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[Senate Report 114-226]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 386
114th Congress     }                                      {     Report
                                 SENATE
                                                                 
 2d Session        }                                      {    114-226
_______________________________________________________________________

                                                   

                     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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 March 14, 2016.--Ordered to be printed

                                _______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

59-010                         WASHINGTON : 2016 

        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                  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
                     
                     
                     

                     
                     
                     
                                                      Calendar No. 386
114th Congress     }                                      {     Report
                                 SENATE
                                                                 
 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 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\
---------------------------------------------------------------------------
    \1\Treasury 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \3\See generally Asbury Park Press Data Universe, available at 
http://php.app.com/agent/federalemployees/search.
    \4\Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \5\See 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \6\See 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/pdfs_edit/031315kl2.pdf.
---------------------------------------------------------------------------
    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 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\
---------------------------------------------------------------------------
    \7\Dep'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-padding-va-employee-
got-big-bonuses/?page=all.
    \10\Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \11\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.
    \12\Id.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \13\This bill was previously introduced in the 113th Congress by 
Senator Ayotte as S. 2263.
---------------------------------------------------------------------------
    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 Committee 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.

             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 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.
          (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.

                                  [all]
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