VA bonus recipients sat on boards that oversaw payments

~ Among them were nearly a dozen senior officials who devised the flawed 2005 budget.

WASHINGTON -- Nearly two dozen officials who received hefty performance bonuses last year at the Veterans Affairs Department also sat on the boards charged with recommending the payments.

Documents obtained by The Associated Press raise questions of conflict of interest in connection with the bonuses, some of which went to senior officials involved in crafting a budget that came up $1.3 billion short and jeopardized veterans' health care.

The documents show that 21 of 32 officials who were members of VA performance review boards received more than half a million dollars in payments themselves.

Among them: nearly a dozen senior officials who devised the flawed 2005 budget. Also rewarded was the deputy undersecretary for benefits, who manages a system with severe backlogs of veterans waiting for disability benefits.

Some members of the review boards, which are appointed by VA Secretary Jim Nicholson, also had input on bonus recommendations involving themselves, fellow members and spouses that made questionable performance claims and neglected agency problems.

The VA, which has defended the bonuses as necessary to retain hardworking senior employees, says board members do not participate in bonus decisions that involve themselves or fellow board members. In those cases, recommendations are made by agency heads in consultation with deputy undersecretaries who sit on the boards, the agency says.

But government watchdogs were harshly critical, saying the process does little to instill public confidence in the fairness of awards. In its last known report on the issue -- one involving NASA -- the Government Accountability Office in 1980 urged that performance boards add credibility and objectivity to their decisions by including "one or more impartial members from outside the agency," although agencies are not required to do so.

With the exception of a panel tasked with reviewing the VA inspector general's office, all the VA's performance board members come from within the agency.

In one case, Michael Walcoff, associate deputy undersecretary for field operations who sits on two of the review boards, and his wife, Kimberly, a VA director, received a package of bonuses totaling $42,000.

"This is a scandal in the making," said Paul C. Light, professor of public service at New York University who specializes in government reform. He said the VA bonuses pointed to possible "featherbedding" and other favoritism.

Light said given the current problems in veterans care, the department would be best served if Nicholson restricted most performance bonuses for at least a year except in cases of clear improvement.

"This is not the time for largesse for the Department of Veterans Affairs," Light said. "They must not make a link between retention and employees, but employees and performance as an incentive to solve these very serious problems."

Following reports this month by the AP of the $3.8 million in bonuses, groups such as the Veterans of Foreign Wars and the Iraq and Afghanistan Veterans of America have called on Nicholson to explain why officials involved in budget foul-ups would be rewarded.

Annual bonuses to senior VA officials last year averaged more than $16,000, the highest average in government.

Rep. John Hall, D-N.Y., has introduced legislation that would freeze 2007 VA bonuses for "senior politically appointed officers" -- such as assistant secretaries or deputy undersecretaries -- until the agency pares its disability claims backlog to under 100,000 cases.

"It is simply unacceptable that veterans are waiting longer and longer for benefits they desperately need while senior staff members in charge of bad policy are rewarded so-called performance bonuses," Hall said.

The legislation, originally scheduled for a vote Tuesday, was expected to be considered along with other veterans health care bills later this month, a spokeswoman for Hall said.

Under a federal law passed in 1978 to increase government accountability by tying bonuses more closely to performance, agencies are required to appoint performance review boards yearly to guarantee bonus awards are "fair and credible."

According to guidance by the U.S. Office of Personnel Management, performance boards must ensure that bonuses are given based not only on individual accomplishments cited by supervisors, but also the department's overall success.

However, 2006 bonus proposals obtained by the AP show that senior officials who received top payments of $33,000 were sometimes credited for achievements that were questionable, if not inaccurate. Also, no mention was made of agency-wide problems.

For example:

--Rita Reed, deputy assistant secretary for budget: "Demonstrated the ability to design and implement strategies that maximize employee potential and foster high ethical standards in meeting the organization's mission and goals."

While touting her role in launching programs to "leverage the VA's buying power" as well as collecting $5.1 million in erroneous payments, the proposal does not mention Reed's lead role in crafting the VA's flawed 2005 budget.

Months prior to her bonus award, GAO investigators determined the VA had used misleading accounting to justify health cuts, claiming false savings in part by double-counting savings from volume purchasing in government contracts from year to year.

--William Feeley, deputy undersecretary for health for operations and management: "Made numerous contributions to veterans and the Veterans Health Administration in his role as deputy undersecretary." It said he also led systemwide improvements that resulted in a 2.2 percent decrease in wait times for primary care.

Feeley received a top bonus and is credited for yearlong achievements even though he did not take the job until February 2006, nearly halfway into the fiscal year. Previously, he was a VA regional director who played a role in the flawed 2005 budget.

Regarding veterans' wait times to see doctors, a 2005 report from the VA inspector general found that VA schedulers routinely put the wrong requested appointment dates into the system, which made reported wait times appear shorter than they really were. The IG has said problems lingered in 2006 despite VA promises.

--Ronald Aument, deputy undersecretary for benefits: "His knowledge of VBA programs and operations and his breadth of experiences across VA have contributed greatly to VBA's progress in improving services to veterans."

Aument helps manage a disability claims system that has backlogs of 400,000 to 600,000 veterans. The waits average 177 days, two months short of the VA's strategic goal of 125 days to process claims. Nicholson has called the delays unacceptable.

Aument also is praised in his bonus proposal for requesting needed money and resources.

The VA is now moving to hire additional case managers to reduce short-staffing after problems were brought to light following disclosures of shoddy outpatient care at Walter Reed Army Medical Center.

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