By Stephen Barr
Monday, August 13, 2007

Bonuses for federal executives are getting a congressional grilling.

Sen. Byron L. Dorgan (D-N.D.) has asked the Government Accountability Office to investigate possible misuse of the bonus program for federal executives. In fiscal 2006, two-thirds of federal executives received bonuses, and at five federal agencies, more than 90 percent of the executives collected bonuses, he pointed out.

In announcing the GAO probe, Dorgan said agencies, rather than rewarding only their high-performing executives, seemed to believe that all of their executives were above average, "a lot like Garrison Keillor's Lake Wobegon." Dorgan said he was concerned by reports that some executives received bonuses when their agencies had failed to meet certain performance standards.

The heat began turning up on executive bonuses in May, when House members faulted the Veterans Affairs Department for awarding $3.8 million in performance bonuses in fiscal 2006, with some executives receiving bonuses of $33,000 each, even though the VA faced a backlog of disability claims and had stumbled in calculating the cost of care for wounded military personnel returning from Iraq.

The grill got a little hotter this month, when lawmakers criticized the Food and Drug Administration for paying $8.3 million in retention bonuses last year. Such bonuses go to scientists, doctors and other employees at risk of leaving to join the private sector, but the critics questioned whether FDA senior managers would really quit.

The perception that agencies are handing out overly generous bonuses "is an embarrassment," said Paul C. Light, a New York University professor who studies public service. "It is an embarrassment to see the lack of connection between what agencies do and what individuals receive."

Agency officials disagree and say bonuses go to seasoned federal executives who run complex operations, such as VA hospitals. Agency leaders, such as Gordon H. Mansfield at the VA and John R. Dyer at the FDA, have said that bonuses help keep experienced executives in government and make their compensation more competitive with the private sector.

According to data released by the Office of Personnel Management, an "outstanding" federal career executive, at the top of a five-level rating system on average received a bonus of $14,290 and a pay raise of $5,644 in fiscal 2006.

For these executives, earning the average salary of $115,429 that year and the average bonus added 9.3 percent to salary, while the average raise added 3.7 percent, the OPM said.

Government-wide, 67 percent of the Senior Executive Service -- the 6,100 career officials who hold top management and technical positions -- received bonuses in 2006.

Some agencies also paid bonuses to a larger share of their SES corps. More than 90 percent of the executives at Defense, Labor, Housing and Urban Development, the General Services Administration and the OPM received bonuses.

Carol A. Bonosaro, president of the Senior Executives Association, which represents the interests of federal executives, said she is not surprised that SES members get high marks at their agencies and receive bonuses. "If you've chosen SES members correctly, and we know that entry into the SES is not all that easy, then you are likely to get high-performing people who are doing well," she said.

Four years ago, Congress changed the rules for pay and bonuses in the SES in hopes of creating a model for introducing a performance-based pay system into the government. In exchange for the chance to obtain higher pay and bigger bonuses, the SES members gave up a guarantee of annual pay raises.

This month, Dorgan, joined by Sens. Daniel K. Akaka (D-Hawaii) and George V. Voinovich (R-Ohio), wrote the GAO saying that they need more information on how the SES system is working, how bonus decisions are made, and how they are linked to agency goals and performance standards. The GAO has agreed to undertake the probe, a Dorgan aide said last week.

It's possible that the executive bonuses are not being used as intended and have been turned into regular salary supplements at some agencies, given congressional curbs on federal pay.

Light said Congress should reexamine the adequacy of federal executive compensation, while agencies should be cautious in how they use bonuses.

"If you are using the bonus as a back-door pay increase, you are going to get caught sooner or later," Light said. "And Congress will get involved and start freezing bonuses, and it will get worse."

This is not the first time that federal bonuses have drawn the ire of Congress or public attention, especially when there are perceptions that an agency is not delivering efficient or effective programs.

"They are probably the lowest-paid executives in their class, so to speak, but somehow when you work for the government it becomes more obvious how much more you are paid than the average American," said Bill Coleman, senior vice president for compensation at Salary.com, a research and software company.

Stephen Barr's e-mail address isbarrs@washpost.com.