The Department of Veterans Affairs headquarters building as seen in Washington, D.C., on July 6, 2022.

The Department of Veterans Affairs headquarters building as seen in Washington, D.C., on July 6, 2022. (Carlos Bongioanni/Stars and Stripes)

WASHINGTON — Incentive bonuses totaling $10.8 million were improperly paid to 182 senior managers at the central office of the Department of Veterans Affairs, according to a new report from the VA Office of Inspector General that stated the agency is still trying to recoup the money.

The inspector general referred the findings from a seven-month investigation to the U.S. Attorney’s Office to determine whether nine managers who approved granting bonuses that they later received violated federal law, according to the report made public Thursday. However, the U.S. Attorney’s Office has declined to open a criminal investigation, the report states.

Federal employees are prohibited from participating in government matters where they have a financial interest.

Several managers collected more than $100,000 in payments.

In September 2023, VA Secretary Denis McDonough canceled the payments when he learned about them and ordered the managers to pay them back.

He announced the agency had incorrectly awarded millions of dollars in “critical skill incentive payments” to senior managers that were intended for workers needed to process a growing demand for veterans benefits.

The bonuses were authorized by Congress to help the VA recruit and retain employees in anticipation of a greater workload from veterans filing for benefits under the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act of 2022, also known as the PACT Act.

The critical skills incentive pay was to supplement the salaries of employees in high-demand jobs where there is a shortage of trained workers. Specifically excluded from the payments were senior VA managers.

“The incentives were meant for high-demand health care and benefits support staff who are vital to VA’s operations following implementation of the PACT Act,” said Rep. Mike Bost, R-Ill., chairman of the House Committee on Veterans’ Affairs.

“The over $10 million dollars in overpayments to VA central office employees were not some type of administrative mistake. That’s a serious problem for the second largest agency in the federal government, and we’re going to get to the bottom of it come hell or high water,” Bost said.

The inspector general report states awarding $10.8 million in critical skills incentive payments to senior managers conflicted with VA policy and language in the PACT Act.

The report cited the VA for a lack of internal controls to prevent the improper awards from being made to senior executives.

The report stated there was a reluctance by managers in human resources to vet the plans for making the payments and the office of general counsel missed opportunities to identify legal issues about how the payments were made.

The VA issued collection notices in October to “all senior executives” who received payments, according to the report.

Managers were given the option to return the bonuses by Dec. 31, 2023, or enter a repayment plan. They also could ask for a waiver or challenge the debt through an appeals process.

“While the [inspector general] has not examined this process, the investigative team received information during this investigation suggesting that VA’s handling of the [bonuses] had significantly damaged the morale of senior executives at the central office, and that several had experienced financial hardship as a result of having to repay the incentives,” according to the report.

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Linda F. Hersey is a veterans reporter based in Washington, D.C. She previously covered the Navy and Marine Corps at Inside Washington Publishers. She also was a government reporter at the Fairbanks Daily News-Miner in Alaska, where she reported on the military, economy and congressional delegation.

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