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Opening Statement of The Honorable Jeff Miller, Chairman, House Committee on Veterans' Affairs

[Gavel down.]

Committee will come to order.

Thank you all for being here today.

We had planned to have a business meeting this morning to subpoena two sets of documents from VA that were long outstanding requests made by this Committee.

Yesterday, VA delivered information regarding the removal of six SES employees for the past two fiscal years. This request had been made by multiple Members of this Committee including myself in multiple hearings since February. This morning, VA delivered the second set of documents, which I requested via letter in October of 2013. The documents covered the performance reviews for each SES individual for Fiscal Years 2011 and 2012.

Although VA’s response to my requests was delayed their production of the requested material is sufficient and therefore, after consultation with Ranking Member Michaud, we will no longer be having a business meeting this morning.

During this morning’s full committee hearing entitled, a “Review of Awarding Bonuses to Senior Executives at the Department of Veterans Affairs” we will examine the outlandish bonus culture at VA and the larger organizational crisis that seems to have developed from awarding performance awards to senior executives despite the fact that their performance fails to deliver on our promise to our veterans.

As the Committee’s investigation into the Department continues, and new allegations and cover-ups are exposed, it is important that we examine how the Department has arrived at the point where it is today. Sadly, it’s a point which has eroded veterans’ trust and America’s confidence in VA’s execution of its mission. Part of the mistrust centers on a belief that VA employees are motivated by financial incentives alone, and I can see why.

It appears as if VA’s performance review system is failing veterans.  Instead of using bonuses as an award for outstanding work on behalf of our veterans, cash awards are seen as an entitlement and have become irrelevant to quality work product.

I know we all agree that preventable patient deaths, delays in care, the continual backlog of disability claims, cost over-runs and construction delays for VA facilities, and deliberate behavior to falsify data are not behaviors that should be rewarded. Yet, despite startling issues that continue to come to light, as well as numerous past IG and GAO reports highlighting these same issues, a majority of VA ‘s senior managers received a performance award for FY 13. According to VA‘s own data, over $2.8 million was paid out in performance awards to senior executives for FY 13. These performance awards went to at least 65% of the senior executive workforce at the Department.  In fact not a single senior manager at VA, out of 470 individuals, received a less than fully successful performance review for the last fiscal year. Based on this Committee’s investigations, outside independent reports, and what we have learned in the last few months, I wholeheartedly disagree with VA’s assessment of its senior staff. 

It should not be the practice of any federal agency to issue taxpayers dollars in addition to paying six-figure salaries to failing senior managers just because a current OPM statute for members of the SES allows it. Bonuses are not an entitlement. They are a reward for exceptional work. VA’s current practice only breeds a sense of entitlement and a lack of accountability, and is why we are where we are today.

This issue, unfortunately, is not a new one for VA.  The Committee has focused its oversight on bonuses for years, and if Members were to go back and review a 2007 Subcommittee on Oversight and Investigations hearing on awarding of bonuses, you would find that the issues we raise today were also questioned seven years ago. There seems to be little to no improvement.

In a May 2013 hearing VA construction chief, Glenn Haggstrom, admitted that he could not explain why he collected almost $55,000 in performance bonuses despite overseeing failed construction plans that cost our government nearly $1.5 billion in over-runs.

In December 2012, an investigation by this committee revealed a legionella outbreak in the Pittsburgh Healthcare System that led to at least six patient deaths, nevertheless, the Director there, Terry Gerigk Wolf received a perfect performance review and the Regional Director, Michael Moreland, who oversaw VA’s Pittsburgh operation at the time, collected a $63,000 bonus. To the average American, $63,000 is considered to be a competitive annual salary - not a bonus.

The medical center director in Dayton, OH received a nearly $12,000 bonus despite an open investigation into veterans’ exposure to Hepatitis B and C under his watch. The Director of the Atlanta VA Medical Center who oversaw multiple preventable deaths received $63,000 in performance bonuses over his four years there.

The former director of the VA Regional Office in Waco, TX, received more than $53,000 in bonuses.  While under his tenure, the Waco office’s average disability claims processing time multiplied to inexcusable levels.  Unfortunately, I could go on and on, as these are not the only instances of those charged with managing VA programs and healthcare facilities falling far short of the quality that veterans and their families deserve.  In short, there are far too many examples that prove that bonuses do not ensure good performance.

As we have previously heard from several witnesses, including ones from VA, the quest for monetary gain rather than public service has led to data manipulation and secrets lists designed to create a false impression of quality health care that is timely and responsive to veterans. This is scandalous…even criminal, I would argue, and runs far deeper than Phoenix. 

Today we will explore the circumstances surrounding the award and eventual rescission of a performance award provided to the former director of the VA Medical Center Director in Phoenix, AZ, Ms. Sharon Helman. In February 2014, Ms. Helman was given an $8,500 bonus for her performance during fiscal year 2013. Only after allegations against Ms. Helman came to light, as a result of this Committee’s work, did a conscientious VA employee examine whether she received a bonus in fiscal year 2013. When we questioned the award, VA determined that she was given this bonus due to an “administrative error.” However past documentation from VA has stated that all performance reviews and awards are ultimately reviewed and signed by the Secretary.

Furthermore, Ms. Helman’s direct supervisor, former VISN 18 Network Director, Susan Bowers, stated in May that Sharon Helman received her bonus "for a highly successful rating, and for improving access concerns and wait lists." Perhaps we should also question Ms. Bower’s qualifications. These stories do not match up, and I believe it further brings into question VA’s transparency, as well as diligence when issuing thousands of dollars to individuals.

Although Acting Secretary Gibson has rightly put a freeze on all bonuses for Senior Executives at VHA for the time being, it is still this Committee’s responsibility to understand the rationale for awarding five figure bonuses to individuals who have clearly fallen short of the Department’s mission and their commitment to those who have served. A performance award should not be received because you were able to check off a few boxes on a form. A performance award should not be an expectation.  A bonus is not an entitlement.  Those at the Department of Veterans Affairs are there to serve veterans and their families. Anything less than the highest possible quality should not be rewarded. Gaming the bonus system is not the business that VA should be in.

Today, we will hear what VA has to say about their performance review system, why senior managers who have overseen failure have received thousands of dollars in bonuses, and how these large performance awards could have led to the terrible situation the Department is now in.

With that, I now recognize Ranking Member Michaud for his opening statement.

Thank you.

I ask that all members waive their opening remarks as per this committee’s custom.

I now invite our one witness today to the table. 

This morning, we will hear from the Honorable Gina Farrisee, Assistant Secretary for Human Resources and Administration, at the Department of Veterans Affairs.

I ask the witness to please stand, and raise your right hand.

Do you solemnly swear, under penalty of perjury, that the testimony you are about to provide is the truth, the whole truth, and nothing but the truth.

Please be seated.

Your complete written statement will be made part of the hearing record.

Secretary Farrisee you are recognized for five minutes.

Thank you, Secretary Farrisee.

I will now yield myself five minutes for questions.

Thank you once again.

If there are no further questions, you are now excused. 

I now ask unanimous consent that all members have five legislative days to revise and extend their remarks and include extraneous material.

Without objection, so ordered.

I would like to once again thank our witness and audience members for joining us this morning.

This hearing is now adjourned.

[Gavel down.]