[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE FEDERAL WORKFORCE: THE VIABILITY OF THE SENIOR
EXECUTIVE SERVICE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
U.S. POSTAL SERVICE AND THE CENSUS
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 11, 2014
__________
Serial No. 113-134
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
U.S. GOVERNMENT PRINTING OFFICE
89-782 WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia TONY CARDENAS, California
THOMAS MASSIE, Kentucky STEVEN A. HORSFORD, Nevada
DOUG COLLINS, Georgia MICHELLE LUJAN GRISHAM, New Mexico
MARK MEADOWS, North Carolina Vacancy
KERRY L. BENTIVOLIO, Michigan
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Federal Workforce, U.S. Postal Service and the Census
BLAKE FARENTHOLD, Texas, Chairman
TIM WALBERG, Michigan STEPHEN F. LYNCH, Massachusetts,
TREY GOWDY, South Carolina Ranking Minority Member
DOUG COLLINS, Georgia ELEANOR HOLMES NORTON, District of
RON DeSANTIS, Florida Columbia
WM. LACY CLAY, Missouri
C O N T E N T S
----------
Page
Hearing held on July 11, 2014.................................... 1
WITNESSES
Mr. Stephen Shih, Deputy Associate Director, Executive Resources
and Employee Development, U.S. Office of Personnel Management
Oral Statement............................................... 4
Written Statement............................................ 7
Mr. Samuel Retherford, Principal Deputy Assistant Secretary,
Office of Human Resources and Administration, U.S. Department
of Veterans Affairs
Oral Statement............................................... 15
Written Statement............................................ 17
Ms. Carol A. Bonosaro, President, Senior Executives Association
Oral Statement............................................... 23
Written Statement............................................ 25
APPENDIX
Answers to questions for the record from Carol A. Bonosaro,
submitted by Chairman Farenthold............................... 50
Answers to questions for the record from Mr. Stephen Shih,
submitted by Chairman Farenthold............................... 53
OVERSIGHT OF THE FEDERAL WORKFORCE: THE VIABILITY OF THE SENIOR
EXECUTIVE SERVICE
----------
Friday, July 11, 2014
House of Representatives,
Subcommittee on Federal Workforce, U.S. Postal
Service, and the Census,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 9:29 a.m., in
Room 2154, Rayburn House Office Building, Hon. Blake Farenthold
[chairman of the subcommittee] presiding.
Present: Representatives Farenthold, Walberg, and Lynch.
Staff Present: Melissa Beaumont, Assistant Clerk; Will L.
Boyington, Deputy Press Secretary; Molly Boyl, Deputy General
Counsel and Parliamentarian; Adam P. Fromm, Director of Member
Services and Committee Operations; Linda Good, Chief Clerk;
Jennifer Hemingway, Senior Professional Staff Member; Laura
Rush, Deputy Chief Clerk; Andrew Shult, Deputy Digital
Director; Peter Warren, Legislative Policy Director; Jaron
Bourke, Minority Director of Administration; Lena Chang,
Minority Counsel; Julia Krieger, Minority New Media Press
Secretary; Mark Stephenson, Minority Director of Legislation;
and Katy Teleky, Minority Staff Assistant.
Mr. Farenthold. Good morning. The Subcommittee on the
Federal Workforce, U.S. Postal Service, and Census will come to
order.
I would like to begin this hearing by reading the mission
statement of the Oversight Committee, as we normally do.
We exist to secure two fundamental principles: First,
Americans have a right to know what the money Washington takes
from them is well spent. And, second, Americans deserve an
efficient, effective government that works for them. Our duty
on the Oversight and Government Reform Committee is to protect
these rights. Our solemn responsibility is to hold government
accountable to taxpayers, because taxpayers have a right to
know what they get from their government. We will work
tirelessly in partnership with citizens watchdogs to deliver
the facts to the American people and bring genuine reform to
the Federal bureaucracy. This is the mission of the Oversight
and Government Reform Committee.
And we'll start with my opening statement.
It is critical and challenging questions surround the
future of the Senior Executive Service. The SES was created in
1979, was envisioned as a mobile executive corps with a broad
view and ability to manage across the Federal Government. The
Office of Personnel Management, the OPM, was charged with
administering the program and assisting agencies in selecting,
developing, and managing the most experienced segment of the
Federal workforce.
More than a decade ago, changes to the SES pay system were
implemented to alleviate pay compensation and better focus--I'm
sorry--pay compression and better focus compensation based on
performance.
Despite these statutory requirements, the committee's
oversight work has shown that the government continues to lack
the quality executive leadership necessary to administer key
governmental services and programs. We have seen scandals like
an senior executive relaxing in a hot tub with a glass of wine
on the taxpayers' dime, while another refuses to cooperate with
Congress despite her admission that her employing agency
targeted conservative organizations for applying to tax-exempt
status.
Data from the OPM shows career SES employees received, on
average, approximately $62 million in performance awards each
year for the last 5 fiscal years, that's 2009 through 2013. At
some agencies, 90 percent or more of the career SES folks
received bonuses.
Questions about the viability of SES also come to mind when
thinking about the Department of Veterans Affairs. The VA
became embroiled in a scandal where employees falsified
waitlists and made veterans wait for months for needed care
while VA executives took more than $2.8 million in bonuses.
That was in fiscal year 2013. Clearly, they were failing to
deliver on the agency's promise to our Nation's veterans.
These are just some examples of the many points that need
to be addressed to restore public confidence in government by
increasing accountability and performance within the executive
corps.
So today's hearing is an opportunity to take a detailed
look at the SES, from the assignment of SES positions to the
accountability and compensation of individual leaders. It is a
chance to discuss how we can institute a system that allows
agencies to more quickly and fairly remove poor leaders whose
appointments do not have time limitations while guarding
against politically-motivated actions.
Some will argue the government has all the laws,
regulations, and tools in place to fire people. Yet in May, the
House agreed on a need for a higher standard and overwhelmingly
passed legislation to make senior executives at the VA at-will
employees. One year ago, the House passed legislation to place
SES workers on unpaid leave for misappropriation of funds,
neglect of duty, or malfeasance.
