Veterans Health Administration: Performance and Conduct Issues Involving
Senior Managers at VA Medical Centers (Letter Report, 04/30/98,
GAO/GGD-98-92).

Pursuant to a congressional request, GAO reviewed how the Department of
Veterans Affairs (VA) manages the performance of senior executives and
deals with instances of poor performance and misconduct, focusing on the
Veterans Health Administration (VHA) during fiscal years 1994 through
1996.

GAO noted that: (1) none of the 477 management triad members received a
performance appraisal of less than Fully Successful during the 1994
through 1996 rating periods; (2) this is not much different from how
other executive agencies rated their senior management employees during
this 3-year period; (3) the network directors acknowledged in
interviews, however, that the record of the performance appraisals did
not capture the actual performance appraisals of all the management
triad members; (4) most network directors agreed that they did not
identify poor or marginal performance in the performance appraisals,
because those ratings necessitate formal actions to remedy performance
problems; (5) the network directors perceived those actions as
time-consuming and distracting, burdensome, and unlikely to produce a
desired result; (6) although network directors did not use formal means
to deal with poor or marginal performers, they said they effectively
managed poor performers through informal means; (7) the network
directors' propensity to use informal, rather than formal, means to
address performance problems is not unique to them; (8) prior studies by
GAO and the Merit Systems Protection Board have shown that managers and
supervisors governmentwide have avoided taking formal actions against
less than satisfactory performers for some of the very same reasons
cited by the network directors; (9) in its oversight capacity for
federal personnel issues, the Office of Personnel Management(OPM) has
included in its strategic plan for fiscal years 1997 through 2002
efforts to improve the capacity of managers to identify and resolve
performance problems; (10) the network directors were nearly unanimous
in asserting that the changes VHA recently implemented, particularly the
reduction in the number of triad members for whom they were responsible,
were helping them to identify and deal with poor performance; (11) most
network directors did not consider misconduct to be a widespread problem
among management triad officials, although they did acknowledge that
instances of misconduct by employees at that level has occurred; (12)
disciplinary actions that VHA took to address the misconduct created
some controversy that primarily revolved around one sexual harassment
case; and (13) the controversy about how VHA handled this case as well
as concerns about the effectiveness of VA's zero tolerance policy for
sexual harassment and employment discrimination led to administrative
and statutory changes.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-98-92
     TITLE:  Veterans Health Administration: Performance and Conduct 
             Issues Involving Senior Managers at VA Medical Centers
      DATE:  04/30/98
   SUBJECT:  Personnel evaluation systems
             Malfeasance
             Human resources utilization
             Federal employees
             Employee demotions
             Personnel management
             Employee transfers
IDENTIFIER:  VA Veterans Integrated Service Network
             OPM Executive Information System
             OPM Central Personnel Data File
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Veterans' Affairs, House of
Representatives; and the Honorable
Tim Hutchinson, U.S.  Senate

April 1998

VETERANS HEALTH ADMINISTRATION -
PERFORMANCE AND CONDUCT ISSUES
INVOLVING SENIOR MANAGERS AT VA
MEDICAL CENTERS

GAO/GGD-98-92

VHA's Handling of Performance and Conduct Issues

(410090)


Abbreviations
=============================================================== ABBREV

  CPDF - Central Personnel Data File
  EEO - equal employment opportunity
  GS - general schedule
  MSPB - Merit Systems Protection Board
  OEO - Office of Equal Opportunity
  OGC - Office of General Counsel
  OHRM - Office of Human Resources Management
  OIG - Office of Inspector General
  OPM - Office of Personnel Management
  ORM - Office of Resolution Management
  PIP - performance improvement plan
  SES - Senior Executive Service
  U.S.C.  - United States Code
  VA - Department of Veterans Affairs
  VHA - Veterans Health Administration

Letter
=============================================================== LETTER


B-276217

April 30, 1998

The Honorable Bob Stump
Chairman, Committee on Veterans' Affairs
House of Representatives

The Honorable Tim Hutchinson
United States Senate

This report was prepared in response to your requests that we
undertake a study of how the Department of Veterans Affairs (VA)
manages the performance of senior executives and deals with instances
of poor performance and misconduct.  As agreed, we focused on the
operations of one component of VA, the Veterans Health Administration
(VHA), during fiscal years 1994 through 1996.  Our objectives were to
determine the following: 

  -- How was the VHA performance management system identifying and
     dealing with poor and marginal performers at the senior
     management levels of medical center director, associate or
     assistant director, and chief of staff? 

  -- What effects, if any, have changes in organizational structure,
     policies, and procedures instituted by VHA in fiscal year 1996
     had on its ability to identify and deal with poor and marginal
     performers? 

  -- How was VHA identifying and dealing with instances of misconduct
     at the senior management levels of medical center director,
     associate or assistant director, and chief of staff? 


   BACKGROUND
------------------------------------------------------------ Letter :1

VHA, with a fiscal year 1998 budget of over $18.5 billion and a
workforce of about 190,000 employees, is charged with providing
health care to the nation's veterans and operates an integrated
health care system that includes medical centers, outpatient clinics,
nursing homes, and counseling centers.  In October 1995, the House
Committee on Veterans' Affairs held a hearing on issues related to
the management of VA's health care system.  The hearing raised
concerns about how VHA manages the performance of its senior
executives and deals with instances of poor performance and
misconduct, particularly at the 173 medical centers. 

In October 1995, VHA implemented a major restructuring designed to
address problems in operational efficiency, accountability, and the
provision of quality health care.  A significant component of that
restructuring was the realignment of VHA's management and field
structure from 4 regional offices, each headed by a regional director
who supervised the operation of 36 to 45 medical care facilities in
his or her region, to 22 regional Veterans Integrated Service
Networks.  VHA designed the networks so that each, headed by a
network director, is intended to coordinate the organization of
various medical facilities in order to improve the efficiency of
medical care provided to veterans in a geographic region. 

Typically, a medical center director, an associate or assistant
director, and a chief of staff (collectively the ï¿½management triadï¿½)
have senior management responsibilities at each medical center. 
Medical center directors and network directors are senior executives
who are appointed under either the Senior Executive Service (SES) or
the Title 38 personnel system.\1 Associate and assistant medical
center directors are general schedule (GS) employees in grades 13
through 15.  Chiefs of staff are appointed under Title 38.  For
purposes of this report, we referred to chiefs of staff as SES
equivalents because of the breadth of their responsibilities and
total pay. 

The appraisal systems governing the job-related performance of
members of the management triads provide for an annual summary rating
of one of five levels:  Outstanding, Excellent, Fully Successful,
Minimally Satisfactory, and Unsatisfactory.  For the purposes of this
report, we defined ï¿½poor or marginal performersï¿½ as those employees
who, in the network directors' view, performed at the Minimally
Satisfactory or Unsatisfactory levels, whether or not they actually
received such performance appraisal ratings.  The appraisal systems
also have provisions for managers to assist employees in improving
their performance and to take formal, performance-based actions, such
as demotions and removals, when their performance is rated less than
Fully Successful. 

Like all VA employees, management triad members are expected to
maintain high standards of conduct.  Instances of misconduct, which
we define as actions that would violate statutes, regulations, or VA
policies, are subject to a departmental process of investigation and
discipline calibrated to the offense.  Misconduct includes, but is
not limited to, such actions as misuse of government property, sexual
harassment, and violations of travel regulations. 


--------------------
\1 The Title 38 personnel system, created under the Act of January 3,
1946, 59 Stat.  677, as amended, governs VA's health care workers in
such occupations as physician, dentist, and nurse. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

None of the 477 management triad members received a performance
appraisal of less than Fully Successful during the 1994 through 1996
rating periods.  This is not much different from how other executive
agencies rated their senior management employees during this 3-year
period.  Office of Personnel Management (OPM) data showed that during
this same period, about one-tenth of 1 percent of an average of 5,066
senior executives received a rating of less than Fully Successful. 
The OPM data also showed that of an average of 126 employees in other
executive agencies who were in positions comparable to the associate
and assistant medical center directors, about eight-tenths of 1
percent received a less than Fully Successful rating. 

The network directors acknowledged in interviews, however, that the
record of the performance appraisals did not capture the actual
performance of all the management triad members.  Two-thirds of the
network directors reported they had considered at least one member of
the management triads within their networks a poor or marginal
performer at some time during the period.  The aggregate number of
poor or marginal performers reported by the network directors was 37. 
Various information VHA headquarters provided showed that the
performance of an additional 10 triad members was considered to be
marginal or poor some time during the 3-year period.  Thus, 47 (or 10
percent) of the 477 triad members were viewed as performing at a less
than Fully Successful level at some time during this period.  Over
half of the network directors believed that the number of poor or
marginally performing triad members within VHA over the fiscal year
1994 through 1996 period was relatively small overall.  They
attributed this to VA's selection process, which, in their view,
weeds out the poor performers before they reach the senior executive
level. 

Most network directors agreed that they did not identify poor or
marginal performance in the performance appraisals, because those
ratings necessitate formal actions to remedy performance problems. 
The network directors perceived those actions as time-consuming and
distracting, burdensome, and unlikely to produce a desired result. 
Most network directors believed that formal actions based on an
official performance appraisal of less than Fully Successful created
an adversarial and unproductive relationship between management and
the employee and were unlikely to either improve performance or lead
to removal.  However, because the network directors and other VHA
senior managers had not given the triad members an official rating
that identified their performance as poor or marginal, it would have
been difficult for them to take formal, performance-based actions
against the employees. 

Although network directors did not use formal means to deal with poor
or marginal performers, they said they effectively managed poor
performers through informal means.\2 These informal measures, they
said, included informal counseling, reassigning a triad member to a
position more suited to an individual's talents (without officially
noting that the reassignment was related to poor performance), and
circumspectly encouraging the individual to retire or resign.  Almost
all of the network directors agreed that informal means of managing
performance at the triad level were effective means for dealing with
poor or marginal performers.  Almost all of the network directors
also stated that passing along poor performers to unwitting
colleagues is not now used as a technique for managing poor
performers, although they said it was formerly done under the
regional structure that existed prior to October 1995. 

The network directors' propensity to use informal, rather than
formal, means to address performance problems is not unique to them. 
Prior studies by GAO and the Merit Systems Protection Board (MSPB)
have shown that managers and supervisors governmentwide have avoided
taking formal actions against less than satisfactory performers for
some of the very same reasons cited by the network directors.  In its
oversight capacity for federal personnel issues, OPM has included in
its strategic plan for fiscal years 1997 through 2002 efforts to
improve the capacity of managers to identify and resolve performance
problems. 

