No layoffs planned after VA exec bonus mistakes, secretary says

Secretary of Veterans Affairs Denis McDonough on Tuesday acknowledged “a series of enormous errors” in improperly awarding about $11 million in incentive bonuses to top department officials last year, but told lawmakers he still trusts his leadership team to make up for the errors and reform agency processes.

Republican lawmakers have questioned whether some senior leaders should be fired over the scandal, which they say has undermined public trust in the department.

“Ultimately, the responsibility for this failure rests on your shoulders,” House Veterans Affairs Committee Chairman Mike Bost, R-Ill., the secretary said at a hearing on the matter Tuesday. “And if the leaders below you fail and are not held accountable, you must be held accountable.”

The disputed bonuses were part of the $117 million Critical Skills Incentive Payments program authorized by Congress two years ago. Money from this fund was given to more than 13,000 employees with high-demand skills in an effort to keep them in VA hospitals and benefits offices.

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But at least 182 senior employees who were not eligible for the awards also received payments through the program. All bonuses were over $30,000 and several received more than $100,000.

VA Inspector General Michael Missal testified Tuesday that the errors resulted from several senior leaders — particularly Health Undersecretary Shereef Elnahal and Benefits Undersecretary Joshua Jacobs — misinterpreting the law, either through ignorance or intentionally skirting it to hand out generous cash rewards to high-ranking employees.

“Our work found failures in governance, judgment, due diligence, communications and accountability at multiple levels at the VA,” he said.

Missal told lawmakers he would have “no confidence” in Elnahal or Jacobs based on their handling of the bonus issues. Republican lawmakers called the mistakes inexcusable, especially given that the money was intended to retain front-line employees rather than bureaucrats.

“The administration decided that pushing paper in Washington, D.C. was a skill critical to VA’s mission and worthy of a maximum bonus,” Bost said. “Make no mistake, that money could have been spent on hard-working VA employees outside the Beltway who could have used it to send their son or daughter to college, not buy a new Porsche.”

Rep. Derrick Van Orden, R-Wisc., said during the hearing that Elnahal, McDonough and President Joe Biden should resign over the issue.

Missal’s report largely absolves McDonough of blame for the bonus errors. VA leaders have been working to recover the improper bonuses for several months. Around 92% of the money was recovered, the secretary said.

McDonough noted in his testimony that his office reported the error to lawmakers last fall, shortly after it became aware of the internal problem, illustrating that there was no intention to withhold information from supervisory officials.

And Democrats on the committee attributed the errors — which they also labeled as serious and troubling — to a misunderstanding of the law and a lack of adequate review procedures within the department. They called for reforms to the department’s oversight system regarding bonuses, but did not call for firings for mistakes.

But Republican lawmakers were angered that their request to hear directly from Elnahal and Jacobs was replaced by McDonough’s decision to testify on Tuesday, promising that these leaders will soon face tough questioning on Capitol Hill.

McDonough said he chose to testify rather than allow them to appear because of the severity of the problem and to explain broader efforts to correct the errors. He promised a response to the inspector general’s recommendations in the near future.

He also said that some of the senior executives may still be eligible for other bonuses in the future, but they will not be awarded in a batch or through the critical skills program.

Both the inspector general and the committee leaders also promised to continue focusing on the issue in the coming months.