I look forward to discussing how these and other reforms
can help us ensure the government hires, compensates, and
manages the executive workforce to meet the needs of their
taxpayer-funded mission.
At this point, I will now recognize the distinguished
ranking member, the gentleman in Massachusetts, Mr. Lynch, for
his opening statement.
Mr. Lynch. Thank you, Mr. Chairman. I would like to thank
you for holding this hearing and the purpose of examining
issues concerning performance, management, and accountability
in the Senior Executive Service.
I'd also like to welcome our witnesses. Thank you for your
willingness to help this committee with its work.
Recent reports concerning unacceptable patient wait times
and inappropriate scheduling practices at facilities within the
Department of Veterans Affairs healthcare system have again
underscored the importance of enacting meaningful reform. In
addition, allegations of wrongdoing by senior officials at the
Phoenix VA Medical Center and several other VA clinics
nationwide have given rise to the question of whether we must
also reform the current system under which Federal Government
agencies evaluate and compensate their senior executive
personnel and hold them accountable for poor job performance.
In the context of VA, Congress has recently undertaken a
series of bills that seek to strengthen department management
of Senior Executive Service personnel. Including among these
efforts is H.R. 4031, the Department of Veterans Affairs
Management Accountability Act, which passed the House of
Representatives by a vote of 309 to 33.
This legislation would authorize the Secretary of Veterans
Affairs to remove an individual from Senior Executive Service
at will, as the chairman has noted, upon the Secretary's
determination that the performance of the individual warrants
such removal.
Most recently, Senator Kelly Ayotte of New Hampshire and
Senator Claire McCaskill of Missouri have introduced Senate
bill 2545, legislation to require the Secretary of Veterans
Affairs to revoke bonuses to any employees involved in the
manipulation of electronic patient waitlists.
I would note that these measures are largely based on the
management issues that have been cited as specific to the
Department of the VA. As noted by White House Deputy Chief of
Staff Rob Nabors in his June 27th report to the President on
issues impacting timely care at the VA, ``a corrosive culture
has led to personnel problems across the Department that are
seriously impacting morale and by extension the timeliness of
health care. The problems inherent within the agency with an
extensive field structure are exacerbated by poor management
and communication structures. Distrust between some VA
employees and management, a history of retaliation toward
employees raising issues, and a lack of accountability across
all grade levels.''
While I am positive that that is not the case in all VA
facilities, and we did a very stem-to-stern review of the three
VA hospitals in my district, and they received 5-star rating on
review, and I do not want to impugn all VA employees, I do
strongly believe that we must make every effort to hold
accountable those senior agency personnel who are found to be
complicit in wrongdoing at the VA.
It is my understanding that some of my colleagues across
the aisle may now be considering legislation that seeks to
dramatically impact the Senior Executive Service across the
board in all agencies, even those that are doing very well,
including a proposal that would subject Senior Executive
Service personnel at every Federal agency to at-will
determination without notification, due process, or the right
of appeal.
I would urge my colleagues to exercise caution and due
diligence before taking such a severe step. I want to remind my
colleagues that such a reform would eliminate one of first and
most significant Federal laws to prevent political patronage
and corruption, the Pendleton Act, passed back in 1883. And
thanks to the Pendleton Act, the great majority of our nearly
7,400 career reserves and general members of the Senior
Executive Service and dedicated--are dedicated and effective
nonpartisan public servants.
With that, I would just like to close and say I--that I
look forward to hearing the testimony of our witnesses.
Thank you. I yield back.
Mr. Farenthold. Thank you very much.
Mr. Farenthold. Just as a matter of housekeeping, we do
have early votes in the House today. Hopefully, we will get
finished before the votes. If not, we will recess and come back
and complete immediately following the votes.
And also, members will have 7 days to submit opening
statements for the record.
Now we will recognize our panel. Mr. Stephen Shih is Deputy
Associate Director of Executive Resources and Employee
Development at the United States Office of Personnel
Management. Welcome sir.
Mr. Samuel Retherford is a Principal Deputy Assistant
Secretary of the Office of Human Resources and Administration
at the United States Department of Veterans Affairs. Welcome to
you, sir.
And Ms. Carol A. Bonosaro is president of the Senior
Executives Association. Welcome, Ms. Bonosaro.
Pursuant to the committee rules, all witnesses will be
sworn in before they testify. Would you please rise and raise
your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
Let the record reflect all witnesses have answered in the
affirmative.
Please be seated. Thank you very much.
Again, we're going to follow the normal rules of the
committee, where you will have--each have 5 minutes to make
your opening statement, and then we will rotate through the
panel up here with a 5-minute rounds of questions.
So let's go ahead and begin with Mr. Shih. You are
recognized for 5 minutes, sir.
WITNESS STATEMENTS
STATEMENT OF STEPHEN SHIH
Mr. Shih. Thank you, Chairman Farenthold.
Chairman, Ranking Member Lynch, and distinguished members
of the subcommittee. Thank you for holding this hearing and for
inviting me to speak today about the Senior Executive Service
and the United States Office of Personnel Management's role in
managing the SES. I appreciate your interest in ensuring the
Federal Government is doing everything possible to enable and
hold accountable an effective senior leadership corps.
Members of the SES are front and center in managing the
challenges that come with operating in a budget-constrained
environment where Federal agencies are often asked to continue
to carry out their critical missions, and in some cases,
increased requirements with reduced resources.
SES members are responsible for providing leadership within
agencies and across agencies to meet the changing needs and
priorities of the American people, and to provide consistency
in leadership across administrations.
SES members are directly accountable for individual and
organizational performance. Their compensation is based upon
their performance, and they are subject to removal from the SES
for performance or from Federal service entirely for misconduct
and other reasons.
The responsibilities for human capital management of the
SES have been divided by statute between agencies and OPM. And
this division reflects a balancing of the important needs of
individual agencies and the important needs of the entire
Federal Government.
