By Stephen Barr
Wednesday, May 16, 2007

In the government, a bonus is never far from controversy.

For the past two weeks, the Veterans Affairs Department has been faulted for awarding $3.8 million in bonuses in fiscal 2006, while congressional critics portray the VA as strapped for resources as thousands of injured veterans return from Iraq and Afghanistan.

House Veterans Affairs Committee Chairman Bob Filner (D-Calif.) criticized inadequate budget planning by the VA in 2005 and said he was concerned that VA officials who "miscalculated the needs of our veterans were awarded with significant bonuses."

Rep. John Hall (D-N.Y.) pointed to the VA's backlog of more than 600,000 disability cases and average delays of 177 days, saying it was "shocking and scandalous" that bonuses were given to VA employees when veterans are waiting longer and longer for benefits.

Hall is trying to write a bill that would freeze bonuses for the VA's senior management this year until the department has reduced its backlog of work to fewer than 100,000 cases. The VA says that political appointees do not receive bonuses, but the committee is apparently interested in trying to sort out who holds VA jobs because of political considerations and those who are in policymaking roles that determine how well the VA performs.

With Democrats in an uproar over the bonuses, Filner announced that Rep. Harry E. Mitchell (D-Ariz.), who chairs an investigations subcommittee, will hold a hearing on the issue.

"We're not after the career people," Filner said yesterday. "We are trying to get accountability from the secretary, assistant secretaries and undersecretaries."

The flap over the VA bonuses reflects the tensions that come with running a federal agency these days. Agencies are expected to be stewards of the public trust but also to operate like a business and to recruit and keep experienced and talented professionals to improve the performance of multibillion-dollar programs.

VA Secretary Jim Nicholson recently told the House Veterans Affairs Committee that many of his top employees could get higher salaries in private business.

The VA thinks bonuses help keep experienced officials and make their compensation more competitive with the private sector. Over the long run, keeping the most talented employees helps improve efficiency and maintains quality services, the VA says.

Congress, of course, has authorized the use of bonuses at agencies, and in 2004 changed the law so that federal executives could receive pay and bonuses worth up to $215,700 this year.

Congressional attention was focused on the VA bonuses after the Associated Press published a report describing annual bonuses to senior VA officials as averaging more than $16,000, "the most lucrative in government."

Democrats were irked that one of the VA officials who received a top bonus of $33,000 was the deputy undersecretary for benefits, who helps manage the backlogged claims system.

The AP reported yesterday that 21 VA officials who received bonuses also sat on the performance-review boards that recommended such payments. The VA, in a response, said board members are not allowed to make recommendations on one another's bonuses.

Filner said Hall's proposed bill may address the issue of how boards make decisions on bonuses. He said the committee will probably have to learn how other agencies select recipients for bonuses before reaching any conclusions.

The Senate also seems likely to have questions about the VA bonus practices.

Sen. Daniel K. Akaka (D-Hawaii), chairman of the Senate Veterans Affairs Committee, wrote Nicholson that the bonuses were not distributed evenly across the department "and that some employees received large bonuses in spite of questionable performance outcomes."

Akaka said his staff's review had found that executives based in Washington received, on average, higher bonuses than their counterparts in other parts of the country.

He said that he was not concerned that VA bonuses to executives are among the highest of any agency but that the bonuses "should not give the appearance of an entitlement for the most centrally placed or well-connected staff."

Nicholson replied that bonuses are based "upon the contributions made by each executive and the relative complexity of his or her assignment." The higher bonuses to VA's central office and health officials "reflect this fact," he said.