The network directors were nearly unanimous in asserting that the
changes VHA recently implemented, particularly the reduction in the
number of triad members for whom they were responsible, were helping
them to identify and deal with poor performance.  They also generally
agreed that VHA's new, more quantifiable performance measures were
having, or would likely have, a positive effect on assessment and
management of performance at the triad level. 

Most network directors did not consider misconduct to be a widespread
problem among management triad officials, although they did
acknowledge that instances of misconduct by employees at that level
had occurred.  Departmental records showed 14 substantiated cases of
misconduct by triad members during fiscal years 1994 through 1996. 
In 6 of the 14 cases, VHA took disciplinary action, which ranged from
a letter of admonishment to a demotion.  For the remaining eight
cases, no disciplinary actions were taken.  Rather, the employees
either retired, resigned, or were counseled. 

The disciplinary actions that VHA took to address the misconduct
created some controversy that primarily revolved around one sexual
harassment case.  The controversy about how VHA handled this case as
well as concerns about the effectiveness of VA's "zero tolerance"
policy for sexual harassment and employment discrimination led to
administrative and statutory changes.  In March 1997, VA changed its
policy and procedures for handling and resolving misconduct that
involves senior VA officials.  This new policy required that a panel
of senior VA executives would be responsible for ensuring
departmentwide consistency in dealing with allegations of misconduct. 
Also, legislation was enacted in November 1997 that established a new
process and structure for investigating and resolving employment
discrimination complaints.  Under this legislation, VA is planning to
change the procedure for investigating allegations of discrimination
and sexual harassment. 


--------------------
\2 For purposes of this report, we defined formal means as
performance-based adverse actions, such as demotions or removals,
that are taken on the basis of an official rating of less than Fully
Successful.  We defined informal means as actions that are taken on
the basis of an employee voluntarily agreeing to them following
management's informal assessment of, rather than an official rating
of, his or her performance as poor or marginal. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To meet our objective of determining how VHA was identifying and
dealing with poor and marginal performers at the triad level, we
analyzed data obtained from VHA's Management and Administrative
Support Office on performance ratings, reassignments, and other
performance-related actions.  We did not verify the accuracy or
completeness of these data, but we did follow up on the readily
apparent omissions and inconsistencies we found in the data provided
on ratings and other performance-related actions. 

Because VHA rating data indicated that no triad members received an
official summary appraisal rating of less than Fully Successful
during the 1994 through 1996 rating periods, we interviewed the 21
VHA network directors who were in their positions when we did the
interviews during April to July 1997.  Although VHA has 22 networks,
we were able to interview only 21 of the 22 directors of these
networks, because 1 had resigned from VA at the time we began our
interviews in April.  We did face-to-face interviews with 19 of the
21 network directors.  For the remaining two directors, we did a
teleconference with one and a videoconference with the other. 

We interviewed the network directors because they are directly
responsible for rating and managing the medical center directors'
performance and are expected to be knowledgeable about, and
ultimately responsible for, the ratings and performance of the
associate and assistant medical center directors and chiefs of staff. 
Our purpose in interviewing the network directors was to (1)
determine whether they believed some triad members were not
performing to the Fully Successful level, despite what their official
ratings showed; (2) identify what actions, if any, were taken to deal
with the triad members whom they believed performed at a less than
Fully Successful level; and (3) get their views on the effectiveness
of the actions in dealing with the performance problems.  We did not
interview affected employees or representatives of VHA employee
organizations.  Consequently, we do not know whether their views on
the effectiveness of the actions for dealing with poor or marginal
performance would be similar to or different from the views expressed
by the network directors. 

To facilitate the network directors being open and candid with us, we
asked them to identify individuals, by position rather than by name,
in their own networks whom they believed were poor or marginal
performers, despite what the official ratings showed for 1994 through
1996.  We also agreed to report the information that the network
directors shared with us in a manner that would not identify them or
their network.  On the basis of the views expressed by the network
directors during the interviews, we developed our definition of poor
or marginal performers. 

To confirm our understanding of and obtain a consensus of the
opinions expressed during the interviews, we sent a survey instrument
to the network directors in July 1997 that summarized various
opinions we had discerned in the interviews.  All 21 network
directors responded to the survey.  We asked them if they agreed or
disagreed with the 57 opinions or had "no basis" for comment because
they either had no knowledge of the particular matter addressed in
the opinion or believed they had not worked long enough at VHA to
comment.  We excluded the "no basis" responses in reporting the
survey results, because we wanted to report the opinions of only
network directors who had a basis for either agreeing or disagreeing
with the opinions.  We also excluded the "no responses" in order to
use a more precise respondent base in reporting the survey results. 
The number of network directors who indicated "no basis" responses
and "no responses" varied.  For example, the number of network
directors who indicated "no basis" ranged from no directors on 6
opinions to 10 directors on 1 opinion.  Five network directors did
not respond to 19 of the opinions.  The average number of "no basis"
and "no responses" was about four network directors per opinion. 

We also interviewed personnel officials in VHA's Management and
Administrative Support Office; VHA's former Chief Network Officer,
who was responsible for rating and managing the performance of the
network directors; and officials at OPM who oversee agencies'
operation of the SES program.  The purpose of the interviews with VHA
officials was to corroborate the information provided by the network
directors and to gather additional information about the number and
management of poor and marginal performers at the management triad
level the official record did not reflect, because the network
directors were relatively new to their positions.  At the time of our
interviews with the network directors, nearly all of them had been in
their positions 18 months.  The purpose of our interviews with OPM
officials was to help us determine whether actions taken by VHA to
deal with poor or marginal performers were consistent with regulatory
and statutory requirements.  We did not attempt to judge the merits
of the specific informal, performance-based actions taken. 

We asked officials of VHA's Management and Administrative Support
Office to confirm that the triad members whom the network directors
identified to us by position and whom they believed were poor or
marginal performers occupied those positions.  We also asked them to
provide information, if any, on other triad members not identified by
the network directors who performed at a less than Fully Successful
level at some point during fiscal years 1994 through 1996.  VHA
provided various documents that contained data on reassignments and
other actions taken to address performance-related problems of triad
members who had not been identified by the network directors. 

We also followed up on the informal, performance-based actions that
VHA took during fiscal years 1994 through 1996 to deal with triad
members who, according to the network directors' views and data
provided by VHA's Management and Administrative Support Office, had
been informally judged to be performing at a less than Fully
Successful level.  We did so by reviewing official personnel and
employee performance files and collecting data from VHA's Management
and Administrative Support Office to determine whether (1) the
less-than-satisfactory performers had been subjects of other informal
actions or formal, performance-based actions as triad members during
the 5- year period ending September 30, 1996; and (2) inconsistent
personnel actions had occurred, such as less-than-satisfactory
performers receiving performance awards in the same year that
informal actions had been taken to deal with their performance. 

To meet our second objective of determining the effects, if any, of
changes in organizational structure, policies, and procedures
recently instituted by VHA on managing performance at the triad
level, we interviewed personnel officials in VA's Office of Human
Resources Management (OHRM) and VHA's Management and Administrative
Support Office to identify the changes.  We also reviewed various VHA
documents to confirm that the recent changes had been implemented. 
These documents included samples of the network directors'
performance plans that contained new performance measures and
directories and organization charts of VHA's restructured field
facilities.  Finally, we asked the network directors for their views
on the effects of these changes during our interviews and in our
follow-up survey with them.  We did not do an independent assessment
of the effects of the changes. 

To meet the third objective of determining how VHA was identifying
and dealing with instances of misconduct at the triad level, we
reviewed VA and VHA manuals that (1) detail the policy and procedures
that managers are required to follow in cases of alleged misconduct
and (2) specify in a table of penalties the range of penalties
available for specific types of misconduct.  We analyzed data on the
number, nature, and disposition of misconduct cases addressed in
fiscal years 1994 through 1996, which we obtained from the records of
VA's Office of Inspector General (OIG), Office of Equal Opportunity
(OEO), and OHRM.  We also interviewed officials from these three
organizations to clarify our understanding of the data provided and
to obtain their insights regarding VHA's practices in dealing with
offenses of misconduct.  We obtained the perspectives of the network
directors on how misconduct was identified and dealt with at the
triad level during our interviews and in a follow-up survey with
them. 

We were not able to determine whether the number and types of
misconduct complaints VHA received and substantiated involving its
triad members were comparable governmentwide, because OPM's Central
Personnel Data File (CPDF) does not contain a record of misconduct
complaints.  Misconduct complaints are not contained in the CPDF,
because they are not personnel actions. 

We compared the range of penalties available at VA for handling
instances of misconduct with the range of penalties available at two
judgmentally selected executive agencies--the Department of Commerce
and the Department of Agriculture--because a governmentwide table of
penalties does not exist.  The number of executive branch agencies
precluded us from doing a detailed comparison of the tables of
penalties available at all of them.  For that reason, we chose two
large federal agencies to serve as points of comparison with VA and
to provide a general illustration of the penalties that other
government agencies use to address misconduct. 

A draft of this report was given to the Acting Secretary of VA and
the Director of OPM for their review and comment.  On March 31, 1998,
designees of the Acting Secretary of VA, which included the director
of VHA's Management and Administrative Support Office and several VA
officials from various offices, such as the Office of the Assistant
Secretary for Human Resources and Administration and OIG, provided us
with oral comments.  Their comments are discussed on page 36.  The
Director of OPM provided us written comments on a draft of this
report in a letter dated April 6, 1998.  These comments are also
discussed on page 36 and are reprinted in appendix I. 

We did our work in Washington, D.C., from March 1997 to January 1998
in accordance with generally accepted government auditing standards. 


   MANAGERS SAID THEY USED
   INFORMAL RATHER THAN FORMAL
   MEANS TO DEAL WITH POOR OR
   MARGINAL PERFORMERS
------------------------------------------------------------ Letter :4

VHA's network directors did not use certain aspects of the formal
performance management system to identify and deal with triad members
whom they believed performed poorly or marginally.  This is partially
supported by the fact that rating data for the 3-year period ending
September 30, 1996, showed that no triad members received a less than
Fully Successful rating.  The majority of the triad members received
ratings of Outstanding or Excellent during 1994 through 1996. 
Consequently, VHA could not take any formal, performance-based
actions on the basis of the triad members' official performance
ratings.  The network directors cited several reasons, such as
organizational culture and systemic problems, for not using the
official performance appraisal and other formal means to identify and
deal with less-than-satisfactory performers.  Nevertheless, the
network directors said they took actions to deal with triad members
whom they believed performed poorly or marginally.  According to the
network directors, they used informal, rather than formal, means to
deal with poor or marginal performers because they believed the
informal means were effective, less time consuming, and less
administratively burdensome. 