On one hand, agencies strongly need direct operational
control and flexibility to apply their expertise in best
addressing their mission and agency-specific requirements. On
the other hand, the Federal Government in our entire Nation
have a strong interest in ensuring that agencies operate
consistently and efficiently, accomplished through the
centralized leadership, government-wide standards, and
oversight for which OPM is responsible.
For example, OPM is required, in consultation with OMB, to
review requests from each agency to allocate a specific number
of SES positions for each agency. And this responsibility helps
ensure appropriateness and consistency in the establishment of
SES positions. In this way, OPM also helps ensure appropriate
numbers of senior executive positions are in place within each
agency and across the Federal Government to enable effective
and continual operations of government agencies and programs.
Agencies have authority to recruit, assess, and hire SES
employees. Specifically, agencies make career SES appointments
through a competitive merit staffing process that includes
requirements to ensure fair and open competition and selection
based upon merit.
OPM is required to establish one or more Qualifications
Review Boards, QRBs, to certify the executive qualifications of
agencies' proposed candidates for initial appointment to the
SES cadre.
OPM also has reserved the authority to review agencies'
proposed career SES appointments to ensure that they comply
with all merit staffing requirements and are free of any
impropriety.
Agencies also have the authority to determine, in
accordance with OPM criteria, initial pay for SES members, and
then to determine additional compensation through salary
adjustments and performance awards. These are a combination of
tools for the overall compensation of the Senior Executive
Service members based on performance.
OPM annually reviews data on agencies' SES performance
ratings, pay adjustments, and performance awards to assess
whether agencies differentiate pay based upon performance,
including appropriately granting SES performance awards to
encourage excellence in performance. Again, this is OPM's
responsibility to help provide appropriateness and consistency
across the Federal Government.
Each agency is required to develop one or more performance
appraisal systems for SES members subject to OPM standards and
the agency's appointing authority. Typically the agency head
issues final performance ratings and determines correlating
compensation for SES members in the agency.
OPM is responsible for reviewing the agency's SES
performance appraisal system for compliance with government-
wide requirements of law, regulations, and OPM standards to
determine appropriateness for OPM approval of the system. This
approval allows the agency to implement the system.
Subsequently, OPM may review the agency's implementation of the
system to determine adherence to government-wide law,
regulations, and standards.
Based upon this review, OPM may, with OMB concurrence, then
certify the system, and the certification enables the agency to
access the higher rates of pay to recruit and compensate their
senior executives.
Agencies have the authority and responsibility, and in
specific situations, are required by law to address poor SES
performance by reducing pay, reassigning or transferring SES
members, or removing them entirely from the SES.
Agencies also have the authority and responsibility to
address SES disciplinary matters, including misconduct, neglect
of duty, or malfeasance, by taking actions against the SES
members, such as reductions in pay, suspensions lasting more
than 14 days, or removal entirely from the Federal service.
OPM takes seriously its responsibilities pertaining to the
SES and remains committed to providing centralized leadership
and oversight on the management of the SES members across the
government. Thank you for inviting me here today, and I am
happy to answer any questions you may have.
Mr. Farenthold. Thank you very much, Mr. Shih.
[Prepared statement of Mr. Shih follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Farenthold. Mr. Retherford, you are now recognized for
5 minutes for your opening statement.
STATEMENT OF SAMUEL RETHERFORD
Mr. Retherford. Thank you. Chairman Farenthold, Ranking
Member Lynch, distinguished members of the subcommittee, thank
you for this opportunity to appear before you today.
I would like to express on behalf of the VA workforce our
commitment to serve veterans. To accomplish this mission, we
must recruit and retain the best talent, many of whom require
special skills in health care, information technology, and
benefits delivery. In general, VA requires talented executives
to manage the complex set of VA facilities and programs. We are
competing in tough public and private labor markets, and to
remain competitive, we rely in part on incentives and awards
that attract and retain talent and recognize superior
performance.
I want to highlight that awards are part of the SES pay
structure. As outlined in the statute, awards were designed to
be part of SES compensation. That is the premise of pay for
performance. Failure to recognize performance puts VA at risk
of losing our most effective senior talent.
Most critical to applying higher salary and performance
awards is having an OPM-certified appraisal system. Without OPM
certification, salaries are restricted and awards are not
permitted. The OPM process is rigorous and requires that
performance distinctions must be made. VA has such an executive
appraisal position approved by OPM.
That said, we definitely recognize that we must do better
in holding our leaders accountable. Fundamental to obtaining
accountability is rigorous implementation and oversight of
performance plans that align organizational goals to
executives.
To have a good program, we must improve our performance
management capabilities. The VA leadership must also more
thoroughly engage in managing SES performance plans to include
setting and verifying outcomes and documenting shortcomings.
Performance management has many challenges. By its nature,
it is very subjective and complex. It is used to identify
superlative and poor performers, and it is the foundation of
development, mentoring, and accountability.
Our senior executives must know how to craft good outcome-
focused objectives. They must fully understand the process and
know how to document deficiencies so that decisions on
performance will be defensible and prevail during the due-
process steps that follow those decisions.
In the evaluation of performance, the process VA uses is
only in the second year. It is described in my written
testimony, but I would like to touch on a few points.
First, we use the OPM-approved government-wide form and the
five rating standards. Executive performance objectives are
assembled into five OPM-critical elements or competencies and
are weighted by VA with the heaviest weightings of 40 percent
on the results-driven element and 40 percent in the two
elements for leading. With more experience with the new system,
we believe there will be greater consistency and clarity.
Second, I want to point out that VA's performance appraisal
system goes beyond minimum OPM standards. VA added a reviewing
official, which is not required, as part of the rating process
and added performance review committees that conducted initial
review of appraisals prior to review by the VA Performance
Review Board.
These new features provide four levels of scrutiny: rater,
reviewer, committee, and the board, prior to recommendation to
the Secretary.
