VA Secretary Reminds Committee He Sought Investigation
Rep. Derrick Van Orden (R-WI)
WASHINGTON, DC—A member of the House VA Committee has called on VA Secretary Denis McDonough to resign over the nearly $11 million in bonuses inappropriately paid to senior VA Central Office (VACO) officials.
While the error was identified by VA in September 2023, with McDonough working quickly to get the money back, a recent VA Office of the Inspector General (OIG) report detailing how the error happened has shined a much brighter spotlight on the incident.
The report places much of the blame on VA Under Secretary for Health Shereef Elnahal, MD, and, to a slightly lesser extent, VA Under Secretary for Benefits Joshua Jacobs.
The nearly $11 million in bonuses were paid out to VACO senior executives using a critical skills initiative (CSI) program included in the PACT Act. The CSI bonuses are meant to be used for employees with difficult to replace skill sets. According to VA regulations, these bonuses should not be paid out without a detailed justification of their use.
Under Elnahal’s direction, VHA gave medical center directors and VISN directors a flat 25% bonus across the board. It also paid out similar bonuses to VHA central office leaders. According to VA Inspector General Michael Missal, this created a cascade that quickly spread to VBA.
“First, it was determined that VHA field execs were getting a bonus,” he told the House VA Committee at a recent hearing. “Then they started discussing giving VHA executives at VACO that same bonus. VBA heard about it and said, ‘If they’re giving it, maybe we should consider it.’ Next thing you know, it was all done.”
Some VA human resource officials told OIG investigators they had serious concerns over the lack of justifications for the bonuses, worrying that they gave “undue deference to VHA and VBA leaders.” But they felt pressured to approve them.
“As one HR leader said, ‘I was a signature along the way,’” Missal told the committee.
To make matters messier, some of the executives pushing for the bonuses were also the ones receiving them. VA needs to look at putting safeguards in place to make sure that does not happen again, Missal said.
The OIG report showed that McDonough was unaware of the VACO bonuses until September 2023, after they were issued. Whether that was through happenstance or through ill intention by VHA and VBA leaders is unclear.
Despite what he admitted was “a series of massive mistakes,” McDonough told lawmakers he would not ask Elnahal or Jacobs to resign.
“I continue to have confidence in our undersecretaries because of their strong performance and the performance of their team on the implementation of the many authorities that we have,” he told the committee. “And because of the forthright way we’ve handled this scandal.”
Some committee members interpreted this as a lack of accountability on VA’s part.
Rep. Derrick Van Orden (R-WI) arrived at the hearing calling for Elnahal’s resignation.
“I took the opportunity to write a resignation letter for Dr. Elnahal addressed to you,” he told McDonough. “I cannot justify his employment any longer.”
After McDonough’s testimony, during which he said he held ultimate responsibility for VA’s failures, Van Orden said, however, he was revising his demand.
“I’m going to give you the opportunity to do what you just said to do. To be held accountable. I’m going to change this [resignation letter] from Dr. Elnahal to Secretary McDonough,” Van Orden said. “This is a systemic problem, and I do not think you are capable of serving in this capacity any longer. It breaks my heart to say that, but I do believe it to be true.”
McDonough reminded the committee that he was the one who brought the problem forward and has been working to rescind the bonuses.
“It was me who asked the Inspector General to investigate it,” he said. “It was me who stopped and recouped now at this date about 92% of those payments.”
McDonough also defended the CSI bonus program as a whole, testifying that it’s helped secure the highest retention rates and lowest quit rates the department has seen in years. He did say that he would be open to Congress crafting legislation specifically looking at how VA awards CSI bonuses in the future.