WASHINGTON, D.C. - Today, U.S. Senator Daniel K. Akaka (D-HI), Chairman of the Senate Committee on Veterans' Affairs, sent a letter to R. James Nicholson, Secretary of Veterans Affairs, expressing concerns about bonus awards paid to some of VA's highest-ranking civil servants.  The letter indicates that personnel based in Washington, D.C. received higher bonuses than their colleagues outside of DC, and that some employees received large bonuses in spite of their role in the budget shortfall in 2005.

"Just one year after VA's notorious budget shortfall, when VA management was forced to request emergency funds based on a determination that the budget was short billions of dollars, several senior budget staff each received VA's highest bonus award of $33,000," Akaka said.  "I am concerned by this generous pat on the back for those who failed to ensure that their budget requests accurately reflected VA's needs."

A copy of the letter is attached below.

April 30, 2007

The Honorable R. James Nicholson

Secretary of Veterans Affairs

810 Vermont Avenue, NW

Washington, DC  20420

Dear Secretary Nicholson,

            I am writing to share with you my thoughts and concerns about bonus awards paid to some of VA's highest ranking civil servants.  The staff of the Committee on Veterans' Affairs has reviewed the summary of bonus awards paid in FY 2006 to VA Senior Executive Service (SES) personnel that you forwarded to me earlier this year.  The staff found that bonuses to SES personnel were not distributed evenly across the organization, and that some employees received large bonuses in spite of questionable performance outcomes.

            For example, SES personnel based in Washington, DC received, on average, significantly higher bonuses than their counterparts in other geographic areas.  In the VBA, SES bonus recipients based in Washington received an average of $6,800 or 41 percent more than their counterparts elsewhere.  In the VHA, bonus awards were an average of $4,600 or 30 percent higher for SES personnel based in Washington.  While I understand that these higher bonuses may to some extent constitute an informal cost of living adjustment, there are many U.S. cities where the cost of living is equally high if not higher than here.

            VISN directors were the only non-Washington based cohort to receive high bonuses as a whole, and were among the most generously rewarded in FY 2006.  18 VISN directors across the country received bonuses, to an average of $24,000.  Their subordinate system and facility directors received, on average, over 40 percent less, and accounted for virtually all recipients of bonuses of under $10,000, the bottom end of the SES bonus range.

            It is evident to me that, on average, managers based outside of Washington received significantly lower bonuses in FY 2006.  It is also clear that award size rose in relation to proximity to the center of the organization.  On the whole, medical center directors received the lowest bonuses, while VISN directors nationwide and top managers in Washington received the largest.  This is despite the fact that all personnel earned roughly the same base pay, and held the same rank in the sense that they were all at the top of the Federal salary pyramid and mostly ineligible for substantial increases in pay.

            Another concern is that just one year after requesting emergency funds based on a determination that the FY 2005 budget and FY 2006 budget request included insufficient

funding, several senior VA budget staff each received the VA's highest award of $33,000.

            I am not concerned that VA's SES bonuses are among the highest of any agency, because I believe that VA has some of the most dedicated and hard-working employees of any agency.  But I also believe that in the Federal government, awards should be determined according to performance and retention considerations, and should not give the appearance of an entitlement for the most centrally placed or well-connected staff.

            I would appreciate your thoughts on the FY 2006 bonus awards as well as on what steps you will take to ensure that future bonus awards are more fairly distributed throughout the Department.

            Thank you for your attention to this matter.

            Sincerely,

DANIEL K. AKAKA

Chairman

--30--