Third, VA added our I Care Values of integrity, commitment,
advocacy, respect, and excellence to leading people. We are
currently working to add standards of conduct to our SES
appraisal system.
And lastly, we are working towards moving away from paper
towards information technology solution. This is our first year
of an automated system. Automating our performance management
system will enable visibility and oversight of the process,
allow full and timely review of performance plans as they are
being developed, and to provide a repository for documentation.
We are also working to automate talent management, which will
allow visibility of requirements and the skill sets of our
executives.
In closing, I am a recent addition to VA, having arrived
last January. I have read the reports, assessed many of our
systems and capabilities, and noted areas of concern. We are
working hard on solutions, which includes revising policies,
establishing new executive training, and applying information
technology.
The Acting Secretary is committed to use all authorities to
enforce accountability, restore trust, and change the VA
culture. I believe our efforts in improving performance
management in the VA will set many of the conditions for the
new VA culture.
Thank you for this opportunity to appear before you today.
I look forward to answering your questions.
Mr. Farenthold. Thank you, Mr. Retherford.
[Prepared statement of Mr. Retherford follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Farenthold. Ms. Bonosaro, you are up for 5 minutes.
STATEMENT OF CAROL A. BONOSARO
Ms. Bonosaro. Chairman, Ranking Member Lynch, and members
of the subcommittee. Thank you for the opportunity to testify
today.
The Senior Executives Association represents nearly 7,000
career members of the SES. For several years, we have been
sounding the alarm about the challenges facing the SES in areas
of needed reform. Many of these issues have now become critical
in the face of problems at the Department of Veterans Affairs.
So I would like to make just two points:
First, with regard to the state of the SES. A strong SES is
critical to effective agency operations and workforce
management. Yet there are serious risks to both the short- and
long-term viability of the senior career executive system.
Career SES are highly qualified professionals who oversee
sizeable agency budgets and complex programs, have a large span
of control, and are often also technical experts in their
fields, and face a rigorous selection process to enter the SES.
They are in a completely different personnel system with no
locality pay, all pay adjustments and awards based on
performance and entirely discretionary with the agency, and
they have no effective appeal rights.
The perception seems to be that a certain number of
executives must be poor performers and that the ratings of many
are inflated. If a large number of senior executives were not
working at the ``fully successful'' or better level, it would
indicate an ineffective selection process.
Where there are poor performers, sufficient remedies exist
to hold them accountable with relative ease. And let me make
clear, SEA believes that they should and must be held
accountable.
A February survey of our membership found 51 percent of
respondents rating overall morale among the SES at their
agencies as low or very low. The rate of retirement of current
SES is up 40 percent since 2009. And talented, able GS-14s and
15s are declining to go into the SES. Thus the service may well
become a place of last resort as high-performing employees take
their skills to the private sector.
What's led to this situation? An essentially broken pay-
for-performance system, the pay freeze, substantial reduction
in performance awards, a suspension of the Presidential Rank
Awards in 2013, ever increasing challenges to do more with
less. But also, a series of punitive legislative proposals to
penalize all senior executives, regardless of their performance
and an atmosphere which inhibits risk-taking and innovation
because failure is unacceptable and in which too many
executives facing investigations have been treated as guilty
until proven innocent.
SEA recommends some essential reforms for the SES.
Outlined--they are outlined in our written statement. And we
stand ready to work with the subcommittee in a comprehensive
review of the system to ensure reforms that promote fairness,
transparency, and efficient government management. The
continued viability of the SES depends on such reform.
My second point has to do with the serious allegations
regarding operations at the VA. And we fully appreciate
Congressional concerns regarding those allegations. However,
the focus on career leadership is wrong. The systemic issues at
VA will remain, irrespective of changes in the personnel
system. Because these are systemic issues, they are ones which
political leadership has repeatedly failed to address.
Political leadership, not career executives, call the shots, to
use the vernacular. Tools exist to fire senior executives with
ease, and it is total nonsense to suggest that they don't. If
they are not being used, it is for one of two reasons: Either
the executive isn't actually accountable, or political
leadership isn't willing to use the tools.
To provide just one example, falsifying government records
is a criminal act. If someone is believed to have falsified
records, a case can and should be referred to the IG, and upon
verification the case should be referred to the Department of
Justice for prosecution.
Punishing all VA senior executives by banning performance
awards, irrespective of performance, or creating at-will
employment in the SES which could enable a new administration
to clean out the Department and bring in ill-qualified
candidates, will do more harm than good.
The best current executives will retire, excellent
candidates will refrain from applying. And who will be left to
provide the care and services which veterans need and deserve?
What has been proposed will create more harm than good. But
what SEA is suggesting is not a quick or easy fix. But if we
care about ensuring that taxpayers have the best career
leadership corps necessary to provide quality programs and
services, then the focus should be turned to needed reforms to
the SES system and to holding political leadership accountable.
Mr. Farenthold. Thank you very much, Ms. Bonosaro.
[Prepared statement of Ms. Bonosaro follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Farenthold. And I will begin with the first round of
questions.
Mr. Retherford, you testified that the bonus structure was
actually, you know, part of the compensation package, I
believe--I don't remember your exact words. But you said it is
used as consideration of the part of overall compensation
package. When that's the case, then, is there--doesn't that
create a reluctance to not award the bonuses when, in fact, it
hasn't been earned, or there hasn't been exceptional
performance?
Mr. Retherford. Chairman, not necessarily so. The
performance plans are evaluated through a various--the four
levels I mentioned, the rate, review, official review
committees, and the board. And recommendations go to the
Secretary.
We make distinctions in evaluation. Our highest level, the
``outstanding'' rating, we only had 21 percent this year. And I
think at the next level, we had--I don't have the exact
numbers. But government-wide, the ``outstanding'' rating is
much higher than that. But the awards, performance awards are
only given to the highest performers who clearly exceed their
performance objectives and their performance plan.
Mr. Farenthold. Now, you talked about rolling out a system
of automated metrics for determining bonuses. My concern with
that is in the recent scandal that we have seen with the VA, it
was like that system was being gamed. Rather than entering
appointment requests into the computer system, you saw pressure
on folks at the VA to keep separate paper lists.