The network directors' avoidance of the formal system to address less
than Fully Successful performance is not unique to them.  Prior to
passage of the Civil Service Reform Act (Reform Act) (P.  L.  95-454,
Oct.  13, 1978), it was recognized that managers rarely gave
unsatisfactory ratings, because the follow-on actions for dealing
with unsatisfactory performance were viewed as time-consuming and
expensive.  We reported in 1990 that governmentwide, poor performers
were not necessarily documented through the appraisal process and
that supervisors were unwilling to use the formal process to deal
with them.\3 MSPB reported in 1995 and 1997 that supervisors
perceived disincentives to using the formal system to deal with
performance problems.\4 For example, MSPB reported that supervisors
were discouraged from taking formal actions against employees who
performed at an unacceptable level, because they perceived the
process for doing so as too complicated, time consuming, or onerous. 

The Reform Act revised the procedures for taking actions against poor
performers to make it easier for managers to do so.  However, the
results of this study and our 1990 study and of recent MSPB studies
indicate that managers perceive that this goal has not been achieved. 


--------------------
\3 Performance Management:  How Well Is the Government Dealing With
Poor Performers?  (GAO/GGD-91-7, Oct.  2, 1990). 

\4 Adherence to the Merit Principles in the Workplace:  Federal
Employees' Views, MSPB, September 1997; and Removing Poor Performers
in the Federal Service, MSPB, September 1995. 


      FORMAL PERFORMANCE
      MANAGEMENT SYSTEM WAS NOT
      USED TO IDENTIFY AND DEAL
      WITH POOR PERFORMERS
---------------------------------------------------------- Letter :4.1

Our review of VHA performance appraisal data revealed that none of
the 477 management triad members received a rating lower than Fully
Successful during the 1994 through 1996 rating periods.  However, in
responding to our survey, 20 of the network directors agreed (and 1
disagreed) that VHA had some poor or marginal performers within the
management triads during that 3-year period.  Fourteen of the 21
network directors said they had poor or marginal performers in their
networks.  The aggregate number of poor or marginal performers,
according to the network directors, was 37.  Also, VHA headquarters
provided various documents, compiled in response to requests from us
and from Senate and House congressional staff, that identified an
additional 10 triad members whose performance was considered to be
less than Fully Successful at some point during the 3-year period. 
Thus, VHA considered that 47 (or 10 percent) of the VHA management
triad members performed below the Fully Successful level at some
point during the 3-year period.  According to the network directors
and documents provided by VHA headquarters, the actions taken to
address the performance-related problems of these 47 triad members
included demotion, reassignment, and placement on a performance
improvement plan (PIP). 

The fact that VHA officials did not rate any of their triad members
as less than Fully Successful is not much different from what occurs
governmentwide and in VA as a whole.  Very few senior executives
governmentwide received ratings of less than Fully Successful,
according to data from OPM's Executive Information System.  The data
showed that for the 1994 and 1995 rating periods, which ended
September 30, eight senior executives each year received a rating of
Unsatisfactory or Minimally Satisfactory.  For the fiscal year 1996
rating period, five senior executives received a rating of less than
Fully Successful.  The number of executives who received a rating of
less than Fully Successful during the 3-year period represented about
one-tenth of 1 percent of an average of 5,066\5 senior executives
rated during that period.  OPM's executive database system also
showed that no senior executives in VA received a rating of
Unsatisfactory or Minimally Satisfactory during the 3-year period. 
Data from OPM's CPDF showed that of an average of 126 employees in
other executive agencies who were in the same job series and grades
as VHA's associate and assistant medical center directors, 1 employee
(or eight-tenths of 1 percent) received a rating of less than Fully
Successful during the 3-year period. 

Also, the distribution of VHA's ratings for its triad members at and
above the Fully Successful level during the same 3-year period did
not differ greatly from what occurred elsewhere in the government and
in VA as a whole.  VHA rating data showed that from 75 percent to 85
percent of the triad members were rated either Outstanding or
Excellent during the 3-year period; 15 to 25 percent were rated Fully
Successful.  OPM's data showed that for this same period, 91 percent
of an average of 5,066 senior executives received either an
Outstanding or Excellent rating, and about 9 percent received a Fully
Successful rating.  OPM's data also showed that of an average of 288
VA senior executives rated during the 3-year period, 83 percent
received ratings of Outstanding or Excellent.  Of an average of 126
employees in other executive agencies who were in positions
comparable to VHA's associate and assistant medical center directors,
OPM data showed that 85 percent of these employees received a rating
above the Fully Successful level during 1994 through 1996. 

According to the network directors, informal means were used to deal
with poor or marginal performers after holding frank, but generally
undocumented, discussions with the employees.  In responding to our
survey, the majority of the network directors agreed that the
following four informal means had been used at VHA, and about
one-third to one-half of them also indicated that they had used these
informal means within their networks to deal with poor or marginally
performing triad members: 

  -- reassigning an individual to a position more suitable to his or
     her skills,

  -- encouraging an employee to retire if eligible,

  -- encouraging an employee to accept another position (sometimes as
     part of a negotiated settlement), and

  -- using the opportunity of organizational consolidations to leave
     a poor or marginal performer out of the new structure. 

Other informal means that some network directors noted in the
interviews included informally assigning a mentor to a struggling
employee, detailing the employee to another position, and deferring a
rating while the employee completed a PIP.  However, in their
responses to our survey, network directors said that one informal
means that is not used is the passing along of poor performers to
unwitting colleagues.  The network directors were nearly uniform in
stating that this method, although used in the past, was not now an
option.  Most network directors agreed that they now have an
understanding among themselves that they will not pass marginal or
poor performers to one another without first discussing the reasons
and circumstances. 

Data provided by VHA headquarters officials confirmed that the types
of informal actions identified by the network directors and earlier
defined in this report had been taken with respect to triad members. 
The data VHA provided also identified action plans as a means for
dealing with poor or marginally performing triad members.  The action
plans were designed to ensure that triad members implemented
recommendations made as a result of reviews of their management of
the medical centers. 

In total, the VHA data showed a record of 7 types of actions taken
with respect to 29 of the 47 triad members identified by the network
directors and VHA headquarters records.  The VHA data did not show a
record of actions (such as assignment of a mentor) that the network
directors said were taken to deal with the performance of the
remaining 18 triad members.  For 11 of the 29 triad members, informal
actions were initiated to address their performance problems after
September 30, 1996, the end of our review period.  According to our
interviews with the network directors and data obtained from VHA's
Management and Administrative Support Office, the performance of the
11 triad members was considered poor or marginal at some point during
fiscal years 1994 through 1996; however, the informal actions were
initiated after September 30, 1996. 

For 19 of the 29 triad members, VHA took only 1 type of action; for
10 triad members, VHA took 2 types of actions.  Table 1 shows the
types of actions taken with respect to the 19 triad members. 



                                Table 1
                
                  Actions Taken to Address Performance
                      Problems of 19 Triad Members

                                                       Number of triad
Type of action                                                 members
----------------------------------------------  ----------------------
Reassigned                                                           4
Demoted                                                              5
Placed on a PIP\a                                                    4
Deferred rating while negotiating actions to                         0
 address the performance problem
Detailed to other positions or duties                                1
Retired voluntarily following performance                            5
 counseling
Placed on an action plan                                             0
======================================================================
Total                                                               19
----------------------------------------------------------------------
\a Three of the four triad members were not rated at the end of the
appraisal cycle.  Instead, their rating periods were extended until
they completed a PIP.  The rating period for the remaining triad
member was not extended.  He was placed on a PIP before the appraisal
cycle ended and rated at the end of it. 

Source:  GAO's analysis of data provided by VHA's Management and
Administrative Support Office. 

Of the remaining 10 triad members for whom 2 actions were taken, 5
were initially detailed and later retired or were reassigned,
demoted, or placed on an action plan.  For 4 of the 10, the rating
periods were deferred or extended, and they later resigned or were
demoted or reassigned.  The remaining triad member was demoted and
later voluntarily decided to retire. 

Of the four triad members whose rating periods were deferred, none
received a formal performance appraisal for the rating period that
had been deferred.  One of the four triad members resigned from his
position.  According to a VHA Management and Administrative Support
Office official, one of the remaining three triad members should have
received a rating but apparently did not because of an administrative
oversight.  This official also said that the remaining two triad
members were not rated, because there was no practical point in doing
so once they had agreed to removal from their positions. 

We followed up on the 29 triad members (15 medical center directors,
5 associate directors, and 9 chiefs of staff) who had been subjected
to these informal actions to determine if (1) they had been subjected
to any other informal actions or any formal, performance-based
actions during the 5-year period ending September 30, 1996; and (2)
any apparently inconsistent personnel actions had occurred, such as a
triad member receiving a performance-based award in the same year
that the informal action was taken. 

In our review of the official personnel and performance files on the
15 medical center directors, we found that 1 of the 15 medical center
directors had been subjected to another performance-based action
during the 5-year period.  After receiving performance counseling,
the medical center director was placed on a PIP during the fiscal
year 1993 rating period.  For the remaining 14 medical center
directors, the files did not contain evidence of informal or formal
actions being taken or proposed to address performance problems from
October 1, 1991, to September 30, 1996. 

For the remaining 14 triad members (the 5 associate directors and 9
chiefs of staff), data provided by VHA's Management and
Administrative Support Office did not indicate that any of the 14 had
been subjected to other informal actions or to formal,
performance-based actions during the 5-year period that ended
September 30, 1996.  However, data provided by VHA's Management and
Administrative Support Office showed that since September 30, 1996,
one of the nine chiefs of staff has been subjected to a formal,
performance-based action.  The chief of staff was placed on a PIP and
subsequently given a Minimally Satisfactory rating for the 1997
rating period.  The VHA data also showed that the chief of staff was
removed and downgraded from the position effective January 18, 1998. 

None of the 15 medical center directors received a performance award
or a pay advancement in the year that informal action was taken. 
Also, none of the nine associate directors received a performance
award in the same year that informal actions were taken.  According
to VHA officials, chiefs of staff do not receive performance awards
because they receive special pay. 


--------------------
\5 This figure excludes an average of 1,235 senior executives in
agencies with a three-level rating system who received a Fully
Successful rating during fiscal years 1994 through 1996.  We excluded
these executives from our comparison, because VHA's senior executives
are rated under a five-level rating system.  According to an OPM
official, the three rating levels consist of Unsatisfactory,
Minimally Satisfactory, and Fully Successful.  He cited the
Department of Defense as an example of an agency with a three-level
rating system. 


