Veterans Affairs Secretary Denis McDonough on Tuesday acknowledged “a series of massive mistakes” in the improper awarding of about $11 million of incentive bonuses to senior department officials last year but told lawmakers he still has confidence in his leadership team to make up for the errors and reform agency processes.
Republican lawmakers questioned whether some senior leaders should be fired because of the scandal, which they said has undermined public faith in the department.
“Ultimately, the responsibility for this failure falls on your shoulders,” House Veterans’ Affairs Committee Chairman Mike Bost, R-Ill., told the secretary at a hearing on the issue Tuesday. “And if leaders below you fail, and are not held accountable, you must be held to account.”
The contested bonuses were part of the $117 million Critical Skill Incentive Payments program authorized by Congress two years ago. Money from that fund has been given to more than 13,000 staffers 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 payouts through the program. All of the bonuses were more than $30,000, and several were given more than $100,000.
VA Inspector General Michael Missal testified on Tuesday that the mistakes stemmed from several senior leaders — particularly Under Secretary for Health Shereef Elnahal and Under Secretary for Benefits Joshua Jacobs — misinterpreting the law, either through ignorance or intentionally skirting it to hand out generous cash rewards to senior officials.
“Our work found lapses in governance, judgment, due diligence, communications and accountability at multiple levels in VA,” he said.
Missal told lawmakers he “would not have confidence” in Elnahal or Jacobs based on their handling of the bonus issues. Republican lawmakers decried the mistakes as unforgivable, especially given that the money was intended to retain front-line employees instead of bureaucrats.
“The administration decided that pushing paper in Washington, D.C. was a critical skill to VA’s mission that was worthy of a maximum bonus,” Bost said. “Don’t be fooled, this money could have been spent on hardworking VA employees, outside the beltway, who might’ve used it to send their son or daughter to college, not to buy a new Porsche.”
Rep. Derrick Van Orden, R-Wisc., said during the hearing that Elnahal, McDonough and President Joe Biden should all resign over the issue.
Missal’s report largely absolves McDonough of blame in the bonus mistakes. VA leaders have been working to recoup the improper bonuses for several months. About 92% of the money has been recovered, the secretary said.
McDonough noted in his testimony that his office reported the error to lawmakers last fall shortly after he was made aware of the internal problem, illustrating that there was not an intent to hide information from oversight officials.
And committee Democrats attributed the mistakes — which they also labeled as serious and concerning — to a misunderstanding of the law and a lack of proper review procedures within the department. They called for reforms to the department’s oversight system regarding bonuses, but did not call for firings related to mistakes.
But Republican lawmakers were angry that their request to hear directly from Elnahal and Jacobs was superseded by McDonough’s decision to testify on Tuesday, vowing that those leaders will soon face harsh questioning on Capitol Hill.
McDonough said he opted to testify instead of allowing them to appear because of the seriousness of the issue, 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 some of the senior executives may still be eligible for other bonuses in the future, but they will not be awarded in batch or through the critical skills program.
Both the inspector general and committee leaders also promised continued focus on the issue in coming months.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.
