VA Improperly Awarded $10.8 Million in Incentives to Central Office Senior Executives

Report Information

Issue Date
Report Number
23-03773-169
VA Office
Office of the Secretary (SVA)
Report Author
Office of Special Reviews
Report Type
Administrative Investigation
Report Topic
PACT Act
Staffing
Major Management Challenges
Leadership and Governance
Recommendations
8
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary

In September 2023, VA announced it had erroneously awarded millions of dollars in critical skill incentive (CSI) payments to senior executives at its central office. VA cancelled the payments, notified Congress, and requested the Office of Inspector General (OIG) review the matter.

CSIs are a new recruitment and retention tool authorized by the PACT Act, which significantly expanded access to VA health care and benefits for veterans exposed to toxic substances. CSIs are meant for an employee who “possesses a high-demand skill or skill that is at a shortage,” to help VA meet a projected increase in staffing requirements. In total, VA awarded $10.8 million in CSIs to 182 senior executives (ranging from nearly $39,000 to over $100,000 each) in the Veterans Health Administration (VHA) and the Veterans Benefits Administration (VBA) at VA’s central office.

The OIG found the award of CSIs to nearly all VHA and VBA central office executives lacked adequate justification and was inconsistent with the PACT Act and VA policy. This was due, in part, to breakdowns in leadership and controls at multiple levels of VA, including

• insufficient transparency from VHA regarding the scope and costs of its CSI plans for VACO senior executives; 
• excessive deference by VA’s Human Resources and Administration/Operations, Security, and Preparedness leaders to under secretaries and other senior leaders, despite concerns that they or their staff had about the incentives;
• missed opportunities by the Office of General Counsel to detect legal issues with the CSIs before payment; and
• failure to leverage VA’s existing governance processes to ensure proper risk management of the new CSI authority.

VA concurred with the OIG’s two findings and eight recommendations and provided acceptable action plans and completion timelines. The OIG will monitor VA’s progress until sufficient documentation has been received to close the recommendations as implemented.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs directs the assistant secretary for Human Resources and Administration/Operations, Security, and Preparedness should update Policy Notice 23-03 and Form 10017-A to address the deficiencies noted in this report, including the overly broad definitions of groups, failure to provide adequate support for high-demand skill CSIs, and lack of needs analyses for recruitment and retention.

No. 2
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs designates a responsible official to review the critical skill incentives that have been paid to any member of the Senior Executive Service (SES), SES-equivalent, or other Senior Leader (including Veterans Health Administration’s medical center directors and Veterans Integrated Service Network directors and the Veterans Benefits Administration’s regional office and district directors) for the deficiencies identified in this report and to ensure compliance with all applicable statutory criteria and VA policy, and take any corrective action needed.

No. 3
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs designates a responsible official to review any critical skill incentive payments based on a high-demand skills justification made to all nonexecutive groups of employees, if any, to ensure compliance with all applicable statutory criteria and VA policy, and take any corrective action needed.

No. 4
Open Recommendation Image, Square
to Office of the Secretary (SVA)

In consultation with the Office of General Counsel’s Ethics Specialty Team, the Secretary of Veterans Affairs or his designee takes appropriate action to determine whether individuals involved in the decision-making process for awarding CSIs had any actual or apparent conflicts of interest and develop a process to ensure all decision-makers are free from conflicts when awarding future incentives.

No. 5
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs directs the assistant secretary for Human Resources and Administration/Operations, Security, and Preparedness to revise policies regarding critical skills incentives to ensure that recommending and approving officials are accountable for their determinations that each CSI recipient meets all established criteria, and that the roles and responsibilities of a technical reviewer and human resources reviewer are clearly established.

No. 6
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs delegates to a responsible official the development of a formal concurrence process to provide reasonable assurance that a senior attorney within the Office of General Counsel (with sufficient experience and expertise to consider all relevant facts and perspectives) is accountable for providing legal advice before and during the implementation of any new authority that carries the potential for significant reputational or financial harm to VA.

No. 7
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs delegates to a responsible official a review of existing governance board policies to determine whether additional guidance is needed to define their role in reviewing proposals for implementing new pay authorities affecting senior executive compensation.

No. 8
Open Recommendation Image, Square
to Office of the Secretary (SVA)

The Secretary of Veterans Affairs takes whatever administrative actions, if any, he deems appropriate related to personnel involved in the process for granting critical skill incentives for VA central office executives based on the findings in this report.