Lawmakers blast VA over executive bonus scandal, but secretary declines to offer any heads

The chief of the Veterans Affairs Department faced heated criticism on Tuesday as House lawmakers berated him over the recent bonuses paid out to senior executives at the agency, and the secretary said the blame for the matter fell on his shoulders. 

Republicans on the House Veterans Affairs credited Denis McDonough for taking accountability for the issue and for leading the charge to recoup the improperly paid bonuses, but said he was covering for his undersecretaries’ failures. Most of those lawmakers expressed frustration that Shareef Elnahal and Joshua Jacobs, the heads of the Veterans Health Administration and Veterans Benefits Administration, respectively, did not personally testify or offer their resignations. 

McDonough repeatedly acknowledged VA made mistakes in approving the $11 million in bonuses to executives, but said he still had confidence in his leadership team and would not seek any resignations. He praised Elnahal and Jacobs for their overall leadership and noted VA has been forthcoming in flagging the improper awards, asking for an inspector general investigation and so far clawing back 92% of the money it doled out. 

The issue came about after President Biden signed the PACT Act into law in 2022, which newly offered VA health care and benefits to millions of veterans exposed to toxic burn pits during their service. To meet the new demand, the law contained provisions to ease the recruiting and retention of employees. That included the “critical skill incentives,” or CSIs, for employees or applicants with “high-demand” or understaffed skills.

VA unveiled last fall that VHA and VBA had provided the CSIs worth up to 25% of an employee’s base pay, to nearly all of their senior executives. In culling back the 182 bonuses, VA said it had made a “policy error” and was “overly broad” in using its new authority.

All told, VA has paid out 41,000 CSIs, worth $340 million or an average of $8,300 per employee.

Michael Missal, the VA IG, told the committee he would not have confidence in how Elnahal and Jacobs handled the bonus payments, saying they failed to ensure proper compliance with the law and VA policy by approving the awards in bulk. His office’s report included a recommendation that McDonough take accountability actions as he deemed appropriate. 

“This is not a recommendation that we do lightly,” Missal said. 

McDonough said because the issues took place on his watch, he showed up to testify so he could be “held to account for them.” Rep. Derrick Van Orden, R-Wis., called on McDonough to resign. The secretary said after the hearing he was awaiting a review from VA’s Office of Accountability and Whistleblower Protection for what disciplinary action he would take, if any, noting he must either accept those recommendations or explain to Congress why he was rejecting them. 

The secretary noted VA has added new layers of review to the CSI process, including that he must personally approve any such awards to SES staff. He said the incentives are still an important tool for the department as it looks to maintain its recently expanded workforce.

Democrats on the panel faulted VA for allowing the payments, but praised the department for flagging its errors in a transparent manner. They called for increased governance policies to ensure the mistakes are not repeated, but did not demand that any heads roll. 

“While the missteps VA made here are disappointing, I have faith the VA can and will use the critical skills incentives authorized in the PACT Act as Congress intends, as they have done for years, with many other authorities that have been granted,” said Rep. Mark Takano, D-Calif., the top Democrat on the committee. 

Rep. Mike Bost, R-Ill., who chairs the panel, did not directly call for McDonough to resign, but suggested some change may be necessary. 

“As far as I can see the same leaders who allowed and made these poor decisions remain in power,” Boat said. “With the VA’s current leadership in place, I am sure many of us are wondering whether your leadership team is focused on selfless service or self service.”

He added that if McDonough did not hold his team accountable, “you must be held accountable.”