      MOST NETWORK DIRECTORS
      VIEWED INFORMAL MEANS AS
      EFFECTIVE FOR DEALING WITH
      POOR AND MARGINAL PERFORMERS
---------------------------------------------------------- Letter :4.2

During the interviews and follow-up survey with the network
directors, they gave several reasons for avoiding rating triad
members as less than Fully Successful and avoiding taking formal
actions to remedy performance problems.  The network directors
described numerous instances during our interviews in which they had
undertaken informal measures to improve poor performance.  In
responding to our survey, 15 network directors agreed (and 1
disagreed) with the opinion that informal means are more effective
than formal means for dealing with poor or marginal performers.  They
also generally agreed with the opinion that informal means of dealing
with performance problems were less adversarial (14 agreed and 4
disagreed) and less administratively burdensome than the formal means
(18 agreed and 1 disagreed). 

Among the reasons cited by the network directors during the
interviews for avoiding rating triad members as less than Fully
Successful were the following: 

  -- Three network directors said that it was especially difficult to
     lower a rating when the performance level had not changed and
     the adjustment was solely to correct the general problem of
     rating inflation that exists at the triad level in VHA.  Another
     network director added that a factor contributing to rating
     inflation is that an individual's prior performance rating
     greatly influenced his or her current year's rating. 

  -- A rating of less than Fully Successful requires that a formal
     remedial action be taken; when a formal action is invoked, it
     turns the problem into a dispute, according to six other network
     directors.  Three of these six network directors also said that
     employees view ratings of less than Fully Successful and
     evidence in the personnel file of formal, performance-based
     actions as serious matters worth fighting.  Thus, the directors
     were reluctant to give marginal and poor performance ratings and
     take formal performance-based actions, because this can result
     in an adversarial atmosphere, which they believe might hinder
     resolution of performance issues. 

One of the network directors recognized that the practice of not
giving accurate appraisals can lead to certain problems.  This
director indicated during our interview that as a result of not
formally identifying poor or marginal performers with the appropriate
rating, it becomes difficult to differentiate among individual
employees because the appraisals are so similar.  This director, who
has a private sector background, also noted during the interview that
this practice does not occur just in VHA.  He said that performance
appraisals in many parts of the private sector were just as benign as
those he had observed in VHA.  In both the public and private
sectors, he said, managers show little willingness to write accurate
performance appraisals. 

Nine of the network directors also noted in the interviews that they
believed that undertaking formal performance actions imposes a heavy
administrative burden.  One of the nine network directors noted that
the formal process often transformed an effort to establish an
employee's lack of satisfactory performance into a legal dispute,
where the objective became the resolution of a dispute.  Thus, the
formal process often led to a compromise, which two of the nine
directors believed did not necessarily lead to the best or the
desired result. 

As shown in table 2, in responding to our follow-up survey, the
network directors also cited additional reasons that contributed to
managers not giving less than Fully Successful ratings to triad
members who should have received such ratings and not taking formal
actions to remedy performance problems. 



                                Table 2
                
                 Reasons Cited by the Network Directors
                 for Not Using Formal Means to Identify
                     and Deal With Poor or Marginal
                               Performers

                                                    Number of network
                                                      directors who:
                                                    ------------------
                                                              Disagree
                                                      Agreed         d
--------------------------------------------------  --------  --------
The network directors either agreed or disagreed
 that the following reasons contributed to
 managers not giving less than Fully Successful
 ratings.
VHA's culture is not to give a less than Fully            11         6
 Successful rating.
Historically, the triad members had received              16         1
 ratings of Fully Successful or higher.
The former performance measures for medical center        15         3
 directors were too broad and subjective for
 identifying performance problems.
The network directors either agreed or disagreed
 that the following reasons contributed to
 managers not taking formal actions.
The processes for taking formal actions were too          18         2
 lengthy, paper-intensive, and time-consuming.
The burden of proof needed to take formal actions         16         3
 is perceived to be too great.
A formal action can result in the poor or marginal        17         2
 performers pursuing the various avenues of appeal
 available to them.
The performance problem had to reach extreme              14         4
 proportions in order for managers to be willing
 to pursue the formal process.
Managers have concerns about being accused of poor         6        11
 supervision, discrimination, or slander.
Managers have concerns about whether or not the VA        14         4
 central offices (e.g., personnel and VHA
 headquarters officials) would support them in
 dealing with poor performers.
----------------------------------------------------------------------
Source:  GAO's survey of the network directors. 


      USE OF INFORMAL MEANS TO
      ADDRESS POOR OR MARGINAL
      PERFORMANCE CARRIES CERTAIN
      RISKS FOR THE AGENCY
---------------------------------------------------------- Letter :4.3

Because none of the triad members identified by the network directors
or VHA headquarters as poor or marginal performers had been
officially rated as such, it made it more difficult for the network
directors and other VHA senior managers to take certain formal,
performance-based actions against the employees in dealing with the
performance problems.  For example, the reassignment, transfer, or
removal of an SES employee for unsatisfactory performance is
permitted under 5 U.S.C.  4314(b).  However, because VHA officials
gave triad members satisfactory or better ratings of record even
though they viewed their performance as poor or marginal, the law did
not permit the officials to take performance-based actions against
the triad members.  Thus, VHA could not take any action against the
triad members unless they voluntarily agreed to the action VHA
proposed to take, because the action was based on an informal
assessment of their performance, not on an official rating of less
than Fully Successful.  This use of informal means to identify and
deal with poor or marginally performing triad members can carry
certain risks for the agency, especially when the agency has not
documented the poor or marginal performance. 

The failure to accurately evaluate the performance of an employee is
a failure to follow the requirements of the performance appraisal
systems mandated by law.  For example, performance appraisal
standards for SES employees in chapter 43 of the United States Code
require an accurate evaluation of performance that is based on
criteria related to the job or position. 

Although the VHA network directors and the top VA human resource
officials with whom we spoke said that the informal means have helped
them to successfully deal with poor or marginal performers, reliance
on these means carries certain risks for the agency.  One of the two
top human resource officials at VA with whom we spoke also recognized
that risks are associated with using informal means, because such
means generally do not preclude the employee from taking action
against the agency.  For example, triad members who were encouraged
to retire and did so because the network directors perceived their
performance to be poor or marginal but had not officially rated them
as such could later appeal the actions taken regarding them.\6

These employees could allege that their retirement resulted from
coercion, deception, or misinformation from the network directors. 
In such cases, VHA would have to prove that the network directors had
a valid basis for assessing the employees' performance as
unacceptable and that the employees retired voluntarily and not
because of coercion, deception, or misinformation from the agency. 
As of the time we completed our audit work, one of the triad members
had filed an appeal with MSPB regarding the informal action taken
with respect to him.  The triad member alleged that he was reassigned
in retaliation for whistleblowing. 

We discussed VHA's practice of relying on the informal system to
identify and deal with poor or marginal performers with VA's two top
human resource management officials.  They believed that the practice
was appropriate in cases where the network directors were informally
taking action to address a decline in the employee's performance that
had occurred at some point during an appraisal period, even though
the employee had received a Fully Successful or higher rating for the
prior appraisal period.  These officials said that it is better to
deal with a performance problem as it occurs rather than wait until
the end of a performance appraisal period to deal with it.  We agree
that taking action under such circumstances is appropriate.  We also
note from our interviews with the network directors that there is a
general aversion to documenting less than Fully Successful
performance in official performance appraisals. 

The officials also recognized, however, that less-than-accurate
appraisals of employees' performance do occur and are inconsistent
with performance appraisal policy.  One of the officials
characterized the performance appraisal system as cumbersome and
ineffective in its outcomes and recognized that most VHA managers do
not rely on it to address perceived problem deficiencies.  He said
that this approach may change over time as VHA develops more
objective, quantifiable performance measures.  Both officials
expressed the view that reliance on informal means to address
performance problems as well as a general aversion to documenting
poor performance on official ratings is a governmentwide phenomenon
and is not restricted to VHA. 

We also discussed with OPM officials VHA's practice of relying on the
informal system to identify and deal with poor or marginal
performers.  These officials said that supervisors should give honest
and accurate appraisals.  They also agreed that it is proper to
informally deal with an employee's decline in performance during an
appraisal period rather than waiting until the end of a period and
documenting the decline in an official appraisal.  The OPM officials
did not specifically address VHA's practice, because they said they
would need to know the details of individual cases.  For example, was
the unacceptable performance extended over a period of time during
which the employee received inflated ratings, or did the unacceptable
performance occur during the rating period in which the
performance-based action was taken?  The OPM officials pointed out
that performance management can be difficult and human nature
sometimes results in managers avoiding confrontation or giving an
employee the benefit of the doubt.  They suggested, however, that if
a system is flawed, or perceived to be flawed, it should be examined
with the objective of making it more usable by managers while
providing appropriate protections to the employees. 

We recognize that the network directors' avoidance of the formal
system for identifying and dealing with unacceptable performance is
not unique to them.  Far less than 1 percent of employees
governmentwide in positions comparable to those of the triad members
received ratings below Fully Successful during fiscal years 1994
through 1996.  In 1990, we reported in a governmentwide study that
all poor performers were not necessarily documented through the
appraisal process.  Supervisors who responded to our questionnaire
estimated that 89,500 (or 5.7 percent) of the estimated 1.57 million
employees they supervised performed below the Fully Successful level
at some time during fiscal year 1988.  Yet, OPM data for that same
year showed that about 0.6 percent of federal employees were rated
below the Fully Successful level.  We also reported that poor
performers were sometimes not formally designated as such in a rating
but instead were given a Fully Successful, because supervisors did
not want to use the formal process to deal with them.  In responding
to our survey, the supervisors indicated that they would not likely
use the formal process, because it took too long and used too much of
their time. 

Even prior to passage of the Reform Act in 1978, managers rarely gave
an unsatisfactory rating, because the follow-on actions for dealing
with the unsatisfactory performance were viewed as time-consuming,
expensive, and aggravating for all parties.  Because the process for
taking action on the basis of unsatisfactory performance was viewed
as slow and burdensome, it deterred managers from taking action that
might otherwise have been appropriate.  To make the process for
taking actions against poor performers easier for managers, the
Reform Act changed the standard of evidence for taking actions on the
basis of unacceptable performance from a "preponderance of evidence"
to "substantial evidence."

However, the results of our study of VHA, our 1990 governmentwide
study, and recent MSPB studies indicate that managers do not perceive
that the process for dealing with poor performers is easy enough to
use.  MSPB reported in 1995 that very few federal managers used the
procedures established by the Reform Act for taking performance-based
actions against poor performers.  Instead, some managers were able to
work around the deficiencies of their poor performers by controlling
assignments and using other strategies, such as reassigning them to
other offices where they might improve.  In responding to an MSPB
survey, managers and supervisors cited various factors that
discouraged them from taking formal actions.  These factors were very
similar to the reasons given by VHA's network directors for not using
the formal system to deal with performance problems.  Managers and
supervisors cited the following factors in response to MSPB's survey: 

  -- Most supervisors perceived the procedures established by the
     Reform Act to be too complicated, time-consuming, or onerous. 

