U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

69–010 

" ! SENATE 115TH CONGRESS

1st Session 

REPORT

2017

115–127 

Calendar No. 167 

STOP IMPROPER FEDERAL BONUSES ACT 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 696 

TO AMEND TITLE 5, UNITED STATES CODE, TO APPROPRIATELY 

LIMIT THE AUTHORITY TO AWARD BONUSES TO FEDERAL 

EMPLOYEES 

JULY 11, 2017.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, North Dakota 

STEVE DAINES, Montana 

CLAIRE MCCASKILL, Missouri 

THOMAS R. CARPER, Delaware 

JON TESTER, Montana 

HEIDI HEITKAMP, North Dakota 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

COURTNEY J. ALLEN, Counsel 

MARGARET E. DAUM, Minority Staff Director 

STACIA M. CARDILLE, Minority Chief Counsel 

CHARLES A. MOSKOWITZ, Minority Senior Legislative Counsel 

KATHERINE C. SYBENGA, Minority Counsel 

LAURA W. KILBRIDE, Chief Clerk 


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Calendar No. 167 

115TH CONGRESS SENATE REPORT " ! 1st Session 115–127 

STOP IMPROPER FEDERAL BONUSES ACT 

JULY 11, 2017.—Ordered to be printed 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 696] 

[Including cost estimates of the Congressional Budget Office] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 696) to amend title 5, United 

States Code, to appropriately limit the authority to award bonuses 

to Federal employees, having considered the same, reports favorably thereon with amendments and recommends that the bill, as 

amended, do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 5 

IV. Section-by-Section Analysis .......................................................................... 5 

V. Evaluation of Regulatory Impact .................................................................. 6 

VI. Congressional Budget Office Cost Estimate ................................................ 6 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 7 

I. PURPOSE AND SUMMARY

The purpose of S. 696, the Stop Improper Federal Bonuses Act, 

is to prevent agencies from giving bonuses to employees that engage in serious misconduct. Specifically, this bill would prevent a 

Federal agency from awarding bonuses to an employee for five 

years after an adverse finding is made. An adverse finding is a 

finding that the employee violated a policy for which the employee 

could be terminated or suspended for at least fourteen days or violated a law for which the employee could be imprisoned for more 

than one year. An adverse finding may be based on information 

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1On March 14, 2016, the Committee approved S. 742, the Stop Wasteful Federal Bonuses Act 

of 2015. That bill is almost identical to S. 696. Accordingly, this committee report is in large 

part a reproduction of Chairman Johnson’s committee report for S. 742, S. Rep. No. 114–226 

(2016). 2Treasury Inspector Gen. for Tax Admin.: The Awards Program Complied with Fed. Regulations but Some Emp. with Tax and Conduct Issues Received Awards, Ref. No. 2014–10–007 

(Mar. 21, 2014), available at http://www.treasury.gov/tigta/auditreports/2014reports/ 

201410007fr.pdf. 3Treasury Inspector Gen. for Tax Admin: Review of the Internal Revenue Service’s Process 

to Address Violations of Tax Law by Its Own Employees, Ref. No. 2015–10–002 (Apr. 14, 2015), 

available at https://www.treasury.gov/tigta/auditreports/2015reports/201510002fr.pdf. 4 Information provided by the Office of Personnel Management to Committee staff (June 26, 

2017). 5Dep’t of Veterans Affairs Office of Inspector Gen.: Review of Alleged Misuse of VA Funds 

to Develop the Health Care Claims Processing Sys., No. 14–00730–126 (Mar. 2, 2015), available at http://www.va.gov/oig/pubs/VAOIG-14-00730-126.pdf. 

6 Id. 

7 Jim McElhatton, Resume-padding VA Employee Got Big Bonuses, Washington Times (June 

16, 2014), available at http://www.washingtontimes.com/news/2014/jun/16/resume-padding-vaemployee-got-big-bonuses/. 8 Id. 

ment, a Government Accountability Office (GAO) or Office of Inspector General (OIG) report, or any other source of information 

made available to the employee’s chain of command. If a bonus had 

previously been awarded in the same year as an adverse finding 

is made, agency managers must attempt to recover that bonus, 

subject to a notice and opportunity for a hearing. The Merit System 

Protection Board (MSPB) can hear appeals about whether the misconduct fits the definition of ‘‘adverse finding.’’ 1

II. BACKGROUND AND THE NEED FOR LEGISLATION

Federal law governs employee awards and incentives, and grants 

agencies authorities to help them manage their workforce. While 

performance awards can be a valuable tool for Federal managers 

to incentivize and reward good employees, they are inappropriate 

in cases where employees have engaged in serious misconduct or 

criminal behavior. 