So the automated metrics system then wouldn't have caught
those delays. What actions are being taken to ensure the
system--other automated metrics aren't being gamed in the same
fashion?
Mr. Retherford. Thank you, Mr. Chairman. The information
technology system I referred to will automate all the SES
performance plans across the VA. We have over 501 senior
executives. Right now it is all paper. This was the first year
we required performance plans to be put into an automated
system. Therefore, we can look and see what the performance
objectives are. We can review all the performance plans at the
essential level. Not only that, we can make sure they are all
done within the first 30 days of the rating period. We can make
sure counselings are done. And will have an audit trail of
documents of mid-year assessments and identification of
shortcomings. Prior to that, we had no ability at an
organization as large as the VA
Mr. Farenthold. Mr. Retherford, I don't mean to sound like
I'm picking on you, but one of my big concerns is the VA. We
have a responsibility to keep the promises we have made to our
veterans. So I am a little bit worried.
And then the committee has learned that in 20--fiscal year
2011 and 2013, 339 SES employees at the VA charged an average
of 90 days' administrative leaves for various reasons, as
compared to a government-wide average of 4 days per SES
employee during the same time period for various reasons.
Would you explain the reasons behind the VA high average
use of administrative leave by SES?
Mr. Retherford. Mr. Chairman, I don't have the information
on that. I would like to take that for the record.
Mr. Farenthold. Would you please get back to us on this?
Mr. Retherford. I will.
Mr. Farenthold. Can you tell us what some of the reasons or
activities SES employees are allowed to use administrative
leave?
Mr. Retherford. Administrative leave is used for a variety
of reasons. In the current system, we can't tell exactly what
the reasons are. But they are for investigations; a person will
be put on administrative leave when they can't perform duties
in the VA where it is just too inconvenient or present a bad--
--
Mr. Farenthold. I'm quickly running out of time and I do
have some questions about the SES overall.
So, Mr. Shih, what, if any, impediments are there to
terminating poorly performing SES employees across the Federal
Government and within the VA?
Mr. Shih. Thank you, Mr. Chairman. I appreciate the
question.
The current system, the SES statute and regulations by OPM
provide tools for agencies to quickly address poor performance
by Senior Executive Service members and also misconduct and all
other types of wrongdoing.
With respect to performance, I'd like to make a couple of
quick points. It is very important for agencies to pay close
attention to performance during the first year, which is a
probationary period of SES's initial appointment to the SES,
because there are great flexibilities here for agencies to be
able to immediately remove poorly performing probationary
SESers from the Senior Executive Service.
Following the probationary period, there are strong
flexibilities. Agencies can reduce pay, based upon poor
performance. One unsatisfactory performance rating requires an
agency to reassign, transfer, or remove the senior executive
from the SES. All that's required is a written notification 30
days before the effective date. There is no right of an MSPB
appeal. There is the availability of an informal hearing before
the MSPB within 15 days, but that informal hearing is not
binding and it doesn't hold up the effective action.
Two unsatisfactory ratings in a period of 5 consecutive
years requires to the agency to remove the senior executive
member. Same notification, same appeal rights, which is only an
informal hearing before of the MSPB.
And then two, less than ``fully successful'' ratings in a
period of any 3 consecutive years requires the agency also to
remove the SESer.
Then on the conduct side, again, there are stronger
flexibilities for an agency to deal with probationary SESer.
And so my recommendation is, again, for agencies to have very
strong scrutiny of their senior executives' performance and
conduct during that probationary period.
Following the conclusion of the probationary period, for
any reasons related to misconduct, neglect of duty,
malfeasance, or other reasons, agencies can take a number of
actions, including reduction in pay, removal from Federal
service, or suspension greater than 14 days.
What's required is 30 days' advanced written notice, a few
other procedural rights, 7 days for the senior executive to
respond, and then that executive does have the right to file an
MSPB appeal.
Mr. Farenthold. All right. I am out of time. I will follow
up on that if we get around to a second round of questions.
Mr. Lynch, we will recognize for you your questions.
Mr. Lynch. Thank you, Mr. Chairman.
Again, thank you for being here.
I think we are all familiar with the problems at the VA
regarding the treatment delays for our veterans. And also,
falsified wait times that were used to determine awards and
also salary increases.
I also understand that the inspector general and the VA
have not completed their investigations and audits in order to
determine the employees who were responsible for these
unacceptable practices.
But I do think it makes sense to go after those who need to
be held accountable, who made these decisions. And I want to
find out from our discussion whether the VA has the tools to do
what they need to do, whether they need additional
authorization from Congress to hold people accountable.
At a very basic level, these veterans have earned, earned
this right to excellent health care. They have served. We have
an obligation now to step up and meet our obligation to make
sure that these veterans and their families are cared for. It
is a very, very high bar. This is a--when you think about the
way our military works, we're asking people to put their lives
aside, to put on that uniform, to serve our country. And so
that's a very deep and abiding obligation that they have taken
here. And what we are promising, what this Nation has promised
is that we will meet that obligation and we will honor that
service. And one part of how we honor that service to those
veterans is to provide decent health care. And in this case, we
have dropped the ball. We have failed in our obligation as a
nation. And that's serious, that is dead serious. And so we
need to--we need to take a good hard look at this.
Mr. Retherford and Mr. Shih, does the VA currently have the
authority to rescind or claw back the performance awards that
have been rendered to senior executives who may be culpable in
this case?
Mr. Retherford. Congressman Lynch, currently we do not have
the authority to go back and rescind an award. The performance
plan, once done, is final.
Mr. Lynch. Okay. So what are the parameters and--what's the
timetable that--well. You're saying you have no recourse
currently?
Mr. Retherford. That's correct, sir.
Mr. Lynch. Okay. So we need to pass legislation.
Mr. Retherford. Sir, if legislation was there, the VA would
use all authorities to enforce accountability.