  -- Many supervisors were reluctant to create an unpleasant work
     environment and believed that if they took formal action against
     a poor performer, it was very possible that (1) higher level
     management would not support them, (2) their decision would be
     reversed upon review or appeal, or (3) they would be falsely
     accused of having acted for discriminatory reasons. 

  -- About a third of the supervisors said they had difficulty
     relating performance deficiencies to their employees' critical
     elements, and over a third (39 percent) found it difficult to
     document employee performance. 

Also, a 1997 MSPB study corroborated its 1995 findings on
supervisors' and managers' reluctance to take formal,
performance-based actions.  According to MSPB's 1997 report, 43
percent of second-level and higher supervisors believed that their
organizations had a major problem in taking appropriate steps to
correct inadequate performance.  Fifty-nine percent of the
second-level and higher supervisors also believed that their
organizations had a major problem separating employees who could not
or would not improve their performance to meet the required
standards.  VA supervisors and nonsupervisors responding to MSPB's
survey also believed that their agency had a major problem with
correcting inadequate performance (41 percent) and separating poor
performers (51 percent). 

OPM's strategic plan for fiscal years 1997 through 2002, in part,
calls for continuing its efforts to improve the capacity of managers
to identify and resolve performance problems effectively.  One of the
strategies outlined in OPM's plan for achieving this objective was to
distribute by 1998 multimedia instructional materials to federal
managers and supervisors on how to identify and resolve performance
problems, including how to take successful action to remove a poor
performer.  On February 4, 1998, OPM's director provided the heads of
departments and independent agencies with a booklet and CD-ROM on
addressing and resolving poor performance.  According to OPM's
director, this material is designed to provide managers and
supervisors with the information needed to understand the process of
dealing with unacceptable performance and taking action when
necessary. 

We recognize the importance of distributing instructions and guidance
on how to identify and resolve performance problems.  As previously
discussed, VHA managers as well as managers at other executive
agencies were reluctant to use the formal system, because they
perceived the system as overly burdensome, complex, and
time-consuming.  For the VHA managers, their reluctance did not
appear to relate to a lack of knowledge on how to identify and deal
with poor performers using the formal system.  However, to the extent
VHA and other managers' negative perception of the formal system is
attributable to a lack of knowledge on how to identify and deal with
poor performers, OPM's instructions and guidance may help managers to
overcome their reluctance to use the formal system. 


--------------------
\6 Because each of the triad members is appointed under separate
personnel systems, their avenues of appeal differ.  Medical center
directors appointed under the SES personnel system may request an
informal hearing before MSPB when a performance-based action, such as
a removal, is taken against them.  This informal hearing is not
considered a formal appeal.  Medical center directors and chiefs of
staff appointed under the Title 38 personnel system generally do not
have appeal rights to MSPB.  They may appeal actions to a VHA
impartial examiner, a VHA Disciplinary Appeals Board, or the courts. 
The associate and assistant medical center directors, who are
appointed under the GS system, have appeal rights to MSPB and the
courts. 


   NETWORK DIRECTORS VIEW THE
   RECENT CHANGES IN VHA'S
   ORGANIZATIONAL STRUCTURE AND
   PERFORMANCE MEASURES AS
   IMPROVEMENTS
------------------------------------------------------------ Letter :5

Over the last 2-1/2 years, VHA's environment and organizational
structure have been undergoing rapid change.  In October 1995, VHA
implemented a major restructuring that was designed to improve the
efficiency of, access to, and quality of care provided to the
nation's veterans.  A major component of the restructuring was the
realignment of VHA's management and field structure, which resulted
in ï¿½the span of controlï¿½ of the most senior-level field executive
positions being substantially reduced.  Also in fiscal year 1996, VHA
implemented new, more quantifiable performance measures for
evaluating and holding its senior executives accountable for their
performance.  According to the network directors, these changes have
improved how VHA operates and will help them to identify and deal
with poor or marginal performers.  In responding to our survey, 19
network directors agreed (and 2 disagreed) that, overall, these
changes would help in identifying and dealing with poor or marginal
performers.  The network directors recognized, however, that the new
changes have also had an impact on how the triad members' performance
is now viewed under VHA's new system of operating. 

Under the new system of 22 Veterans Integrated Service Networks that
was created in October 1995, each network director is now responsible
for approximately 24 triad members; under the old, ï¿½regional
directorï¿½ system, the director was responsible for at least 80 triad
members.  The network directors frequently emphasized in the
interviews that the reduction in the number of triad members for whom
they were responsible significantly improved their ability to gauge
and manage performance.  Network directors said they believed they
now have the opportunity to become more familiar with all their triad
members and to make their own assessments of their performance,
rather than relying on the appraisals provided by the medical center
directors.  Management triad members would no longer, as one director
put it, "have a place to hide."

The new, more quantifiable performance measures were first
incorporated into the network directors' performance plans in the
Spring of 1996.  For example, in order for a network director to be
considered Fully Successful under the fiscal year 1997 outpatient
surgery performance measure, 65 percent of the surgical procedures
performed in the director's network must be done on an outpatient
basis.  According to a VHA official, the network directors are
responsible for meeting the performance measures, and how they elect
to do so is up to them.  The network directors may choose to include
the performance measures in the medical center directors' performance
plans, but they are not required to do so.  The VHA official also
said that the performance measures are not a required part of the
performance plans of the other triad members--the associate director
and chief of staff.  In responding to our survey, all 21 network
directors indicated that they had included the same or similar
performance measures in the medical center directors' performance
plans. 

The network directors generally agreed that VHA's new, more
quantifiable performance measures are an improvement on the former,
more subjective measures.  Several directors believed, however, that
it was too early to tell exactly how well the new measures would
work, because they had received their individual performance measures
too late in the last two appraisal cycles to completely implement
them.  The performance measures were issued to the network directors
about 6 months after the 1996 and 1997 rating periods began.  One
director cautioned that the performance measures could be
unreasonable and cited the performance goal of ï¿½over 90 percent
patient satisfaction with careï¿½ as an example.  Nineteen directors
agreed (and 2 disagreed) with the opinion that the new performance
measures need some fine-tuning. 

The network directors recognized that the recent changes under VHA's
new operating environment--more quantifiable performance measures and
reduced span of control over the medical centers as a result of the
transition from a regional to a network structure--have altered how
the performance of triad members is now viewed.  For example, two
network directors told us in the interviews that medical center
directors who were once considered outstanding performers under the
old environment are no longer considered to be such performers under
the new environment.  In responding to our survey, 11 network
directors agreed (and 6 disagreed) that the recent changes in VHA's
operations and organizational structure have led to a decline in the
performance appraisals of some triad members.  For example, their
performance appraisals may have dropped from the Outstanding or
Exceptional level to the Fully Successful level.  However, one of the
six network directors who disagreed with this opinion said that it
should not be presumed that a drop from Outstanding or Exceptional to
Fully Successful reflects a drop in performance.  Rather, this
network director said that in some cases, it is more reflective of a
difference in the network director's management philosophy,
particularly when the director was hired from outside the VA system. 

The triad members' performance under the new environment also
requires a new set of managerial and technical skills, according to
another two network directors.  For example, one network director
said that it is becoming increasingly difficult for senior executives
to perform at the satisfactory level if they do not possess certain
technological or computer skills.  The other network director said
that the medical center directors today will need to have been
exposed to doing cost-benefit analysis and profit and loss
statements.  This network director also indicated that a medical
center director's lack of the new skills, reluctance to adapt to the
new changes, or lack of an understanding of what is required under
VHA's new environment can lead to him or her being considered a poor
performer. 

Our analysis of the distribution of the medical center directors'
ratings for fiscal years 1994 through 1997 indicates that the recent
changes in VHA, such as the new performance measures, have not led to
an overall decline in their performance ratings.\7 As shown in table
3, the percentage of medical center directors rated at or below the
Fully Successful level did not increase over the 4-year period. 
Instead, there was generally a steady increase in the percentage of
medical center directors who received either an Excellent or an
Outstanding rating during this period.  The table shows that nearly
78 percent of medical center directors were rated above Fully
Successful in 1996, the first year that the changes were implemented,
which is slightly lower than the percentage rated above the Fully
Successful level in 1995.  In 1997, 86 percent of the medical center
directors were rated above Fully Successful, which represents a 7
percentage point increase over the percentage rated above the Fully
Successful level in 1995, before the changes were implemented. 



                                Table 3
                
                     Distribution of Medical Center
                  Directors' Performance Ratings--1994
                              Through 1997

                                        Percent of total rated
                                 -------------------------------------
                                    Below
                          Total     Fully     Fully
                         number  Successf  Successf  Excelle  Outstand
Rating year               rated        ul        ul       nt       ing
--------------------  ---------  --------  --------  -------  --------
1994                        117         0      32.5     38.5      29.0
1995                        126         0      20.6     43.7      35.7
1996                        125         0      22.4     41.6      36.0
1997                        133         0      13.5     47.4      39.1
----------------------------------------------------------------------
Source:  GAO's analysis of rating data provided by VHA's Management
and Administrative Support Office. 

The director of VHA's Management and Administrative Support Office
attributed the upward trend in the medical center directors' ratings
to the networks' overall progress in achieving the performance
measures.  For example, he said that VHA's 1997 Network Performance
Agreement Report showed that the percentage of surgeries and
diagnostic procedures performed on an outpatient basis increased to
69 percent, which represented a 33-percent increase over the 1996
rate of 52 percent.  Also, the patients' overall quality rating of
these outpatient services increased slightly from 61 percent to 63
percent.  This VHA official also believes that the upward trend in
the medical center directors' ratings may have been affected by the
retirement of several poor or average performing medical center
directors over the last 4 years, thus leaving a cadre of
high-performing executives. 


--------------------
\7 Although the scope of our review was primarily fiscal years 1994
through 1996, we included fiscal year 1997 in our analysis because
the requesters' staffs asked us to review the 1997 rating data to see
whether or not the new performance standards would result in any
medical center directors receiving a less than Fully Successful
rating.  Since performance measures had not been uniformly given to
chiefs of staff and associate or assistant directors, we did not
request 1997 rating data regarding them. 


   DISCIPLINARY ACTIONS TAKEN FOR
   MISCONDUCT, BUT NOT WITHOUT
   CONTROVERSY
------------------------------------------------------------ Letter :6

VHA network directors did not consider misconduct to be a widespread
problem within the management triad at VHA medical centers, although
some directors acknowledged that instances of misconduct had
occurred.  In their survey responses, all but one of the network
directors agreed that misconduct is not considered a widespread
problem within the management triad at VHA's medical centers. 
Misconduct offenses involving triad members had not occurred in most
networks; 13 of 21 network directors agreed that "within the past 3
fiscal years, no conduct problems occurred within my network that
involved triad members."

