       *


SUBCHAPTER I--GENERAL EMPLOYEE MATTERS

           *       *       *       *       *       *       *


Sec. 725. Annual performance plan for political appointees

  (a) In General.--The Secretary shall conduct an annual 
performance plan for each political appointee of the Department 
that is similar to the annual performance plan conducted for an 
employee of the Department who is appointed as a career 
appointee (as that term is defined in section 3132(a) of title 
5) within the Senior Executive Service at the Department.
  (b) Elements of Plan.--Each annual performance plan conducted 
under subsection (a) with respect to a political appointee of 
the Department shall include an assessment of whether the 
appointee is meeting the following goals:
          (1) Recruiting, selecting, and retaining well-
        qualified individuals for employment at the Department.
          (2) Engaging and motivating employees.
          (3) Training and developing employees and preparing 
        those employees for future leadership roles within the 
        Department.
          (4) Holding each employee of the Department that is a 
        manager accountable for addressing issues relating to 
        performance, in particular issues relating to the 
        performance of employees that report to the manager.
  (c) Submission to Congress.--Not later than 30 days after the 
date of the completion of an annual performance under 
subsection (a), the Secretary shall submit the plan to the 
Committees on Veterans' Affairs of the Senate and House of 
Representatives.
  [(c)] (d) Definition of Political Appointee.--In this 
section, the term ``political appointee'' means an employee of 
the Department who holds--
          (1) a position which has been excepted from the 
        competitive service by reason of its confidential, 
        policy-determining, policy-making, or policy-advocating 
        character; or
          (2) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined in section 
        3132(a) of title 5).

           *       *       *       *       *       *       *


Sec. 729. Notation in Department of Veterans Affairs employee personnel 
                    record file of eligible personnel investigation

  (a) Notation Required.--Notwithstanding section 3322 of title 
5 or chapter 74 of this title, with respect to a covered 
employee who is the subject of an eligible personnel 
investigation and who resigns, retires, transfers, or otherwise 
separates from employment with the Department prior to the 
resolution of such eligible personnel investigation, the 
Secretary shall--
          (1) continue such eligible personnel investigation 
        until it is completed; and
          (2) not later than 40 days after the date such 
        eligible personnel investigation is completed, make a 
        permanent notation of such eligible personnel 
        investigation in the official personnel record file of 
        such covered employee.
  (b) Certain Consideration Prohibited.--In carrying out an 
eligible personnel investigation, the Secretary may not 
consider the resignation, retirement, transfer, or any other 
separation from employment with the Department of the covered 
employee subject to such eligible personnel investigation.
  (c) Notification Required.--Prior to making a permanent 
notation in the official personnel record of a covered employee 
under subsection (a), the Secretary shall--
          (1) notify the employee in writing within 5 days of 
        the resolution of the eligible personnel investigation 
        and provide such covered employee a copy of the adverse 
        finding and any supporting documentation;
          (2) provide the covered employee with a reasonable 
        time, but not less than 30 days, to respond in writing 
        and to furnish affidavits and other documentary 
        evidence to show why the adverse finding was unfounded 
        (a summary of which shall be included in any notation 
        made to the personnel file of such employee under 
        subsection (e)); and
          (3) provide a written decision and the specific 
        reasons therefore to the employee at the earliest 
        practicable date.
  (d) Right to Appeal.--A covered employee is entitled to 
appeal the decision of the Secretary to make a permanent 
notation under subsection (a) to--
          (1) the Merit Systems Protection Board under section 
        7701 of title 5; and
          (2) a Disciplinary Appeals Board under section 7464 
        of this title.
  (e) Notation of Appeal.--(1) If a covered employee files an 
appeal with the Merit Systems Protection Board pursuant to 
subsection (c), the Secretary shall make a notation in the 
official personnel record file of the covered employee 
indicating that an appeal disputing the notation is pending not 
later than 2 weeks after the date on which such appeal was 
filed.
  (2) If the Secretary is the prevailing party on appeal, not 
later than 2 weeks after the date that the Board issues the 
appeal decision, the Secretary shall remove the notation made 
under paragraph (1) from the official personnel record file of 
the covered employee.
  (3) If the covered employee is the prevailing party on 
appeal, not later than 2 weeks after the date that the Board 
issues the appeal decision, the Secretary shall remove the 
notation made under paragraph (1) and the notation of an 
adverse finding made under subsection (a) from the official 
personnel record file of the covered employee.
  (f) Definitions.--In this section:
          (1) The term ``covered employee'' means an employee 
        in the competitive service, the excepted service, or 
        the Senior Executive Service within the Department.
          (2) The term ``eligible personnel investigation''--
                  (A) means a personnel investigation that 
                commences not later than 60 days after the date 
                on which the covered employee subject to such 
                personnel investigation resigns, retires, 
                transfers, or otherwise separates from 
                employment with the Department; and
                  (B) includes--
                          (i) an investigation by an Inspector 
                        General; and
                          (ii) a prospective investigation that 
                        may recommend an adverse personnel 
                        action as a result of alleged 
                        performance, misconduct, or for such 
                        cause as will promote the efficiency of 
                        the service under--
                                  (I) chapter 43 of title 5;
                                  (II) chapter 75 of such 
                                title;
                                  (III) chapter 74 of this 
                                title; or
                                  (IV) section 501 of this 
                                title;
                          (iii) an adverse personnel action as 
                        a result of performance, misconduct, or 
                        for such cause as will promote the 
                        efficiency of the service under the 
                        provisions specified in subclauses (I) 
                        through (IV) of clause (ii);
                          (iv) an internal investigation 
                        carried out by the Secretary, including 
                        through--
                                  (I) the Office of 
                                Accountability and 
                                Whistleblower Protection of the 
                                Department;
                                  (II) the Office of the 
                                Medical Inspector of the 
                                Veterans Health Administration; 
                                and
                                  (III) the General Counsel of 
                                the Department; and
                          (v) an investigation carried out by 
                        the head of any other Federal agency 
                        responsible for investigation 
                        allegations of employee misconduct, 
                        including the head of--
                                  (I) the Office of the Special 
                                Counsel; and
                                  (II) the Equal Employment 
                                Opportunity Commission.