The Committee is concerned that bonuses are being awarded to 

Federal employees even during periods in which those employees 

were engaging in misconduct. For example, an Internal Revenue 

Service (IRS) OIG report revealed that $2.8 million was awarded 

in bonuses to 2,800 employees with conduct violations between 

2010 and 2012.2 Another OIG report found that, between 2008 and 2013, the IRS gave nearly $145,000 in bonuses to employees within 

one year of being disciplined for willful tax non-compliance.3

While the amount of awards distributed to Federal employees has fluctuated or declined in recent years—awards reached $1.2 

billion in fiscal year 2016 4—the scope of potentially improper 

award allocations is still broad. 

The former Deputy Chief Business Officer for Purchased Care at 

the Department of Veterans Affairs (VA), Patricia Gheen, retired in 

May 2012 after a VA OIG investigation found that she attempted 

to steer more than $2 million in contracts to a firm that employed 

her former boss.5 Gheen received nearly $35,000 in bonuses while 

employed at the VA.6 Sheila Cullen, director of the VA’s Sierra Pacific Network, received a $21,000 bonus the year the OIG found 

that she got the job by using a fabricated resume,7 and a $23,000 

bonus the next year.8

Bonuses awarded by the VA in fiscal years 2014 and 2015, with 

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9Dep’t of Veterans Affairs Office of Inspector Gen.: Tomah VA Medical Center Administrative 

Closure, MCI #2011–04212–HI–0267 (Mar. 12, 2014), available at https://www.va.gov/oig/pubs/ 

admin-reports/VAOIG-11-04212-127.pdf. 10Donovan Slack and Bill Theobald, Veterans Affairs Pays $142 Million in Bonuses Amid 

Scandals, USA Today (Nov. 11, 2015), available at https://www.usatoday.com/story/news/politics/ 

2015/11/11/veterans-affairs-pays-142-million-bonuses-amid-scandals/75537586/. 11The Systematic Failures and Preventable Tragedies at the Tomah VA Medical Center, Majority Staff Report of the Comm. on Homeland Security & Governmental Affairs, United States 

Senate (May 31, 2016), available at https://www.hsgac.senate.gov/ 

library?PageNum_rs=2&c=114&type=reports. 12 Id. at 1. 13 Id. at vi. 14 Bill Glauber and Daniel Bice, Fired Tomah VA Chief to Surrender Medical License, USA 

Today (Jan. 18, 2017), available at http://www.jsonline.com/story/news/politics/2017/01/18/firedtomah-va-chief-of-staff-surrender-medical-license/96724274/. 15 Id. See also Dep’t of Veterans Affairs Office of Inspector Gen.: Administrative Investigation: 

Inappropriate Use of Position and Misuse of Relocation Program and Incentives in the Veterans 

Benefits Administration (Sept. 28, 2015), available at https://www.va.gov/oig/pubs/VAOIG-15- 

02997-526.pdf. 16 Id. 17 Id. 18Donovan Slack and Bill Theobald, supra note 11. 19 Bill Theobald, More bonuses for VA employees despite ongoing problems at the agency, USA 

Today (Oct. 28, 2016), available at https://www.usatoday.com/story/news/politics/2016/10/28/ 

more-bonuses-va-employees-despite-ongoing-problems-agency/92837218/. 

conduct, indicate that the agency continues to pay bonuses to employees committing these violations. 

The VA distributed over $142 million in bonuses to 156,000 VA 

employees in fiscal year 2014. One recipient was Dr. David 

Houlihan, the chief of staff of the Tomah VA Medical Center 

(Tomah VAMC) in Wisconsin. Despite a March 12, 2014 VA OIG 

report that found Dr. Houlihan’s opioid prescription practices 

‘‘raised potentially serious concerns’’,9 he received a $4,000 bonus 

in December 2014.10 The Committee investigated the allegations of 

over-prescription of opiates and issued a 359-page majority staff report on the systematic failures of the VA and VA OIG to identify 

and stop the over-prescription, veterans’ deaths, abuse of authority, 

and whistleblower retaliation at the Tomah VAMC.11 During this 

16-month long investigation, the Committee found that veterans 

nicknamed Dr. Houlihan the ‘‘Candy Man’’, because of his reputation for dispensing narcotics like candy.12 The Committee discovered this nickname for Dr. Houlihan was known to law enforcement agencies and executive branch agencies since at least 2009.13