Mr. Lynch. Okay. Would--I'm going to ask you, would each of
you be supportive of legislation that would allow the VA to
downgrade the performance evaluations and rescind the bonus
awards for those who were found to be culpable in either
falsifying or, you know, perpetrating this fraud upon our
veterans and their families?
Mr. Retherford. Congressman Lynch, we would use all
authorities granted.
Mr. Lynch. But would you support the legislation? That's
what I'm asking.
Mr. Retherford. The legislation to allow us to go back and
change ratings once we find--once investigations are completed
and we found that there was wrongdoing?
Mr. Lynch. Yes.
Mr. Retherford. We have indicated that, yes, sir, we would
use all authorities.
Mr. Lynch. Because I intend to introduce legislation in the
House here that would revoke the bonuses paid to VA employees
in the manipulation--that were culpable in the manipulation of
appointment wait times but also ensure that the performance of
these employees are downgraded accordingly.
You know, we're going to have to recognize the due process
rights. As I said, you know, in my own inspection, going to the
VA hospitals in my district, talking to the patients, talking
to the families, meeting with the administrators, we found a
very high level of performance. So I am interested in focusing
like a laser on those individuals who were culpable in this
case. And getting back those--those bonuses. And also--and also
putting that out as a marker to those in the future who might
think about manipulating the process in a way that harms our
veterans.
So I appreciate the witnesses' testimony. And look forward
to working with you.
Mr. Farenthold. And if you will give me a copy of that
legislation, I would like to read it and possibly sign on as a
cosponsor. I agree with the principles there a hundred percent.
Mr. Walberg, you are now recognized for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman. And thanks to the
witnesses for being here today.
Mr. Retherford, how many SES employees have been removed
from their positions this year?
Mr. Retherford. I am not aware of the number this year. I
do have the number for last year.
Mr. Walberg. What about the past 5 years?
Mr. Retherford. Past 5 years, I don't have. I will take
that for the record.
Last year, we removed six employees, six executive
employees.
Mr. Walberg. Six executives. Okay.
Records that I have here for fiscal years 2010, 2013
indicate that all 470 VA senior executives received performance
ratings of ``fully successful'' or higher. In fiscal year 2010,
76 percent of the VA SES received bonuses averaging $15,000. In
fiscal year 2011, 74 percent of the VA SES received bonuses
averaging $11,500. In fiscal year 2012, 54 percent of the VA
SES received bonuses of $12,000. In fiscal year 2013, 78
percent of VA senior managers had performance ratings that
exceeds ``fully successful'' or ``outstanding.'' And more than
2.8 million was paid out in bonuses to executives.
Is it likely and realistic that all 470 senior executives
would receive the same ``fully satisfactory'' rating today?
Mr. Retherford. It is not. The data do not tell the whole
story. The VA is at fault for not completing many of the
performance evaluations once we remove an executive. For
example, the six we removed last year, we should have rendered
performance appraisal on them. They had 90 days at the job.
The administration, after the action to remove, whether it
was performance or misconduct, was not completed, not
reflected. We find that is the case in many of the years that
we looked at.
The administration never caught up, the unsatisfactory
performance was never captured, and therefore----
Mr. Walberg. And again, the main reason for not capturing
that, catching up with the problem?
Mr. Retherford. Failure to adhere to our policies and
process. The information technology will help us a long way in
monitoring this type of administrative details.
Mr. Walberg. Did the bonus system help lead to this
problem?
Mr. Retherford. I don't think the performance award system
led to this problem. The performance awards in 2013 were
greatly reduced down to an average of about 9,000 to about 5.5
percent of base salary. So it has been coming down.
Mr. Walberg. You testified that the absence of ratings in
these two lowest categories is not uncommon for most agencies.
Adding that in all of the Federal Government, there were only
12 senior executives rated ``minimally satisfactory'' and three
rated ``unsatisfactory'' in fiscal year 2012. Do you really
believe that almost 100 percent of career senior executives
were successful in their jobs?
Mr. Retherford. I do not. And I don't believe the data tell
the whole story. Like I said, reports were not rendered after
actions were taken. And, additionally, poor-performing senior
executives tend to depart and resign and leave before
appraisals are submitted. But it is a matter of administration.
You still have to complete the performance plan.
Mr. Walberg. And clean up with what is left behind.
Mr. Retherford. Absolutely. Absolutely. That has not been
done.
Mr. Walberg. We have certainly seen that with the VA and
the IRS. We could talk about that all day here as well. The
supervision that went on that allowed destruction of emails and
the like, a real problem.
Let me ask a general question for all of you, if you'd care
to answer. What, if any, impediments are there to terminating
poorly performing SES employees across the Federal Government
and at the VA? And I'm open to answers from anyone.
Mr. Retherford. I think we have all the authorities to do
our job and hold folks accountable, executives accountable. The
hardest part is performance management, and evaluation is
subjective. It's hard. You have to document. You have to know
what you're doing to be defensible in the due process steps
that follow. So you have to have a good system. You have good
objectives aligned to the executive. You have to track them,
you have to counsel, you have to document. Because at the end,
you have to defend your decision. I think that's the hard part.
Executives knowing how to confront poor performance.
Mr. Walberg. Ms. Bonosaro?
Ms. Bonosaro. I would argue that I think what Mr.
Retherford has suggested would be what would be fair; in other
words, to make perfectly clear the executive, here is what we
expect from you, we're going to hold you to it. The trick is to
be certain you have a good enough system that really is--
enables to you evaluate that.
But the fact of the matter is that the agency, the
Department does not have to put on a major defense if they
decide to fire a senior executive. And that's a matter of
spine. It is called take the action when it's appropriate.
Because that executive has no effective appeal right if they
are fired for poor performance. They can go to the MSPB. And if
the MSPB agrees with them that their firing was inappropriate,
it's only a recommendation to the agency. And which the agency
or department can ignore. So it's not as though there is a
major bureaucratic effort that one has to go through. And it is
quite true that many executives who have not done well, in
fact, will retire or get the message and move on out.