The network directors' perception is confirmed by data compiled by
VHA.  According to these data, VA authorities received a total of 35
allegations of misconduct by management triad members during fiscal
years 1994 through 1996.  VA investigators substantiated 14 of the 35
allegations.\8 As a result, VHA took disciplinary actions that ranged
from a letter of admonishment to a demotion.  Even so, VHA has been
criticized for being too lenient in punishing some instances of
misconduct.  As a result of such criticism, VA has established a new
procedure to give closer scrutiny to proposed disciplinary actions
for misconduct.  In addition, Congress recently passed the Veterans'
Benefits Act of 1997, which established a new process and structure
for handling equal employment opportunity (EEO) complaints. 


--------------------
\8 A substantiated allegation means that the entity, such as the OIG
or an administrative review board, that investigated the allegation
confirmed that the particular situation existed as alleged, according
to a top VA management official.  However, substantiation of an
allegation does not necessarily result in a disciplinary action or a
finding that something improper or inappropriate was done, according
to this official. 


      VHA'S RESPONSE TO
      ALLEGATIONS OF MISCONDUCT
---------------------------------------------------------- Letter :6.1

Allegations of triad member misconduct, as well as misconduct by
other VA employees, may surface through the EEO process, through
management channels, or through the VA OIG.\9 Investigations of such
allegations may be conducted by OIG, EEO investigators designated by
VA's OEO, the Veterans Integrated Service Networks, or by
administrative review boards established by VHA to address specific
cases.  Administrative review boards normally consist of senior
officials outside the medical facility where the alleged misconduct
occurred.  Investigating misconduct allegations generally entails
collecting and reviewing relevant documents as well as obtaining
information from the employee identified in the allegation as having
perpetrated the offense and from other individuals considered to have
information pertinent to the case.  The investigations are designed
to obtain the facts of the case so that management can determine (1)
if the allegation can be substantiated; (2) whether action is
warranted; and (3) what type of disciplinary action, if any, should
be taken. 

Regardless of what organization conducts the investigations, an
investigative report is normally prepared and provided to senior VHA
officials, usually the network director.  The investigative reports
generally do not recommend that specific disciplinary actions be
taken on substantiated allegations of misconduct.  Decisions on
whether to take adverse or disciplinary actions, and the specific
action that is appropriate, are generally made by the VHA officials
who supervise the employee in question.  In the case of triad
members, that individual has been the cognizant network director,
following consultation with senior VHA headquarters officials. 

VA investigations substantiated 14 of the 35 allegations.  The 14
substantiated allegations involved 13 management triad members.  For
6 of the 14 allegations, VHA took disciplinary action, which ranged
from a letter of admonishment to a demotion.  For the remaining eight
allegations, no disciplinary actions were taken.  Instead, five of
the eight allegations resulted in the employees either retiring or
resigning, and three resulted in the employees receiving counseling. 
Appendix II provides further details on the nature and disposition of
each of the substantiated allegations.  According to a VHA official,
2 allegations of misconduct were substantiated against 1 of the 13
triad members, a medical center director, during fiscal years 1994
through 1996.  One of the two allegations involved installing a video
camera in a restroom.  The medical center director installed the
video camera to discourage racial graffiti, according to another VHA
official.  The other allegation involved the medical center director
lobbying his local congressman for funds to renovate buildings that
would be given to a medical school affiliated with the medical
center.  In the 2 fiscal years preceding the period of our review,
none of the 13 management triad members had been named in any
allegations of misconduct, according to a VHA official. 

The number of disciplinary actions taken for misconduct at VHA and
governmentwide, in proportion to the size of their respective
workforces, was comparable during fiscal years 1994 through 1996.\10
VHA data showed that 1 triad member was demoted during the 3-year
period, which represented two-tenths of 1 percent of an average of
421 triad members employed as of the end of each fiscal year during
that period.  None of VHA's triad members were suspended or
discharged because of misconduct during this time period, according
to VHA's data.  OPM's CPDF showed that during this same 3-year
period, a total of 11 actions were taken governmentwide, excluding
VA.  The 11 actions affected less than one-tenth of 1 percent of an
average of 7,292 employees who were in similar positions
governmentwide. 

In deciding on the appropriate disciplinary action to take,
management officials are to consult a table of penalties, included in
VA's policy manual, which describes the disciplinary penalties
appropriate for most types of misconduct.  The table is not all-
inclusive, because it is intended as a guide for managers to use in
administering disciplinary and major adverse actions.  Management
officials generally retain the discretion to tailor disciplinary
actions to the incident of misconduct by considering a variety of
factors, both mitigating and aggravating.  Such factors include the
employee's length of service, past disciplinary record, the severity
of the misconduct, and whether the misconduct was intentional or
inadvertent.  However, in cases where a specific penalty is required
by statute (such as a 30-day suspension for misuse of a government
vehicle), such factors are not to be considered. 

One of 14 substantiated allegations involved a medical center
director's misuse of a government vehicle while on official business. 
Although VHA procedures require a mandatory minimum penalty for a
first offense of this misconduct, VHA did not impose the penalty. 
Under the law, 31 U.S.C.  1349(b), "An officer or employee who
willfully uses or authorizes the use of a passenger motor vehicle or
aircraft owned or leased by the United States Government (except for
an official purpose authorized by section 1344 of this title) or
otherwise violates section 1344 shall be suspended without pay by the
head of the agency.  The officer or employee shall be suspended for
at least one month, and when circumstances warrant, for a longer
period or summarily removed from office."

In this case, the Deputy Under Secretary for Health decided that a
reprimand was the appropriate corrective action, even though VHA's
table of penalties included the mandatory suspension.  According to a
VHA official, clear evidence did not exist that would have proven the
medical center director's action as a "willful" misuse of the
government vehicle. 

Because a governmentwide, standard table of penalties does not exist,
we compared VA's table of penalties, which is applicable at VHA, with
the tables of penalties of two other judgmentally selected executive
branch departments--the Department of Commerce and the Department of
Agriculture.  The purpose of our comparison was to see if the range
of penalties at VHA on the treatment of various instances of
misconduct was similar to the range of penalties at those two
departments.  Specifically, we compared VA's range of penalties for
the types of misconduct involved in the 14 substantiated cases at
VHA.  The types of misconduct included sexual harassment, improper
use of a government vehicle, fighting, participation in an activity
that created the appearance of a conflict of interest, abusive
language or behavior, and violations of the Privacy Act and merit
system principles. 

This comparison showed no appreciable difference between the range of
penalties available at VA and those available at the other two
executive branch departments.  For example, VA's range of penalties
for the first and second offenses of misuse of a government vehicle
is identical to the range of penalties at Agriculture and Commerce. 
None of the three agencies' tables of penalties list a penalty for a
third misuse of government vehicle offense.  Depending on whether the
misconduct represented an employee's first, second, or third offense,
the range of penalties in some instances at VA was either slightly
harsher or less punitive than the range of penalties available at
Commerce and Agriculture.  For example, VA's suggested penalty for a
third offense involving conflict of interest is more punitive than
the penalty at Commerce.  VA can remove an employee for a third
conflict of interest offense, whereas Commerce's penalty for a third
offense of this same misconduct ranges from a 30-day suspension to a
removal.  On the other hand, VA's suggested penalty for a second
offense of fighting ranged from a 10-day suspension to a discharge. 
Agriculture's penalty for the same offense ranged from a 14-day
suspension to a removal.  Viewed in this context, VA's penalties
generally conform to those provided for at the two other executive
branch departments.  Appendix III contains a table comparing the
range of penalties available at each of the three departments. 


--------------------
\9 VA does not keep consolidated statistics on the number of
misconduct allegations received.  An OIG official estimated that OIG
annually receives approximately 20,000 contacts through OIG's
telephone hotline alone.  The OIG official said that the majority of
the 20,000 contacts do not represent misconduct allegations. 
Instead, most of the contacts represent concerns about other matters,
such as veterans' benefits and compensation, he said.  An average of
700 of the 20,000 contacts result in cases that are investigated; and
25 percent (or about 175) of those 700 investigated cases are
substantiated, the OIG official said. 

\10 We limited our comparison to discharges, suspensions, and
demotions, because these types of disciplinary actions result in a
personnel action and thus are to be recorded in the CPDF.  Although a
letter of admonishment is a disciplinary action, it does not result
in a personnel action and thus is not recorded in the CPDF. 


      CONTROVERSY OVER VHA'S
      HANDLING OF MISCONDUCT LED
      TO REVISIONS IN VA'S POLICY
      AND PROCEDURES FOR
      RESPONDING TO MISCONDUCT
---------------------------------------------------------- Letter :6.2

Although VHA took disciplinary actions to address instances of
misconduct, these actions were not without controversy.  VHA's
handling of 1 highly publicized case, which is among the 14
substantiated allegations listed in appendix II, led to VA changing
its policy and procedures for handling conduct and performance
problems that involve senior VA officials. 

The highly publicized case involved a former medical center director
who allegedly committed sexual harassment.  VA's OIG investigated the
sexual harassment allegations and determined that the former medical
center director sexually harassed one of the three female employees
who had alleged sexual harassment and that there was insufficient
evidence to support a finding that the director sexually harassed the
other two female employees.  However, the OIG concluded that the
former director's behavior toward the two other women was abusive,
threatening, and inappropriate. 

The OIG provided a draft report to the network director for review
and comment in September 1996 and recommended that given the findings
of misconduct by the former director, appropriate administrative
action should be taken.  The network director concurred with the
OIG's findings and recommendations and initially proposed removing
the director from federal service.  However, in December 1996, the
network director rescinded the proposed adverse action, referring to
a lack of evidence and doubts that a case would hold up on appeal. 
As a result, a negotiated settlement was reached that ensured the
former director's removal from the facility and SES.  The former
director resigned from SES, was downgraded to a GS-14 nonsupervisory
position, and was reassigned to another VA medical center in a
different state.  He was allowed to permanently retain his SES pay
and was transferred at government expense to another medical center. 

Some VHA employees, Members of Congress, and the media criticized the
settlement as too lenient.  However, a VHA official with whom we
spoke believed that the settlement was made in the best interests of
the department and avoided further disruption at the former medical
center director's facility.  He acknowledged, however, that the
decisionmaking process should have been better coordinated with VHA
headquarters senior officials and the Office of General Counsel
(OGC). 

Because there was additional evidence of possible misconduct by the
former medical center director that was unrelated to the original
allegations, the OIG opened a second investigation in May 1997.  That
investigation substantiated numerous incidents of misconduct by the
employee.  As a result, on August 1, 1997, VHA notified the employee
of its intent to remove him from federal service.  The employee
retired on August 15, 1997. 