Dr. Houlihan surrendered his medical license in January 2017 pursuant to an agreement with Wisconsin state regulators to stop investigating his activities at the Tomah VAMC.14

Kimberly Graves, a VA benefits office director, also received a 

bonus for 2014, the year in which she improperly used her authority for personal and financial benefit, according to a VA OIG report.15 The VA OIG found that Graves ‘‘participated personally and 

substantially in creating [a position] vacancy and then volunteering 

for the vacancy.’’ 16 The VA provided Graves over $129,000 in relocation expenses for taking this position that she created for herself.17 Yet, Graves also collected an $8,697 bonus for her performance during this time.18

In fiscal year 2015, the VA awarded more than $177 million in 

bonuses to more than half of the agency’s employees.19 VA employees receiving these bonuses included Dr. Darren Deering, the 

former chief of staff at the Phoenix VA Health Care System, who 

received a $5,000 bonus just four months before being fired for 

‘‘negligent performance of duties and failure to provide effective 


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20 Id. 21 Id. 22 Id. See also Dep’t of Veterans Affairs, VA Takes Action on Allegations of Wrongdoing in Cincinnati (Feb. 25, 2016), available at https://www.va.gov/opa/pressrel/includes/ 

viewPDF.cfm?id=2750. 23 Id. 24 Ann Saker, Suspended Cincinnati VA Leader Indicted on Federal Drug Charges, Cincinnati 

Enquirer (May 4, 2017), available at http://www.cincinnati.com/story/news/2017/05/04/ 

suspended-cincinnati-va-leader-indicted-federal-drug-charges/101289568/. 25 Jeff Deal, $20 Million to be Paid to Women Claiming Sexual Harassment, Cover-up at Florida Prison, WFTV9 (Feb. 13, 2017), available at http://www.wftv.com/news/local/20-million-to-bepaid-to-women-claiming-sexual-harassment-coverup-at-florida-prison/493884499. 26Taronica White, et al., v. U.S. Dep’t of Justice, EEOC Case No. 510–2012–00077X (2013), 

available at http://www.mcclatchydc.com/latest-news/article24192091.ece/BINARY/ 

Class%20Certification%20Decision%20on %20Sexual%20Harassment. 27 Id. 28Kevin Johnson, Execs at Troubled Federal Prisons Received Bonuses Totaling in the Millions, USA Today (Apr. 9, 2017), available at https://www.usatoday.com/story/news/politics/2017/ 

04/09/federal-prison-execs-got-thousands-bonuses-despite-ongoing-problems/100072938./. 29 Id. 30See generally Abuse of USPTO’s Telework Program: Ensuring Oversight, Accountability and 

Quality: Hearing Before the H. Comm. on Oversight & Gov’t Reform & H. Comm. on the Judiciary, 113th Cong. (2013) (statement of the Honorable Todd J. Zinzer), available at https:// 

www.oig.doc.gov/OIGPublications/OIG-15-009-T.pdf. 31Dep’t of Justice Office of Inspector Gen.: Bonuses and Other Favorable Personnel Actions 

for Drug Enforcement Administration Employees Involved in Alleged Sexual Misconduct Incidents (Mar. 2015), available at https://oig.justice.gov/reports/2015/e1601.pdf#page=1. 

oversight.’’ 20 Another bonus recipient, Jack Hetrick, a VA official 

at the Cincinnati VA Medical Center, retired within weeks of collecting a $12,075 bonus after receiving a notice of pending removal.21 The VA proposed firing Hetrick after a review found that 

Barbara Temeck, the acting chief of staff at the Cincinnati VA 

Medical Center, was prescribing medications and providing other 

medical care to Hetrick’s family without a proper license.22 Temeck 

also received a bonus of $5,000 in January 2016.23 Temeck was 

later suspended from employment and indicted on three felony 

charges of writing drug prescriptions outside the scope of her government licensing.24

The VA is not the only agency to fail to take into account serious 

allegations or investigations against employees before paying them 

bonuses. In February 2017, the Bureau of Prisons agreed to a $20 

million settlement in a class-action Equal Employment Opportunity 

complaint filed by more than 500 female employees of a Federal 

prison in Florida.25 This complaint alleged that ‘‘the [BOP] created 

a hostile work environment when it failed to correct known egregious sexual harassment perpetrated by inmates at Federal Correctional Complex (FCC) Coleman since February 6, 2011.’’ 26 Despite 

this complaint by hundreds of FCC Coleman employees that was 

filed in 2011,27 four senior executives at FCC Coleman during the 

course of these allegations received some of the largest bonuses 

paid by the BOP in 2015.28 Among them, the then-warden of FCC 

Coleman received $34,500 in bonuses during the past two years.29

Further illustrating the disconnect between bonuses and actual 

performance is an OIG report finding that large numbers of Patent 

and Trademark Office employees did not do any work at all for 

weeks at a time and still received bonuses.30

Some agencies have internal policies related to bonuses for employees involved in serious misconduct. The Drug Enforcement 