Mr. Walberg. Thank you. My time has expired. Yield back.
Mr. Farenthold. Thank you very much. And I've got just a
couple more questions, and we'll give Mr. Lynch an opportunity
to ask any questions that he may still have.
So Mr. Shih, it's my understanding that a senior executive
removed for performance can retain his or her SES pay if placed
in a position with lower pay, such as a GS-15.
Can you help me understand why we would allow executives
removed from their position for performance to retain their pay
if placed in a new position?
Mr. Shih. Chairman, thank you very much for your thoughtful
question. It is a question that I believe is open to
discussion.
The point that I would have emphasize is the SES statute,
all of its purposes are intended to foster, support, and enable
the recruitment and retention of top executive talent into the
Federal Government. The purpose of the statute is to provide
conditions of employment, including compensation and civil
service protections that would make the Federal Government an
attractive employer and make the Federal Government an
attractive place to work.
And so all of these provisions that we have been discussing
today relating to performance, relating to compensation,
relating to due process and also protections such as the fall-
back position and safe pay are intended again to foster an
environment where we can recruit the top talent.
Mr. Farenthold. Do you think that one of the unintended
consequences of that is you create a situation where if you can
check all the boxes, you're fine, and you can hang on to your
job, and there's no real incentive to innovate and for
excellence. I mean, you look at your system for rating
employees. You'd expect there to be a bell curve with, you
know, satisfactory and slightly above satisfactory being the
high point in the bell curve. But we see practically no folks
getting unacceptable reviews. And a very high percentage at the
very top.
Mr. Shih. Thank you, Chairman. I believe that with respect
to any type of personnel system, including a performance
appraisal system, the effectiveness of that system depends
greatly on the implementation of that system. And so some of
the proposals that have been discussed in terms of providing
new tools and new flexibilities and more control for agencies
to be able to address situations, I think the answer still is
going to remain the same, which is that the success of any of
those new tools or new systems is going to depend on the
implementation.
The other point I'd like to add to that very briefly is
that following up on Representative--Ranking Member Lynch's
comments regarding actions that employers can take to deal with
poor performance, I'd also like to remind the subcommittee that
agencies have the authority to address some of these issues
after the fact, not only through performance, but also through
conduct, malfeasance, neglect of duty, and even law enforcement
proceedings.
Mr. Farenthold. Great. And let me visit with you for a
second, Ms. Bonosera; I didn't mean to ignore you throughout
this whole hearing.
In the past you've--and in some of your testimony, you've
expressed concerns that several so-called scandals have
surfaced. As a result, the SES is bearing the brunt of poor
judgment and the damaging actions of a few.
My frustration is that it seems with each oversight hearing
that we have and each oversight review and each ID report, we
see an example of poor performance and misconduct.
Yesterday, the Commerce Department inspector general found
that high ranking executive in the U.S. Patent and Trademark
Office improperly used her position to ensure the hiring of the
live-in boyfriend of an immediate family member. The IG
investigated after receiving a whistleblower complaint and
found not only did the executive exert undue influence in the
hiring process, but the applicant was not among the most
qualified candidates, as determined by the PTO hiring
officials.
In fact, to the applicant was twice rejected. The executive
then interviewed and created an additional position
specifically for the applicant.
That intervention doesn't seem proper to me.
The senior executive threatened to the sue the inspector
general for making the report publicly available.
It is these examples that have damaged and shaken the faith
that Congress has in the leadership.
What is the SES doing to tighten up its ranks? And do you
think this is acceptable behavior?
Ms. Bonosera. Of course that's not acceptable behavior, and
it should be dealt with appropriately.
You know, I think that's the really sad part of this. We've
got so many executives that are doing a phenomenal job. And
then we have some who have behaved egregiously. And when they
do, they should be dealt with, up to and including, where it is
appropriate, criminal prosecution. Because I go back to the
point, if senior executives are found to have ordered or
falsified records, government records, that includes their own
results for performance reviews, for waiting time, whatever,
that is a criminal act. And all we need to do is refer it for
prosecution when it has been found to have been determined----
Mr. Farenthold. But you don't have to suggest that for us
to terminate an executive it has to rise to the level of
criminal offense. There have got to be other----
Ms. Bonosera. No. But the point is that those are criminal
acts. And I think a few instances of prosecution, where it is
found that that has been done, will send the message pretty
clearly. I mean, we are talking about making the entire Senior
Executive Service at will, with all of the tremendous dangers
that that poses, instead of dealing with specific cases that
very much deserve to be dealt with.
Mr. Farenthold. Do you think the system is perfect as it
is?
Ms. Bonosera. No.
Mr. Farenthold. Or do you come up with some tweaks?
Ms. Bonosaro. Absolutely not. I mean, we've got--apart from
what you do vis-a-vis the SES itself, for example, we think you
need far more training and a straightforward handbook for
managers on dealing with poor performance and problem
employees. We think agencies have to limit their use of
administrative leave to ensure it is used appropriately. We are
well aware of cases that have dragged on, people are put on
administrative leave for months and months and months. We're
also aware of agencies that are ignoring IG recommendations,
which are appropriate and based upon their investigation. So
there are a lot of issues here that are contributing to this
situation.
Mr. Farenthold. Thanks so much. I am way over on my time.
We are about to run up on votes. I do want to give Mr. Lynch
and Mr. Walberg, if they have additional questions, an
opportunity.
Mr. Lynch. Mr. Retherford, under the standards that are in
place right now, you can remove somebody for malfeasance;
right?
Mr. Retherford. For misconduct--yes. Yes. You can.
Mr. Lynch. Why can't we do that? Why can't we, you know, go
after these employees? I mean, would part of that--would part
of that--look, if an employee conceals that they're--that
they're manipulating the wait times and hurting our veterans,
that would seem to qualify as malfeasance and misconduct. We
can fire them.
Are you saying that even if we fire them, having done that,
and concealed that from their evaluators, we can't take back
the bonus? Is that what you're saying?
