U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

59–010 

" ! SENATE 

114TH CONGRESS

2d Session 

REPORT

2016

114–226 

Calendar No. 386 

STOP WASTEFUL FEDERAL BONUSES 

ACT OF 2015 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 742 

TO APPROPRIATELY LIMIT THE AUTHORITY TO AWARD BONUSES 

TO EMPLOYEES 

MARCH 14, 2016.—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 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

MARY BETH SCHULTZ, Minority Chief Counsel 

JOHN A. KANE, Minority Senior Governmental Affairs Advisor 

LAURA W. KILBRIDE, Chief Clerk 


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Calendar No. 386 

114TH CONGRESS SENATE REPORT " ! 2d Session 114–226 

STOP WASTEFUL FEDERAL BONUSES ACT OF 2015 

MARCH 14, 2016.—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. 742] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 742) to appropriately limit the authority to award bonuses to employees, having considered the 

same, reports favorably thereon with an amendment 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 ......................................................................................... 3 

IV. Section-by-Section Analysis .......................................................................... 4 

V. Evaluation of Regulatory Impact .................................................................. 4 

VI. Congressional Budget Office Cost Estimate ................................................ 5 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 5 

I. PURPOSE AND SUMMARY

The purpose of S. 742, the Stop Wasteful Federal Bonuses Act of 

2015, is to ensure agencies are not 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 relating to that employee and require repayment of any bonus awarded in the year in 

which 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 known 

by the employee’s supervisor or human resources department, a 


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1TREASURY 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. 2 Id. 

3See generally Asbury Park Press Data Universe, available at http://php.app.com/agent/ 

federalemployees/search. 4 Id. 

5See 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. 6See Sharon M. Helman v. U.S. Dep’t of Veterans Affairs, P.S. Docket No. VA 14–397 (Feb. 

25, 2015), available at https://www.govexec.com/media/gbc/docs/pdfsledit/031315kl2.pdf. 

Government Accountability Office (GAO) or inspector general (IG) 

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 misconduct fits the definition of ‘‘adverse finding.’’ 

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) IG report revealed that $2.8 million was awarded in 

bonuses to 2,800 employees with conduct violations between 2010 

and 2012.1 The IG found that, too often, the IRS does not consider 

misconduct when determining bonuses.2

While the amount of awards distributed to Federal employees 

has fluctuated or declined in recent years—awards peaked in 2011 

at $439 million 3—the scope of potentially improper award allocations is still broad. The agencies awarding the most total bonus 

compensation each year are the Patent and Trademark Office 

($33.8 million), the Veterans Health Administration ($27.3 million), 

and Customs and Border Protection ($22.1 million).4

Further illustrating the disconnect between bonuses and actual 

performance is an IG 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.5

Even after being fired for her misconduct, Phoenix Veterans Affairs Health Care System director Sharon Helman’s bonus was reinstated after a judge ruled that the agency lacked sufficient authorities to revoke performance awards previously paid to her.6

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 IG investigation found that she attempted to 

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


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7DEP’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. 8 Id. 

9 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-paddingva-employee-got-big-bonuses/?page=all. 10 Id. 11OFFICE 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. 12 Id. 13This bill was previously introduced in the 113th Congress by Senator Ayotte as S. 2263. 

former boss.7 Gheen received nearly $35,000 in bonuses while employed at the VA.8 Sheila Cullen, director of the VA’s Sierra Pacific 

Network, received a $21,000 bonus the year the IG found that she 

got the job by using a fabricated resume ́,9 and a $23,000 bonus the 

next year.10

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.11

However, the DEA did not follow this policy when it awarded bonuses 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.12

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. 742 would help address the most extreme of these systemic 

problems by barring employees who commit serious misconduct 

from receiving bonuses and providing a mechanism to recover previously awarded bonuses when the agency learns of misconduct 

after the bonus has already been awarded. 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 IG, the Comptroller General of the United States, or another senior ethics official of an agency. 

III. LEGISLATIVE HISTORY

Senator Kelly Ayotte (R–N.H.) introduced S. 742 on March 16, 

2015 with Senators Claire McCaskill (D–Mo.) and Deb Fischer (R– 

Neb.).13 The bill was referred to the Committee on Homeland Security and Governmental Affairs. 

The Committee considered S. 742 at a business meeting on June 

24, 2015. During the business meeting, Senator Ayotte offered a 

modified substitute amendment that strengthened due process procedures and restricted ‘‘adverse findings’’ to be those that can carry 

a penalty of suspension for two weeks or more. The modified substitute amendment was adopted by unanimous consent. The ComVerDate Sep 11 2014 00:42 Mar 17, 2016 Jkt 059010 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR226.XXX SR226

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mittee ordered the bill, as amended by the Ayotte Substitute 

Amendment as modified, reported favorably by voice vote. Members 

present for the vote were Senators Johnson, McCain, Lankford, 

Ayotte, Ernst, Sasse, Carper, Tester, Baldwin, Heitkamp, and 

Peters. Senator Tester was recorded for the record as voting ‘‘No’’. 

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

Section 1. Short title 

This section provides the bill’s short title, the ‘‘Stop Wasteful 

Federal Bonuses Act of 2015.’’ 

Section 2. Bonuses 

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

and ‘‘bonus’’. 

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 

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, IG, 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 year in which an adverse 

finding is made, after notice and opportunity for a hearing, in addition to appeal rights before the MSPB. 

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. 


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VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

JULY 13, 2015. 

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. 742, the Stop Wasteful Federal Bonuses Act of 2015. 

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

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 742—Stop Wasteful Federal Bonuses Act of 2015 

S. 742 would amend federal law to prohibit a federal agency 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 an employee violated the law and 

could be imprisoned for more than 1 year. Under the bill all bonuses given to employees in the same year as an adverse finding 

would be returned to the agency. 

Under current law, there is no prohibition on awarding bonuses 

to federal employees. Information from the Department of Veterans 

Affairs and the Internal Revenue Service 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. 742 would not have a significant effect on the federal budget. 

Enacting S. 742 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 we do not expect a significant 

number of returned bonuses, CBO estimates that any net changes 

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

S. 742 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Matthew Pickford. 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 S. 742 as reported are shown as follows (existing law proposed to be omitted 


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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 

* * * * * * * 

CHAPTER 45—INCENTIVE AWARDS 

* * * * * * * 

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 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. 


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(2) 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 date of enactment of this section, an employee of 

an agency shall sign a certification stating that the employee shall 

repay the bonus in accordance with a final order issued in accordance with 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 appeal to the Merit Systems Protection Board under 

section 7701. 

Æ 


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