Click to Enlarge: CSIs approved for VACO senior executives in August 2023.60
Source: OIG Analysis
WASHINGTON, DC — In September 2023, VA revealed that it had erroneously awarded $10.8 million in bonuses to 182 senior executives at its central office using retention provisions included in the PACT Act. The provisions had been meant to ensure difficult-to-replace employees with highly needed skills were incentivized to stay at VA.
VA quickly rescinded the payments, informed Congress, and asked the VA Office of the Inspector General to investigate. That investigation has now been concluded, and the resulting report focuses blame on VA leaders, particularly Under Secretary for Health Shereef Elnahal, MD.
According to the PACT Act, critical skill incentive (CSI) bonuses can be issued when an employee possesses a high-demand skill or skill that there is a shortage of; that skill is directly related to their duties and responsibilities; and employment of an individual with that skill serves a critical, mission-related need. With regard to the $10.8 million provided to these executives, the investigators suggested that VA provided no market factors to justify the bonuses, the amount was determined haphazardly, and the executives were grouped together despite having a wide range of skills and being employed in different departments.
Of the 182 executives, 148 were VHA employees whose bonuses were signed off on by Elnahal. The rest were VBA employees, signed off by Under Secretary for Benefits Joshua Jacobs. The awards ranged from $38,986 to $106,473.
The OIG report provides another example of Elnahal using PACT Act incentives in a fashion that critics have called injudicious. At a conference of high-ranking VA staff in March 2023, Elnahal announced that VISN directors and medical center directors would be receiving CSI bonuses equal to 25% of their base pay across the board. This came as a surprise to Elnahal’s HR team, since he had signed a memorandum the day before approving 25% for VISN directors and 20% for facility directors. The memorandum was quickly changed to reflect his statement at the conference.
According to investigators, VA Secretary Denis McDonough and his staff reported being concerned about the use of PACT Act provisions to award bonuses to senior executives. Between May and July 2023, McDonough’s office sought more information from Elnahal. In response, Elnahal provided the numbers for the VISN and facility leader bonuses, but not for the central office employees.
“With respect to VHA central office executives, the OIG did not find evidence that any data were presented to justify the incentives until after the Secretary questioned the CSIs in mid-September, at which time VHA conducted a post-payment analysis that revealed weaknesses in the justification for the group,” the OIG report stated.
According to the report, VA human resource officials had multiple opportunities to question the decision of the undersecretaries to award these bonuses but failed to do so despite having concerns.
One HR senior executive described to investigators the stark contrast between the ease with which these bonuses were given to executives vs. the hoops required to jump through for low-level employee awards.
“I can’t even give a GS employee a special contribution award for $250 without writing an entire page about how great they are and forms and process,” they were quoted as saying. “And this, with a stroke of a pen and three sentences, they’re saying these folks are critical because they’re critical, giving all these people this huge amount of money.”
McDonough agreed with the OIGs report and the investigators’ overall assessment but defended Elnahal.
“While out of the office, Dr. Elnahal requested his staff obtain the approval of the Secretary’s office before moving forward. Although the VHA VACO documentation package never was received by the Secretary’s office, this was a consequence of timing, miscommunication, and inadvertence,” McDonough said in his written response.
This will likely be a topic of upcoming congressional hearings, with House VA Committee Chairman Rep. Mike Bost (R-IL) declaring that the report speaks to ill-intent rather than miscommunication.
“It appears like this was a calculated effort by senior VA leadership including, Undersecretary for Health Dr. Elnahal, and Undersecretary for Benefits Jacobs,” Bost said in a statement following release of the OIG report. “The over $10 million dollars in overpayments to VA central office employees were not some type of administrative mistake–that’s a serious problem for the second-largest agency in the federal government–and we’re going to get to the bottom of it, come hell or high water.”