           *       *       *       *       *       *       *


PART III--READJUSTMENT AND RELATED BENEFITS

           *       *       *       *       *       *       *


CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

           *       *       *       *       *       *       *


SUBCHAPTER III--ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


Sec. 3729. Loan fee

  (a) Requirement of Fee.--(1) Except as provided in subsection 
(c), a fee shall be collected from each person obtaining a 
housing loan guaranteed, insured, or made under this chapter, 
and each person assuming a loan to which section 3714 of this 
title applies. No such loan may be guaranteed, insured, made, 
or assumed until the fee payable under this section has been 
remitted to the Secretary.
  (2) The fee may be included in the loan and paid from the 
proceeds thereof.
  (b) Determination of Fee.--(1) The amount of the fee shall be 
determined from the loan fee table in paragraph (2). The fee is 
expressed as a percentage of the total amount of the loan 
guaranteed, insured, or made, or, in the case of a loan 
assumption, the unpaid principal balance of the loan on the 
date of the transfer of the property.
  (2) The loan fee table referred to in paragraph (1) is as 
follows:


 
----------------------------------------------------------------------------------------------------------------
             Type of loan                Active duty  veteran          Reservist              Other obligor
----------------------------------------------------------------------------------------------------------------
(A)(i) Initial loan described in       2.15                     2.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 October 1, 2004, and before January
 1, 2020).
(A)(ii) Initial loan described in      2.30                     2.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 January 1, 2020, and before April 7,
 2023).
(A)(iii) Initial loan described in     2.15                     2.15                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 April 7, 2023, and before November
 [15] 29, 2031).
(A)(iv) Initial loan described in      1.40                     1.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 November [15] 29, 2031).
(B)(i) Subsequent loan described in    3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after October 1, 2004, and before
 January 1, 2020).
(B)(ii) Subsequent loan described in   3.60                     3.60                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(B)(iii) Subsequent loan described in  3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after April 7, 2023, and before
 November [15] 29, 2031).
(B)(iv) Subsequent loan described in   1.25                     1.25                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after November [15] 29, 2031).
(C)(i) Loan described in section       1.50                     1.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed before
 January 1, 2020).
(C)(ii) Loan described in section      1.65                     1.65                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(C)(iii) Loan described in section     1.50                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after April 7, 2023, and before
 November [15] 29, 2031).
(C)(iv) Loan described in section      0.75                     0.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after November [15] 29, 2031).
(D)(i) Loan described in section       1.25                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed before
 January 1, 2020).
(D)(ii) Loan described in section      1.40                     1.40                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(D)(iii) Loan described in section     1.25                     1.25                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after April 7, 2023, and before
 November [15] 29, 2031).
(D)(iv) Loan described in section      0.50                     0.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after November [15] 29, 2031).
(E) Interest rate reduction            0.50                     0.50                     NA
 refinancing loan.
(F) Direct loan under section 3711...  1.00                     1.00                     NA
(G) Manufactured home loan under       1.00                     1.00                     NA
 section 3712 (other than an interest
 rate reduction refinancing loan).
(H) Loan to Native American veteran    1.25                     1.25                     NA
 under section 3762 (other than an
 interest rate reduction refinancing
 loan).
(I) Loan assumption under section      0.50                     0.50                     0.50
 3714.
(J) Loan under section 3733(a).......  2.25                     2.25                     2.25.
----------------------------------------------------------------------------------------------------------------