In the wake of the criticism received regarding the initial
settlement with this employee, VA instituted a new policy in March
1997 designed to ensure more effective communication and coordination
among top management officials when conduct problems that involve
triad members and other VA executives are handled.  VA revised its
procedures for responding to allegations of improper conduct by
establishing a panel composed of senior VA executives whose
objective, among other things, would be to ensure departmentwide
consistency in dealing with allegations of misconduct and to discuss
the appropriate penalties for confirmed allegations of misconduct. 

Under these revised procedures, all proposed actions are to be
reviewed by the respective VA administration head or Assistant
Secretary, OGC, and the Office of the Assistant Secretary of Human
Resources and Administration.  After this review, the Office of the
Secretary is to be informed of the results and is to consult with the
Office of Public and Congressional Affairs before clearing the
proposed action for implementation. 

Before VA implemented the new policy, authority to approve and
implement such actions had been delegated solely to administration
heads, Assistant Secretaries, or other key officials.  The new policy
does not differ dramatically from the old one it replaced, according
to a VHA official.  However, "It .  .  .  systematizes the process,"
ensuring more effective communication, coordination, and cooperation
among VA's senior management, the VHA official said.  The new policy
was designed to ensure that management coordination in handling
misconduct cases that involve VA senior executives is more effective,
the VHA official said. 

Most of the network directors believed that the recently instituted
policy on how to handle and reach resolution of conduct problems that
involve triad members and other VA executives will help ensure that
such matters are consistently dealt with.  This viewpoint was held by
12 of the 21 network directors, according to our survey. 

The new policy may facilitate the handling of conduct problems in the
future.  However, it is not clear whether or not the policy applies
to all VHA medical center triad members.  As worded, the new policy
applies to occupants of positions "centralized" to the VA Secretary,
which includes medical center directors who are members of SES as
well as associate medical center director GS-15 employees.  However,
the wording does not specify whether or not the new policy covers
Title 38 employees, who include medical center directors and chiefs
of staff, and assistant medical center directors at the GS-13 or
GS-14 grade level. 

According to the director of VHA's Management and Administrative
Office, all triad members are to be covered by the new policy.  He
said that Title 38 medical center directors are considered
centralized to the Secretary by virtue of the positions they occupy. 
This official also said that the intent of the new policy is to
include all members of management triads, including medical center
directors, associate and assistant medical center directors, and
chiefs of staff. 


      NEW LAW DESIGNED TO IMPROVE
      EEO SYSTEM AT VA
---------------------------------------------------------- Letter :6.3

In response to concerns about the effectiveness of VA's policy of
"zero tolerance" for sexual harassment and its handling of
discrimination complaints, the Congress enacted and the President
approved legislation in November 1997 designed to improve VA's EEO
system.  The new law, entitled the "Veterans' Benefits Act of 1997
(P.L.  105-114, Nov.  21, 1997), requires VA to (1) establish a new
employment discrimination complaint resolution system to encourage
timely and fair resolution of concerns and complaints, including
those related to allegations of sexual harassment; and (2) submit
reports to Congress on the implementation and operation of the new
EEO system on April 1, 1998; January 1, 1999; and January 1, 2000. 

The law establishes an Office of Employment Discrimination Complaint
Adjudication within VA.  The Director of this office is to be
responsible for making final agency decisions on the merits of any
unlawful employment discrimination complaints filed by a VA employee,
a function that is currently performed by VA's OGC.  The Director is
also to be responsible for submitting reports to the Secretary of VA
and to Congress on the implementation and operation of the Office of
Employment Discrimination Complaint Adjudication.  The law requires
the Secretary of VA to enter into an agreement with a private entity
to review and report to the Senate and House Committees on Veterans'
Affairs on the employment discrimination complaint resolution system
within VA. 

VA is establishing a new organization, the Office of Resolution
Management (ORM), to replace OEO's Discrimination Complaint Service. 
Establishing ORM will effectively separate the function for
adjudicating complaints from the line management function, according
to the former Deputy Assistant Secretary for EEO, thereby providing
greater assurances that VA employees perform the EEO complaint
counseling and investigating functions in a professional and
independent manner.  The new organization eventually will establish
12 field offices located around the United States.  ORM is expected
to begin operation in April 1998 with the opening of 2 of the 12
field offices, according to the VA official responsible for
coordinating the transition to the new EEO structure and process. 
Plans call for completing the implementation of ORM by the end of
1998. 

VA's current process for handling sexual harassment complaints and
other EEO discrimination complaints will change under the planned ORM
framework.  For example, VA's Assistant Secretary for Human Resources
and Administration, the Deputy Assistant Secretary for Resolution
Management, ORM District Managers, and ORM Field Managers will serve
as VA's EEO officers, and the newly designed complaint resolution
management structure will be linked to them.  VA facility directors
and heads of VA Central Office organizations will no longer serve as
EEO officers under the new structure, which situates them outside the
EEO complaint process.  However, these officials will continue to be
held accountable for maintaining a workplace free of discrimination. 

Also, the directors of VHA's networks and medical centers, as well as
directors of other headquarters and field offices, will no longer
have authority to establish administrative review boards to
investigate discrimination and sexual harassment complaints filed
against members of the senior management teams, such as medical
center directors, associate directors, assistant directors, and
chiefs of staff, according to VA's Deputy Assistant Secretary for
Human Resources.  Instead, these complaints and other complaints of
serious misconduct will be investigated by rapid response teams, a
concept that has been in use since the spring of 1997.  These teams
will be deployed by the Assistant Secretary for Human Resources and
Administration.  Procedures regarding the use of rapid response teams
are under development, according to this VA official.  As of March 4,
1998, the procedures had not been finalized. 

Depending on the nature of the allegations, the rapid response teams
will generally consist of human resource specialists, attorneys, EEO
specialists, and other officials deemed appropriate for the
investigation, according to the VA official responsible for
coordinating the transition to the new EEO structure and process. 
This VA official also said that the rapid response team, on the basis
of its findings, will be responsible for identifying a range of
penalties for management officials to consider in determining the
appropriate disciplinary or adverse action.  However, the final
decision on what disciplinary action to take against the employee
will be made by the appropriate supervisory official. 

This VA official also said that VA's OIG authority to investigate
complaints received directly from employees about sexual harassment,
discrimination, and other activities that constitute a violation of
law, rule, or abuse of authority will continue under VA's new EEO
process.  According to this VA official, OIG prefers not to be
involved in individual EEO cases, because it does not have authority
to grant relief to complainants or take specific types of
disciplinary or adverse actions.  However, this VA official said that
to the extent permissible, OIG and ORM will coordinate the
investigation of EEO complaints more closely. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

VHA officials did not officially rate any triad member as less than
Fully Successful during the 1994 through 1996 rating periods.  At
first glance, this fact would suggest that either VHA experienced no
performance problems among its medical center executives during that
period, or that VHA officials were not addressing performance
problems.  Our work has shown that neither is true. 

Rather, VHA network directors responsible for triad members
acknowledged that the record of performance ratings did not capture
the actual performance of all triad members and that poor performers
did exist.  But the network directors collectively held that
identifying poor performers in official ratings is not an effective
way to address the problem because, among other things, it
necessitates formal actions that they perceived to be time-consuming,
burdensome, and unlikely to produce the desired results.  Instead,
the network directors believed they had effectively managed poor
performance through informal means. 

The network directors' recognition that poor performers do exist, but
are not identified as such on official ratings because of negative
perceptions toward the formal system, raises an important question. 
Was the attempt in 1978 with the Civil Service Reform Act to make
performance management systems more "user friendly" to managers in
identifying and dealing with poor performers successful?  When the
Reform Act was passed, there was general recognition that managers
rarely gave unsatisfactory ratings, because the system was viewed as
time-consuming and aggravating to all parties.  Our "case study" at
VHA, our 1990 governmentwide study, and MSPB's 1995 and 1997 surveys
all suggest that little has changed in the 20 years since enactment
of the Reform Act. 

We do not know for certain whether executives in other government
agencies share the VHA network directors' perceptions and also rely
on an informal system to address performance.  However,
governmentwide OPM statistics and our prior work, which showed that
far less than 1 percent of employees received less than Fully
Successful ratings, suggest that such perceptions are not limited to
VHA. 

Our overall impression is that VHA has taken seriously its
responsibility to identify and deal with performance problems among
triad members.  However, our findings also suggest a problem exists. 
The problem is not necessarily with VHA or the network directors but
with the federal performance management systems.  Research has shown
that when systems do not work, or are perceived not to work,
employees find ways to work around the systems.  This appears to be
what is occurring at VHA.  The network directors have adapted and
worked around a system they have deemed to be a failure.  Although
this adaptation has apparently enabled network directors to take
performance-based actions, it carries with it some significant
implications for policymakers who are again considering civil service
reform.  Performance appraisal system requirements call for honest
and accurate appraisals.  A system that discourages such appraisals
contradicts the fundamental premise of performance management and
compromises the integrity of federal personnel management. 

OPM's strategic plan for fiscal years 1997 through 2002 calls for,
among other things, continuing OPM efforts to improve the capacity of
managers to effectively identify and resolve performance problems. 
As part of this effort, OPM has distributed instructional materials
to federal managers on how to identify and resolve performance
problems.  These are important efforts that may help alter managers'
existing perceptions that the formal performance management systems
are not helpful in this regard.  To facilitate its efforts, it would
be useful for OPM to develop and monitor data showing the extent to
which such negative perceptions change over the 6-year period covered
by the strategic plan. 

OPM might use positive results showing that managers' perceptions
have improved to encourage other federal managers to make greater use
of the formal performance management system for identifying and
dealing with performance problems.  Negative results showing that
managers continue to believe that the system is not working as
intended could form the basis for OPM, working with Congress, to
develop and test alternative approaches to identifying and dealing
with performance problems. 

VHA has also taken actions to discipline triad members who have
engaged in misconduct.  However, some of the actions that VHA took
resulted in much controversy and concern about how effectively
misconduct, especially sexual harassment, is dealt with at the senior
management levels within VHA.  Thus, VA implemented a new policy and
process for handling conduct problems that involve VA senior
management.  However, we believe that VA needs to change the wording
of its policy to clarify that all triad members are covered by it. 
VA also is in the process of establishing a new office and process
for handling employment discrimination complaints as a result of
legislation enacted in November 1997.  We believe that VA's final
policy regarding the use of administrative review boards should
clearly reflect, as currently intended by VA, that complaints of
sexual harassment and discrimination made against any triad member
cannot be investigated by an administrative review board.  The
changes VA is making in its EEO process, as well as those we suggest
here, should lead to improvements in how VHA responds to and resolves
misconduct at the senior management levels. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :8

Although OPM has developed training materials to help improve
managers' performance in identifying and dealing with poor
performers, we believe that data are needed to show whether the
training changes managers' negative perceptions of the formal
performance management system.  Thus, we recommend that the Director
of OPM develop data to show by 2002 whether managers' perceptions of
the formal performance management system improve following training
and experience in proper use of the system.  If perceptions improve,
we recommend that the Director of OPM advertise this information and
further encourage managers to use the formal performance management
system.  However, if the data developed by OPM continue to show that
managers perceive that the formal system is too burdensome and
unlikely to produce the desired results, we recommend that the
Director of OPM work with Congress to develop and test alternative
approaches that may be more effective than the existing performance
management system. 

