How Big Government Bonuses Rule the Beltway, Despite Systemic Bureaucratic Failures

Big government bonuses took center stage this year after a litany of reports revealed that Veterans Affairs officials had been receiving millions of dollars in performance incentives despite unfathomable failures inside the department, including months-long and falsified waiting lists for wounded veterans to receive medical care. Now, the department has said, three of its officials are in the process of being fired and a fourth has retired.

But that's just one example of what appears to be a multitude of government agencies whose executives are or were reaping big financial rewards through a bonus system drawn from taxpayers with no accountability guidelines.

Tom Schatz, president of the nonprofit government watchdog group Citizens Against Government Waste, said his organization wants a revamp of federal policy on all government agency bonuses. Schatz said that while not illegal, such rewards "certainly seem unethical, particularly when the agencies that are doling out the bonuses and have not lived up to expectations."

Veterans Affairs Secretary Robert McDonald speaks at a news conference at the Veterans Affairs Department in Washington, Sept. 8, 2014. (AP Photo/Manuel Balce Ceneta)

In May, Schatz's watchdog group called on Congress to re-evaluate the federal government bonus system after dozens of reports revealed that the VA was continuing to give out millions of dollars in bonuses in 2013. Roughly a dozen senior employees were rewarded even while the agency was under investigation for a multitude of violations by the department's inspector general.

Schatz called the bonus system an "inscrutable, unaccountable black box."

The Indian Health Service, a division of the Department of Health and Human Services, has been criticized by dozens of Native American tribes for allegedly not doing enough to provide necessary health care on reservations. That didn't stop the agency from doling out tens of millions of dollars in performance bonuses given out despite an onslaught of lawsuits from more than 229 tribes across the United States.

In 2012, Stephen M. Friedman, one of the agency's top executives, received a $66,078 bonus, constituting approximately 23 percent of his $290,000 salary, according to the FedsDataCenter, which lists bonuses and salaries of federal government employees.

Overall, 1,404 employees at the Indian Health Service received $1,799,102 in bonuses that same year, based on calculations by TheBlaze.

Alex Wong/Getty Images

IHS spokeswoman Dianne Dawson told TheBlaze Friedman's bonus was handed out for "a job well done."

Constance James, director of IHS public affairs Staff, said it's agency policy "to recognize deserving employees for contributions and achievements that further the mission and strategic goals of the IHS, enhance organizational performance, and improve organizational quality."

"Awards can be given for overall performance or for a substantial accomplishment that contributes to the quality, efficiency, or economy of IHS operations," James said. "The award can be initiated by supervisors, team leaders, or co-workers and require supervisory approval.”

The agency did not provide the criteria used to issue the bonuses, which were listed on the Office of Personnel Management's website.

Most of the 2012 bonuses were based on 2011 performance evaluation reports and selections. In 2013, many performance-based bonuses were reduced due to sequestration, but that still didn't stop many agencies from doling out millions.

Schatz points to bonuses given to IRS employees as an example of how taxpayer dollars are being wasted. Citizens Against Government Waste noted that in 2011, while the Treasury Inspector General for Tax Administration was investigating the IRS, senior officials "handed out almost $92 million in cash — along with 520,000 hours of time off — to 70,500 of its approximately 104,400 employees."

In 2012, the IRS awarded $86 million in cash and almost 490,000 hours of time off to 67,870 of its approximately 98,000 employees, despite a long list of ongoing investigations. The names of IRS employees under investigation are withheld by the agency, but the salary and bonus information is listed at the FedsDataCenter website.

“This pattern of widespread, serious, and chronic mismanagement related to the distribution of cash awards to federal employees demands a thoughtful, thorough and transparent congressional review of the whole bonus system," Schatz said.

He said taxpayers have "virtually no sightline into the contractual obligations that agency officials have entered into with federal employee unions and they have no clue about the criteria and performance benchmarks for making awards, even though hundreds of millions of dollars are at stake. It is long past time for Congress to fully vet the federal bonus system, provide chapter and verse on how much the government spends, and reveal how all bonus decisions are made within each agency."

After 2013's budget sequestration, the Obama administration eliminated the the Presidential Rank Award — large bonuses given out to senior officials within various government agencies and often used as a kind of incentive to keep top executives from leaving government for the private sector. The bonuses have since been reinstated and will be distributed before the end of the year.

In 2012, two U.S. Immigration and Customs Enforcement officials received a combined total of $79,283 in Presidential Rank Award bonuses and the department distributed roughly $1 million in performance bonuses to its employees. During that same year, ICE employees ranked their agency near the bottom of the entire government for morale — 222 out of 240. It didn't improve in 2013, ranking statistically worse with employees rating ICE 291 out of 300 government institutions.

ICE spokeswoman Barbara Gonzalez said her agency has "a strict process, which adheres to all government-wide guidelines and statutes, which allows performance-based awards in cases where employees have been identified as having made significant contributions to improving the efficiency and effectiveness of the federal government."

Under federal law, general schedule employees may receive annual performance-based awards not exceeding 10 percent of their salary. Under DHS guidelines, the 2011 maximum performance award for an SES member was 9 percent of the member’s salary. Award amounts vary yearly based on DHS guidelines.

In 2011, out of ICE’s 20,000 employees, two career civil service senior executive service employees were nominated for and received the Presidential Rank Award, according to ICE officials. The Presidential Rank Award provides a one-time bonus of between 20 percent and 35 percent of the employee’s salary.

State Department officials also received enormous bonuses in 2012. James L. Millette, the chief financial officer for the State Department, received $62,985 lump sum bonus in 2012 — nearly 35 percent of his $179,700 yearly salary at the time. In fact, the top eight bonuses totaled $327,364. All were over $32,000 and more than well over $1 million was distributed throughout the department.

While the Office of Personnel Management lists the various persons receiving bonuses by department on their search engine, there is no total or overall number for how much money is awarded in government bonuses in a given year. Every department must be added up separately to get a total, making it difficult to get a full picture.

Nicole Thompson, a State Department spokeswoman, defended Millette's presidential bonus, saying the awards "have been given annually by the president of the United States since the establishment of the Senior Executive Service in 1978 until the award program was suspended" for a year due to budget issues.

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