  (3) Any reference to a section in the ``Type of loan'' column 
in the loan fee table in paragraph (2) refers to a section of 
this title.
  (4) For the purposes of paragraph (2):
          (A) The term ``active duty veteran'' means any 
        veteran eligible for the benefits of this chapter other 
        than a Reservist.
          (B) The term ``Reservist'' means a veteran described 
        in section 3701(b)(5)(A) of this title who is eligible 
        under section 3702(a)(2)(E) of this title.
          (C) The term ``other obligor'' means a person who is 
        not a veteran, as defined in section 101 of this title 
        or other provision of this chapter.
          (D)(i) The term ``initial loan'' means a loan to a 
        veteran guaranteed under section 3710 or made under 
        section 3711 of this title if the veteran has never 
        obtained a loan guaranteed under section 3710 or made 
        under section 3711 of this title.
          (ii) If a veteran has obtained a loan guaranteed 
        under section 3710 or made under section 3711 of this 
        title and the dwelling securing such loan was 
        substantially damaged or destroyed by a major disaster 
        declared by the President under section 401 of the 
        Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act (42 U.S.C. 5170), the Secretary shall 
        treat as an initial loan, as defined in clause (i), the 
        next loan the Secretary guarantees or makes to such 
        veteran under section 3710 or 3711, respectively, if--
                  (I) such loan is guaranteed or made before 
                the date that is three years after the date on 
                which the dwelling was substantially damaged or 
                destroyed; and
                  (II) such loan is only for repairs or 
                construction of the dwelling, as determined by 
                the Secretary.
          (E) The term ``subsequent loan'' means a loan to a 
        veteran, other than an interest rate reduction 
        refinancing loan, guaranteed under section 3710 or made 
        under section 3711 of this title that is not an initial 
        loan.
          (F) The term ``interest rate reduction refinancing 
        loan'' means a loan described in section 3710(a)(8), 
        3710(a)(9)(B)(i), 3710(a)(11), 3712(a)(1)(F), or 
        3762(h) of this title.
          (G) The term ``0-down'' means a downpayment, if any, 
        of less than 5 percent of the total purchase price or 
        construction cost of the dwelling.
          (H) The term ``5-down'' means a downpayment of at 
        least 5 percent or more, but less than 10 percent, of 
        the total purchase price or construction cost of the 
        dwelling.
          (I) The term ``10-down'' means a downpayment of 10 
        percent or more of the total purchase price or 
        construction cost of the dwelling.
  (c) Waiver of Fee.--(1) A fee may not be collected under this 
section from a veteran who is receiving compensation (or who, 
but for the receipt of retirement pay or active service pay, 
would be entitled to receive compensation), from a surviving 
spouse of any veteran (including a person who died in the 
active military, naval, air, or space service) who died from a 
service-connected disability, or from a member of the Armed 
Forces who is serving on active duty and who provides, on or 
before the date of loan closing, evidence of having been 
awarded the Purple Heart.
  (2)(A) A veteran described in subparagraph (B) shall be 
treated as receiving compensation for purposes of this 
subsection as of the date of the rating described in such 
subparagraph without regard to whether an effective date of the 
award of compensation is established as of that date.
  (B) A veteran described in this subparagraph is a veteran who 
is rated eligible to receive compensation--
          (i) as the result of a pre-discharge disability 
        examination and rating; or
          (ii) based on a pre-discharge review of existing 
        medical evidence (including service medical and 
        treatment records) that results in the issuance of a 
        memorandum rating.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    This legislation presents significant policy concerns. This 
bill the ``Personnel Integrity in Veterans Affairs Act'', as 
amended, combines two pieces of legislation, H.R. 7734, the VA 
Accountability Annotation Act, and H.R. 7731, the VA Political 
Performance Disclosure Act. At a March 21, 2024, Oversight and 
Investigations Subcommittee legislative hearing, where H.R. 
7734 was on the agenda, the Department of Veterans Affairs (VA) 
stated:

          Of note, if VA is required to query offices internal 
        and external to VA at the time an employee resigns to 
        determine if there is a pending investigation and to 
        obtain the results to ascertain if any allegations were 
        substantiated, this will require staff and technology 
        to manage. Further, when an employee moves to another 
        Federal agency or leaves Federal service, VA no longer 
        has access to the official personnel record file. 
        Determining where the record is located and how to make 
        a notation in the file will require coordination in 
        these instances and other options for complying with 
        the intent of the Bill need to be considered when the 
        record is no longer within the control of VA.