Agency (DEA), for example, prohibits employees from receiving promotions or performance awards for three years after being disciplined for misconduct or while an investigation is pending.31

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32 Id. 

nuses and time-off awards to employees who were disciplined for 

patronizing prostitutes, visiting a brothel overseas, sexually 

harassing a Foreign Service National, and attending sex parties.32

This example in particular illustrates that some Federal managers award bonuses to employees whom they know to have engaged in serious misconduct. A performance award or bonus should 

be reserved for employees who excel at their work for the American 

people. 

S. 696 would help address the most extreme of these systemic 

problems by barring employees who commit serious misconduct 

from receiving bonuses and would provide a mechanism to recover 

previously awarded bonuses when the agency learns of misconduct 

after the bonus has already been awarded. An amendment allows 

employees to utilize a repayment plan for returning improper bonuses awards to agencies. The provisions of this bill are triggered 

if the head of an agency makes an ‘‘adverse finding’’ that the employee either violated an agency policy that would warrant removal 

or suspension of not less than fourteen days, or violated a law for 

which the employee could be imprisoned for more than one year. 

An adverse finding may be based on, among other things, information, investigations, or findings of an OIG, the Comptroller General 

of the United States, or another senior ethics official of an agency. 

III. LEGISLATIVE HISTORY

S. 696, the Stop Improper Federal Bonuses Act, was introduced 

on March 22, 2017, by Senator Deb Fischer, Ranking Member 

Claire McCaskill, and Senator Dean Heller. The bill was referred 

to the Committee on Homeland Security and Governmental Affairs. 

The Committee considered S. 696 at a business meeting on May 17, 

2017. 

During the business meeting, Senator Tom Carper offered an 

amendment requiring agencies to allow an employee to repay a 

bonus under a repayment plan. The Committee adopted the 

amendment by voice vote and ordered the bill, as amended, reported favorably by voice vote en bloc with Senators Johnson, 

McCain, Portman, Paul, Lankford, Enzi, Hoeven, Daines, McCaskill, Tester, Heitkamp, Peters, Hassan, and Harris present. Consistent with Committee Rule 11, the Committee reports the bill 

with a technical amendment by mutual agreement of the Chairman 

and Ranking Member. 

IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

This section establishes the short title of the bill as the ‘‘Stop Improper Federal Bonuses Act.’’ 

Section 2. Bonuses 

This section provides definitions for ‘‘adverse finding’’, ‘‘agency’’, 

‘‘bonus’’, and ‘‘employee’’. 

Under this section, the head of an agency shall not award a 

bonus to an employee of the agency for a period of five years after 

the head of an agency makes a qualifying adverse finding against 


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that employee. An adverse finding is a finding that the employee 

violated a policy of the agency for which the employee may be removed or suspended for at least fourteen days, or that the employee violated a law for which the employee could be imprisoned 

for longer than one year. 

This section also lists some sources of information that may be 

the basis for such a finding, including reports prepared by the 

GAO, OIG, and senior ethics officials. This is not intended to be an 

exhaustive list. 

This section further requires the head of an agency to recover bonuses already paid to an employee in a fiscal year in which an adverse finding is made, after notice and opportunity for a hearing, 

in addition to appeal rights before the MSPB. An agency will also 

be required to allow a bonus to be repaid under a repayment plan. 

Finally, this section requires that as a condition of receiving a 

bonus awarded after the date of enactment, a Federal employee 

must sign a certification stating that the employee will repay the 

bonus if so compelled under this section. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill and determined that the bill will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s statement that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 

(UMRA) and would impose no costs on state, local, or tribal governments. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

JUNE 21, 2017. 

Hon. RON JOHNSON, 

Chairman, Committee on Homeland Security and Governmental Affairs, 

U.S. Senate, 

Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 696, the Stop Improper Federal Bonuses Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Dan Ready. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 696—Stop Improper Federal Bonuses Act 

S. 696 would prohibit federal agencies from awarding a bonus to 

an employee for five years after an adverse finding against the employee. The bill defines an adverse finding as a determination that 

an employee violated agency policy for which the employee could be 

removed or suspended from employment for 14 or more days or 

that the employee violated the law and could be imprisoned for 

more than 1 year. Additionally, any bonuses given to an employee 


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in the same year as an adverse finding would be returned to the 

agency. 

