Pointing to Misuse, House Passes Bill Trimming Funds for VA Merit Bonuses

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By Sandra Basu

WASHINGTON — Noting that the VA has awarded merit-based bonuses to managers of facilities with substandard care and poor management practices, a bill passed by the House of Representatives last month reduces the amount of money that can be used for employee awards or bonuses.

For 2013, the amount of allowable payments was capped at $395 million, according to the Congressional Budget Office (CBO). The recently passed legislation would prohibit VA from paying more than $345 million in VA employee awards or bonuses during each of the years from FY 2014 to FY 2018. In order to become law the bill would also have to be passed by the Senate and signed by President Barack Obama.

The bill points to problems with how VA has dealt with bonuses, noting that the VA Office of Inspector General (OIG) “consistently identified missing support documentation to accompany the award” and that “concerns have been raised regarding VA’s provision of merit-based bonuses to managers and supervisors who have led troubled offices, including Veterans Health Administration medical centers with demonstrated incidences of gross negligence in care, and VBA positions where a growing inventory of claims and poor workload management practices abound.”

“The VA OIG’s findings were consistent with the Committee [on Veterans’ Affairs] findings of bonuses being awarded to employees with less than satisfactory performance and retention incentives being awarded to employees who had stated their intention to retire in the very near future,” the bill states. “The proposed reduction under Section 5 of the bill, which does not include additional time off awards, would leave sufficient funding for VA to award suitable bonuses and other incentives to deserving employees.”

Lawmakers were particularly irate over a $63,000 financial award to the regional director of the VA Pittsburgh Healthcare System, shown here, despite a Legionnaires disease outbreak.

Lawmakers were particularly irate over a $63,000 financial award to the VA Pittsburgh Healthcare System Regional director, despite a Legionnaires’ disease outbreak in the system. During congressional hearings, lawmakers have repeatedly questioned VA officials about these types of financial awards to employees.

Performance Problems

Highlighting these financial awards, House Committee on Veterans’ Affairs Chairman Rep. Jeff Miller (R-FL), even launched a dedicated page on the committee website this summer that cites VA personnel who received financial awards despite problems with the program they oversaw or with their performance.

In addition, lawmakers on the House Committee on Veterans’ Affairs signaled their displeasure by voting on a bill earlier this year that would ban VA senior executives from receiving any bonuses for five years, citing claims backlogs and unresolved healthcare quality issues. The bill had not been taken up by the full House as of last month.

“The fact that so many VA executives collected huge performance bonuses year after year while continually failing at their jobs calls into question whether department leaders even know the meaning of the word ‘accountability,’” Miller said earlier this year.

Meanwhile, an Office of Management and Budget (OMB) memo released last month to all federal agencies providing guidance for awards in FY 2014 stated that given “the current fiscal environment and the budget constraints agencies will operate under in FY 2014, it is critical that agencies’ use of performance awards be managed in a manner that is cost-effective and leads to increased employee performance and organizational results.”

The memo advised that agencies “must limit total spending on individual performance awards for career members of the Senior Executive Service (SES)[1] and senior-level and scientific and professional (SL/ST) employees to no more than 5% of their respective aggregate salaries.”

“Agencies must also limit award spending to no more than one percent of total aggregate salaries for non-SES/SL/ST performance awards plus individual contribution awards (e.g., special act, or spot) for all employees,” the memo stated. “In addition, agencies may not exceed FY 2012 spending levels on either category of awards. These award spending targets apply for awards paid during FY 2014. [Office of Personnel Management] and OMB will monitor awards data that agencies provide to OPM under the agencies’ regular reporting procedures.”

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