    If this legislation becomes law, it will be burdensome for 
VA to implement, with likely little effect on accountability at 
VA. Further, following the legislative hearing on H.R. 7734, 
the text was updated to align with 5 U.S.C. Sec. 3322 and to 
afford VA employees the due process rights that were absent 
from the original text. However, language that goes beyond the 
requirements of Title 5 was also added, requiring VA to start 
or complete investigations into alleged employee misconduct 
after an employee retires or resigns. Since this significant 
change to the text occurred after the subcommittee legislative 
hearing on the bill, VA views on how this requirement would 
work in practice have not been provided. In an April 30, 2024, 
letter submitted for the record for the House Committee on 
Veterans Affairs full Committee markup on May 1, 2024, the 
American Federation of Government Employees explained the 
following in opposition to H.R. 7734:

          While we understand the intent of the bill, any 
        personnel investigation conducted after an employee 
        departs is likely to be unreliable and biased in favor 
        of the government. Requiring the department to conduct 
        and complete such an investigation after an employee's 
        departure is costly, burdensome, and arguably a waste 
        of time--and ironically discourages both the agency and 
        the employee from resolving and settling routine 
        personnel matters. Moreover, for an employee to contest 
        an adverse determination after leaving the VA requires 
        a significant investment of personal resources, 
        including the ability to pay what are likely six-figure 
        legal bills for the sake of a position the employee no 
        longer holds and where there is little benefit to 
        litigation. Finally, it appears the bill gives the 
        agency an unlimited time period to accumulate evidence 
        and complete its report, whereas a subject employee has 
        only an unrealistic 30-day window to obtain affidavits 
        and other evidence to rebut whatever the agency has 
        produced.

    Additionally, there are issues with the other bill 
underlying H.R. 7734, as amended, H.R. 7731, the VA Political 
Performance Disclosure Act. This language requires VA to submit 
to Congress the performance plans of its political appointees. 
This Committee does not and should not have a role in 
micromanaging the performance plans of any VA employee, 
including political appointees. The VA Choice and Quality 
Employment Act of 2017 added section 725 to Title 38 and 
defined which political appointees shall receive an annual 
performance plan and the minimum contents of the plan. VA 
operates an SES performance appraisal system that is certified 
by the Office of Personnel Management with concurrence from the 
Office of Management and Budget. Certification criteria require 
that all SES members' performance plans be aligned to the 
agency's mission, strategic goals, program/policy objectives, 
and/or annual performance plan and budget priorities and that 
the annual summary rating be based on both individual and 
organizational performance. There are other opportunities for 
the Committee to perform oversight on political appointees' 
performance rather than placing an onerous requirement on VA to 
submit performance plans to Congress.
    In an April 30, 2024, letter submitted for the record for 
the House Committee on Veterans Affairs Full Committee mark up 
on May 1, 2024, the Senior Executives Association explained the 
following in opposition to H.R. 7734, as amended:

          There may be better options for Congress to perform 
        its oversight function than to review individual 
        performance plans. Federal agencies, including VA, 
        report publicly on Performance.gov their agency 
        priority goals, their strategic plans, learning 
        agendas, performance plans and quarterly reports. To 
        strengthen its oversight capabilities, Congress should 
        seek to understand how the Secretary and Departmental 
        leadership are using performance information to hold 
        its appointees accountable for serving Veterans. This 
        may be a topic that would be ideal for study by the 
        National Academy of Public Administration (NAPA), or a 
        similar independent and well-respected non-profit.

    It is also concerning that external stakeholders were not 
asked to comment on or provide views for either of the bills 
underlying H.R. 7344, as amended. Without understanding the 
practical implications and ramifications of these policy 
changes and whether they will make any meaningful change in 
terms of accountability at VA, this bill is unwarranted. 
Instead, the Committee should focus on performing oversight on 
how VA itself is holding its political appointees accountable 
for their performance and VA's compliance with existing Title 5 
requirements for personnel file notations when an employee 
leaves the agency after an investigation that results in an 
adverse finding.
                                               Mark Takano,
                                                    Ranking Member.

                                  [all]