Rounds Calls on VA Secretary to Hold Benefits Bureaucrats Accountable for ‘Shockingly Unethical’ Misuse of Funds

WASHINGTON – U.S. Senator Mike Rounds (R-S.D.), along with other members of the Senate Veterans’ Affairs Committee, today called on the Department of Veterans Affairs (VA) Secretary Robert McDonald to hold accountable senior bureaucrats who participated in a “shockingly unethical” scheme at the Veterans Benefits Administration to increase pay for high-level employees by transferring them to other positions within the administration.

According to a VA Office of Inspector General investigation requested by the committee, the Veterans Benefits Administration, or VBA, spent nearly $2 million over the past three years to transfer 22 VBA employees to different positions, using the transfers as justification for increasing their pay and offering exorbitant relocation incentives. In one case, a VBA bureaucrat used her authority to create a position for herself that required less responsibilities and the VA paid $274,000 in relocation expenses in addition to retaining her previous salary.

Under Secretary for Benefits Allison Hickey was aware of the scheme and allowed it to continue under her watch.

In a letter to McDonald, the committee members called on the secretary to hold all the senior-level bureaucrats involved accountable, noting that “there is no indication that these transfers were in any way based on merit or intended to serve the best interests of veterans.”

“Now more than ever, VA needs leaders committed to changing the culture and old way of doing business,” wrote the senators. “During your confirmation hearing, you told this Committee that ‘those employees that have violated the trust of the Department and of veterans must, and will be, held accountable.’ More recently, at a field hearing in Gainesville, Georgia, you testified that you have the tools you need to do just that.  So, we call on you now to live up to your commitment and to hold accountable those who orchestrated, participated in, or benefitted from the unethical practices outlined in this report, including but not limited to the Under Secretary for Benefits.”

In addition, the committee members asked that the secretary review all pending relocation efforts for senior level employees and provide a plan for reforming the approval and reimbursement of relocation expenses at the VA.

The letter was signed by U.S Senators Johnny Isakson (R-Ga.) and Richard Blumenthal (D-Conn.), chairman and ranking member of the Senate Veterans’ Affairs Committee, respectively, Dean Heller (R-Nev.), and committee members Mike Rounds (R-S.D.), Jerry Moran, (R-Kan.), John Boozman, (R-Ark.), Bill Cassidy, (R-La.), Thom Tillis, (R-N.C.), Dan Sullivan, (R-Alaska), Patty Murray, (D-Wash.), Sherrod Brown, (D-Ohio), Jon Tester, (D-Mont.), and Mazie Hirono, (D-Hawaii). 

            Full text of the letter appears below. A PDF of the signed letter is available here.

The Honorable Robert A. McDonald 

Secretary of Veterans Affairs

U.S. Department of Veterans Affairs

810 Vermont Ave., N.W.

Washington, D.C. 20420

Dear Secretary McDonald:

As Members of the Senate Committee on Veterans’ Affairs, we ask that you take urgent and immediate actions regarding the shockingly unethical practices described in the September 28, 2015, report from the Department of Veterans Affairs (VA) Office of Inspector General, entitled “Administrative Investigation: Inappropriate Use of Position and Misuse of Relocation Program and Incentives” at the Veterans Benefits Administration (VBA).  Our Committee confirmed your nomination to fundamentally overhaul and reform this struggling agency, after VA faced a moment of crisis that resulted from failed leadership and a culture that in some cases led VA leaders and employees to act contrary to their core mission to serve veterans.  But, unfortunately, it is clear from this report that your well-intentioned and meaningful efforts to change the culture at VA have not yet taken hold.

As you are aware, the report outlines an orchestrated scheme – carried out by numerous senior executives at VBA - to skirt salary and bonus limitations for senior VBA leaders by unnecessarily relocating executives and using those moves to justify increases in their pay and relocation benefits.  In fact, VBA spent nearly $2 million on transferring 22 VBA leaders across the country over the past three years and offering generous pay increases and relocation perks to the relocating officials. There is no indication that these transfers were in any way based on merit or intended to serve the best interests of veterans. In fact, one VBA official confirmed that this was simply an effort to “get around pay freezes and bans on performance bonuses” for senior VBA leaders and the Under Secretary for Benefits, Allison Hickey, admitted that this scheme was an effort to make the pay of these VBA officials “more even” or to achieve “level-setting pay.” 

In addition to that broader scheme, the Inspector General found that Ms. Diana Rubens used her position of authority within VBA to create a vacancy in Philadelphia that she later volunteered to fill.  This new position brought much less responsibility than her prior position, yet she retained the same Senior Executive Service pay, and VA paid a total of $274,000 for relocation expenses.  The Inspector General also found that Ms. Kimberly Graves created a vacancy in St. Paul – in part by forcing the transfer of the VA regional office Director to another city – so that she could then fill that vacancy.  This position change also resulted in fewer responsibilities, but she too maintained the same level of pay.  The Inspector General concluded that these officials inappropriately used their positions of authority for personal and financial benefit.  In addition, it is clear from the report that Ms. Hickey and her leadership team were aware of, assisted with, and authorized these actions.   

Now more than ever, VA needs leaders committed to changing the culture and old way of doing business.  During your confirmation hearing, you told this Committee that “those employees that have violated the trust of the Department and of veterans must, and will be, held accountable.”  More recently, at a field hearing in Gainesville, Georgia, you testified that you have the tools you need to do just that.  So, we call on you now to live up to your commitment and to hold accountable those who orchestrated, participated in, or benefitted from the unethical practices outlined in this report, including but not limited to the Under Secretary for Benefits. 

Moreover, we ask that you:

(1)   review all pending relocation efforts for Senior Executive Service employees to ensure staffing and salary adjustments would be in the best interests of veterans rather than VA officials

(2)   provide documentation of any actions you are taking to stop the practice of inappropriate relocations

(3)   provide a plan for reforming the approval and reimbursement of relocation expenses, including reforms to the Appraised Value Option program

(4)   identify any Office of Personnel Management requirements that might restrict your ability to lower compensation for Senior Executive Service employees who are transferred to match the requirements of their position and

(5)   update this Committee on steps you are taking to fill vacant and “acting” Senior Executive positions.

Given the seriousness of the issues identified in the Inspector General’s report, we would ask that you provide a response to this letter no later than October 23, 2015.  We thank you for your dedicated service on behalf of veterans across the nation and look forward to continuing to work with you to restore the integrity of the institution created to meet their needs. 

Sincerely,