Mr. Retherford. We don't have the authority--we don't have
the authority, Congressman Lynch to do that right now.
Mr. Lynch. All right. Thank you, that is good to know.
Ms. Bonosera, thank you for your help this morning.
Some of my colleagues are suggesting that we apply an at-
will standard for all employees across the SES. The problem I
have with that is the last time we tried that, every time the
administration changed, a new president would come in. If he
was a Democrat, he would fire all the Republicans and put all
Democrats in. And if the Republican President got elected, he
would fire all the Democrats and put all Republicans in. So--
and it really--it stopped the government from working even
closely to what we would expect.
I don't want to go back to that point. I don't want to go
back to that point. And I don't think applying an at-will
standard, you know, so that you serve at the will of your boss,
you know, the President of the United States, and they can kick
whoever they want, whether they are doing a good job or not, I
don't think that's the way we should go. But I'd like to hear
your thoughts on this idea that we go to and at-will standard
across the board.
Ms. Bonosera. Well, we're terribly worried about it. We
know already that there are a good number of very talented,
able GS-14s and 15s who would make terrific SES candidates who
aren't interested. They look at this situation, they look at
the broken pay system, pay for performance, they look at the
pressure on these senior executives, they look at the current
atmosphere of guilty till proven innocent, they look at having
to deal with political appointees, be on call 24/7. Say, you
know what? I don't need that. I'm very happy where I am.
So we are terribly concerned about the next generation.
I think if we go to at-will employment, I am really fearful
for what we're going to see by way of candidates and with the
number of executives retiring government-wide. It is a real
concern. I mean, if we want the taxpayers to get the quality
career leadership they deserve, I think we've got to be far
more thoughtful about the kind of reforms we do to the Senior
Executive Service.
Mr. Lynch. I agree. And I yield back.
Mr. Farenthold. Thank you very much. They have just called
for votes in the House, but we--we're close enough and have the
subway across here from Rayburn that we'll be able to allow Mr.
Walberg one more round of questions.
Mr. Walberg. I thank the chairman, and I'll be brief.
Ms. Bonosera, let me just go back to the issue of
compensation. You stated that the balance of risk and reward
within the SES has eroded over the years because they are being
asked to take on more duties and work longer hours without the
same compensation given to general schedule workers.
Ms. Bonosaro. Well, that's part of the erosion. It's not
without the same compensation.
What we've seen happen is that there are an awful lot of
senior executives who are supervising those in the general
schedule who are earning more than they do. And that creates
part of the disincentive, when a talented, able GS-14 or 15
looks at the idea of moving into the SES, why would I do that?
Mr. Walberg. Of course, why would I do that would be the
opportunity to lead. Opportunity to set policy, opportunity to
expand, to encourage people to do a better job.
You know, I'm thinking that an average $161,000 per year,
plus when you add the potential of salaried bonuses to about
$233,000, and then benefits, approximately $70,000, in other
words, total compensation potential of $300,000, and the
ability to lead, to direct, to establish policy, to expand the
capabilities, wow.
Ms. Bonosaro. Well, I absolutely agree in terms of the
ability to have an impact on the mission, to lead, to innovate,
et cetera.
The problem is that GS-15 is already getting those
benefits, and they are probably, in many cases, earning very
close to what that senior executive is earning. So the
additional responsibility, plus the additional--the tremendous
risk, I've often said it's like having one foot on a banana
peel, no matter how well you do, is what's dissuading a lot of
them. And it's not--my concept is what they're saying
themselves. And I think that that's very worrisome.
Mr. Walberg. Well, it is worrisome. And I guess I can
understand that feeling.
But, Mr. Chairman, as we--as we hold these hearings, I
mean, we're talking about a much broader issue then.
We have public servants that are serving at the will of the
people expressed through us in establishing departments, in
establishing agencies, establishing thrusts are necessary for
the ongoing of this government. It is a special duty. They,
indeed, could go out in the private sector, some of them, some
of them. And I have met some of them that could make a better
living. However, they've chosen this service. We need to
perform it as honestly, uprightly, effectively, and as low cost
as humanly possible and still giving credit where credit is
due.
And so I don't think it's a selling point to say that GS-
15s, 14s don't want to go in because they don't make any more
money at that level when they would have the opportunity to do
good public service for the people, establish a pattern, expand
the opportunities to impact of this government.
And, yes, if we did follow due process, if we did give
incentives to continue serving well and also make it very clear
that if you don't, it's not automatic that you stay, it might
encourage some of these lower level--well, at the top of the
pay grade until they go to that SES--encourage them with the
fact that I can make an impact. I won't make any more income,
maybe, I can make an impact.
Having said that, Mr. Chairman, I think there's a problem
that goes in attitude as well that responds in action. And I
yield back.
Ms. Bonosera. May I just say one thing in response? And
that is that it isn't just the money. They are concerned, which
they have expressed, has to do with they are subject to being
geographically reassigned. They are--the younger ones are far
more concerned about work/life balance, being available to
their families.
So the money is just one of the factors. So that there is
not a sufficient attraction above and beyond. There is for a
good number of them.
Mr. Walberg. I understand that only 3 percent--forgive me
for breaking in there--but only 3 percent have been reassigned
to other agencies. I mean, we are talking pretty good security
there, a lot better security than most of us people at this
rostrum right now.
Mr. Farenthold. Every 2 years, we have a job review.
Thank you very much. You know, it is disappointing, in
summation, that you've had these scandals specifically at the
VA where everybody is looking for our veterans to be taken care
of. And hopefully this is exception but not the rule. And we
will continue on this committee our diligent oversight work
over the entire Federal Government.
I would like to thank our witnesses for being here. We were
able to wrap this up in time for us to get to votes. We'll let
you get back to your day job serving the taxpayers as well.
Thank you for your participation, and we're adjourned.
[Whereupon, at 10:29 a.m., the subcommittee was adjourned.]
APPENDIX
----------
Material Submitted for the Hearing Record
[GRAPHIC] [TIFF OMITTED]