Under current law, there are no restrictions on awarding bonuses 

to federal employees. Information from the Office of Personnel 

Management indicates that some employees with conduct and performance issues have received bonuses. However, while the legislation would slightly diminish the pool of people eligible for bonuses, 

CBO expects it would not change the total amount of bonus money 

that could be awarded. Therefore, CBO estimates that implementing S. 696 would not have a significant effect on the federal 

budget. 

Enacting S. 696 could affect direct spending by some agencies 

(such as the Tennessee Valley Authority) because they are authorized to use receipts from the sale of goods, fees, and other collections to cover their operating costs; therefore, pay-as-you-go procedures apply. Because most of those agencies can make adjustments 

to the amounts collected and because CBO does not expect a significant number of returned bonuses, any net changes in direct 

spending by those agencies would likely not be significant. Enacting the bill would not affect revenues. 

Enacting S. 696 would not increase net direct spending or onbudget deficits in any of the four consecutive 10-year period beginning in 2028. 

S. 696 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local, or tribal governments. 

The CBO staff contact for this estimate is Dan Ready. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows: (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

* * * * * * * 

TITLE 5—GOVERNMENT ORGANIZATION AND 

EMPLOYEES 

* * * * * * * 

PART III—EMPLOYEES 

* * * * * * * 

SUBPART C—EMPLOYEE PERFORMANCE 

* * * * * * * 


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CHAPTER 45—INCENTIVE AWARDS 

* * * * * * * 

Table of sections. 

Subchapter I—Awards for Superior Accomplishments 

* * * * * * * 

Subchapter IV—Limitations on Bonus Authority 

4531. Certain forms of misconduct. 

* * * * * * * 

Subchapter IV—Limitations on Bonus Authority 

* * * * * * * 

SEC. 4531. CERTAIN FORMS OF MISCONDUCT. 

(a) DEFINITIONS.—In this section: 

(1) ADVERSE FINDING.— (A) IN GENERAL.—The term ‘adverse finding’ means a determination by the head of the agency employing an employee that the conduct of the employee— 

(i) violated a policy of the agency for which the employee may be removed or suspended for a period of not 

less than 14 days; or 

(ii) violated a law for which the employee may be imprisoned for more than 1 year. 

(B) BASIS.—A determination described in subparagraph 

(A) may be based on an investigation by, determination of, 

or information provided by the Inspector General or another senior ethics official of an agency or the Comptroller 

General of the United States, as part of carrying out an activity, authority, or function of the Inspector General, senior 

ethics official, or Comptroller General, respectively, under a 

provision of law other than this section. 

(2) AGENCY.—The term ‘agency’ has the meaning given that 

term under section 551. 

(3) BONUS.—The term ‘bonus’ means any performance award 

or cash award under— 

(A) section 4505a; 

(B) section 5384; or 

(C) section 5754. 

(b) PROHIBITION.—The head of an agency shall not award a 

bonus to an employee of the agency until 5 years after the end of 

the fiscal year during which the head of an agency makes an adverse finding relating to the employee. 

(c) AFTER BONUS AWARDED.— 

(1) IN GENERAL.—For a bonus awarded to an employee after 

the date of enactment of this section, if the head of the agency 

employing the employee makes an adverse finding relating to 

the employee during the fiscal year during which the bonus is 

awarded, the head of the agency, after notice and an opportunity for a hearing, shall issue an order directing the employee 

to repay the amount of the bonus. 

(2) REPAYMENT PLAN.—An agency shall allow an employee 

who is required to repay a bonus under paragraph (1) to repay 

that bonus using a repayment plan. 


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(3) HEARINGS.—A hearing under this paragraph shall be conducted in accordance with regulations relating to hearings promulgated by the head of the agency under chapter 75. 

(d) CONDITION OF RECEIPT.—As a condition of receiving a bonus 

awarded after the enactment of this section, an employee shall sign 

a certification stating that the employee shall repay the bonus in accordance with a final order issued under subsection (c). 

(e) APPEAL.—An employee determined to be ineligible for a bonus 

under subsection (b) or against whom an order is issued under subsection (c) may submit an appeal to the Merit Systems Protection 

Board under section 7701. 

* * * * * * * 

Æ 


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