Although the intent of VA's March 1997 policy on handling instances
of misconduct that involve VA senior management is to include all
triad members, in practice this may not occur.  Thus, to avoid any
potential confusion on which positions in the management triad are
covered by the March 1997 policy, we recommend that the Secretary of
VA revise the policy to specifically include all chiefs of staff who
are appointed under Title 38 and associate and assistant medical
center directors who are at the GS-13 and GS-14 levels.  We also
recommend that the Secretary's policy on the use of administrative
review boards clearly reflect that VHA officials cannot convene such
boards to investigate employment discrimination complaints made
against any triad member. 


   AGENCIES' COMMENTS
------------------------------------------------------------ Letter :9

We provided a draft of this report to the Acting Secretary of VA and
the Director of OPM for comment.  On March 31, 1998, we met with the
director of VHA's Office of Management and Administrative Support and
other VA officials to obtain oral comments.  In a letter dated April
6, 1998, the Director of OPM provided comments on a draft of our
report.  (See app.  I.)

The VA officials said that VA agrees with the two recommendations we
made to the Secretary and considers both recommendations to be
consistent with the policy direction in which VA is moving.  The VA
officials characterized our report as fair, objective, balanced, and
thorough.  They also commented that VHA managers, like managers
elsewhere in the federal government, know how to use the formal
system to deal with performance problems but are reluctant to use it
and instead rely on the informal measures. 

The Director of OPM said that our findings showing that VHA managers
tend to deal with employees who have performance and conduct problems
in an informal manner before invoking formal systems are not
surprising.\11 She recognized that prior studies by us, MSPB, and OPM
have shown that managers and supervisors in many agencies avoid
taking formal actions, because they perceive the formal system as
administratively burdensome, time-consuming, and not as effective as
informal methods.  She pointed out, however, that regardless of how
simple or how well-designed a system is, it can be effective only if
it is used. 

The Director of OPM said that our recommendation that OPM assess the
effectiveness of its recently developed training materials aimed at
helping to improve managers' performance in identifying and dealing
with poor performers is a good one, and OPM will assess the
effectiveness of these and other materials used to help managers
address performance and conduct issues.  The Director said that OPM
is working with its stakeholders to improve individual and
organizational performance, including strengthening ways to hold
executives and managers accountable for producing results and
providing them tools to identify and rectify performance
deficiencies.  She said that OPM is encouraged that VHA managers are
addressing performance and conduct problems. 


--------------------
\11 Although our report did not specifically depict VHA's handling of
misconduct as informal, the manner in which some incidents of
misconduct were resolved--employees deciding to voluntarily resign or
retire--avoided the formal system. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Acting Secretary of VA
and the Director of OPM.  We are also sending copies to the Ranking
Minority Member of the House Committee on Veterans' Affairs, the
Chairman and Ranking Minority Member of the Senate Committee on
Veterans' Affairs, other appropriate congressional committees, and
other interested parties.  Copies will be made available to others on
request. 

The major contributors to this report are listed in appendix IV. 
Please contact Michael Brostek, Associate Director, or me at (202)
512-8676 if you have any questions. 

L.  Nye Stevens
Director, Federal Management
 and Workforce Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE OFFICE OF
PERSONNEL MANAGEMENT
============================================================== Letter 



(See figure in printed edition.)


DISPOSITION OF MISCONDUCT CHARGES
INVOLVING VHA MANAGEMENT TRIAD
MEMBERS--FISCAL YEARS 1994 THROUGH
1996
========================================================== Appendix II

Position      Nature of misconduct              Disposition
title         --------------------------------  --------------------------------
Director      Verbal sexual harassment;         Demoted and reassigned out of
              abusive language                  state to another facility\a

Director      Improperly lobbied local          Counseled
              congressman to provide funds to
              renovate buildings on the
              medical center's grounds to be
              turned over to university
              medical school named for the
              same congressman

              Engaged in wasteful spending on   Admonishment was issued citing
              quarters renovations, improper    poor judgment in installing
              spending on a (golf course)       camera. Other allegations were
              putting green, and installing     not substantiated.
              video cameras in a restroom

Director      Used government vehicle for       Reprimanded
              personal use while on temporary
              duty

Chief of      Conflict of interest:             Resigned after counseling and
Staff         represented the medical center    removal of contracting authority
              in contracting negotiations with
              university where he was on staff

Associate     Sexual and racial harassment:     Admonished and put under an
Director      permitted establishment of        action plan
              hostile environment

Director      Committed reprisal by             Retired
              terminating a registered nurse
              with whom he had engaged in a
              consensual affair

Associate     Physical altercation with a       Demoted and reassigned out-of-
Director      police officer; hostile           state to another facility
              environment

Director      Violated the Privacy Act by       Counseled
              disclosing information to
              officials of veterans group
              regarding an employee's status
              in the workers' compensation
              program

Director      Violation of merit principles;    Admonished\a
              travel irregularities

Associate     Sexual harassment: established    Retired
Director      hostile environment via
              consensual relationships with
              subordinates

Director      Made inappropriate comments       Retired
              regarding members of the
              clerical staff

Associate     Sexual harassment                 Counseled
Director

Associate     Sexual harassment: requested      Resigned
Director      "quid pro quo" sexual favors
              from staff
--------------------------------------------------------------------------------
\a Although the misconduct occurred within our fiscal year 1994
through 1996 review period, VHA's disposition of the misconduct
occurred during fiscal year 1997. 

Source:  GAO's analysis of data provided by VHA. 


RANGE OF MISCONDUCT PENALTIES AT
VA COMPARED WITH RANGES AT
AGRICULTURE AND COMMERCE
========================================================= Appendix III

                                       VA\a                                 Agriculture                                    Commerce
                        ----------------------------------  -------------------------------------------  --------------------------------------------
Nature of misconduct    First       Second      Third       First          Second         Third          First           Second         Third
----------------------  ----------  ----------  ----------  -------------  -------------  -------------  --------------  -------------  -------------
Sexual harassment       Reprimand   5-day       10-day      Letter of      14-day         \b             N/A             N/A            N/A
                        to          suspension  suspension  reprimand to   suspension to
                        discharge   to          to          discharge      discharge
                                    discharge   discharge

Inappropriate comments  Reprimand   10-day      Discharge   Letter of      5-day          \b             Written         5-day          30-day
about staff             to          suspension              reprimand to   suspension to                 reprimand to    suspension to  suspension to
                        discharge   to                      discharge      discharge                     10-day          discharge      discharge
                                    discharge                                                            suspension

Improperly lobbied      N/A         N/A         N/A         N/A            N/A            N/A            N/A             N/A            N/A
local congressman to
earmark funds for
building renovations

Used government         Mandatory   Discharge   \b          Mandatory 30-  Discharge      \b             Mandatory 30-   Discharge      \b
vehicle for personal    30-day                              day                                          day suspension
use                     suspension                          suspension to                                to discharge
                        to                                  discharge
                        discharge

Inappropriately         N/A         N/A         N/A         N/A            N/A            N/A            N/A             N/A            N/A
installed video camera
in restroom

Conflict of interest:   Admonish-   10-day      Discharge   Letter of      Discharge      \b             N/A             N/A            N/A
Represented VA in       ment to     suspension              reprimand to
contract negotiations   discharge   to                      discharge
with university where               discharge
he was on faculty

Engaged in a physical   Reprimand   10-day      Discharge   5-day          14-day         \b             Written         5-day          30-day
altercation with        to          suspension              suspension to  suspension to                 reprimand to    suspension to  suspension to
policeman               discharge   to                      discharge      discharge                     discharge       discharge      discharge
                                    discharge

Violated Privacy Act:   Reprimand   10-day      Discharge   Letter of      Discharge      \\b            N/A             N/A            N/A
Disclosed information   to 10-day   suspension              reprimand to
regarding workers'      suspension  to                      discharge
compensation case                   discharge

Violated merit          Reprimand   10-day      Discharge   Letter of      Discharge      \b             Written         5-day          30-day
principles: Promoted    to          suspension              reprimand to                                 reprimand to    suspension to  suspension to
employees before they   discharge   to                      discharge                                    10-day          discharge      discharge
had 1 year in grade                 discharge                                                            suspension
-----------------------------------------------------------------------------------------------------------------------------------------------------
Note:  The N/A designation represents charges or allegations that are
not expressly listed in the departments' tables of penalties. 
However, the tables are designed to be broad enough to include most,
but not all, types of offenses, and appropriate penalties for the
unlisted charges could be imposed that are consistent with the range
of penalties for comparable offenses. 

\a VA's table of penalties, dated October 18, 1994, applies to all VA
employees appointed under Title 5, such as GS and SES employees; and
under sections 7401(2) and 7401(3) of Title 38, such as psychologists
and pharmacists, respectively.  VHA's supplement to this table
applies to employees appointed under section 7401(1) of Title 38,
such as nurses, physicians, and optometrists.  The range of penalties
listed in VHA's supplemental table is generally the same as the range
in VA's table of penalties. 

\b The tables of penalties do not list a penalty for a third offense
of these types of misconduct. 

Source:  GAO's analysis of the tables of penalties available at VA,
the Department of Commerce, and the Department of Agriculture. 


MAJOR CONTRIBUTORS AND
ACKNOWLEDGMENTS
========================================================== Appendix IV

GENERAL GOVERNMENT DIVISION

Michael Brostek, Associate Director
Richard Caradine, Assistant Director
Mary Martin, Assignment Manager
Gerard Burke, Evaluator in Charge
Gregory Wilmoth, Supervisory Social Science Analyst
Ruth Kassinger, Writing Consultant

OFFICE OF THE GENERAL COUNSEL

Alan Belkin, Assistant General Counsel
Bruce Goddard, Senior Attorney

ACKNOWLEDGEMENTS

In addition to those named above, the following individuals from the
General Government Division made important contributions to this
report:  Ernestine Burt, Issue Area Assistant; Donna M.  Leiss,
Communications Analyst; Michael O'Donnell, Senior Evaluator; and
William Trancucci, Senior Evaluator. 


*** End of document. ***