House Report 118-613 - PERSONNEL INTEGRITY IN VETERANS AFFAIRS ACT OF 2024

[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

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.

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