Watchdog: improper workforce incentives could cost VA millions

Improper use of workforce bonuses at the Department of Veterans Affairs -- and inadequate oversight of these bonuses -- resulted in millions of dollars in unsupported spending and could lead to even larger amounts in the future, according to a recent inspector general report.

VA estimates that 31 percent of its employees, including 58 percent of the Senior Executive Service workforce, will be eligible for retirement by 2020. In fiscal year 2015, the department spent about $67 million on 3R incentives (recruitment, relocation and retention incentives), $66 million of which was spent by the Veterans Health Administration. The VA uses incentives to keep needed workers on the job and to recruit replacements for outgoing personnel.

However, all incentives require proper clearance, and auditors began their investigation of the VA's fiscal year 2014 practices due to complaints that VA was awarding incentives to its SES employees without adequate justification.

While these specific allegations levied against VA were "unsubstantiated," auditors uncovered instances where the department offered incentives that violated protocol spelled out in the VA handbook.

In order to maintain a skilled workforce and compete with compensation offered by the private sector, federal agencies are permitted to offer employees 3R incentives, and they have a good deal of discretion in making the awards.

"3R incentives are really an important way agencies can recruit talent for hard-to-fill positions," where there is a skills gap in the workforce or to fill a position that has been vacant for a long time, Director of Education and Outreach at the Partnership for Public Service Margot Conrad told FCW. "Some of these positions may be very competitive in the private sector in terms of difficulty to fill."

Conrad explained that recruitment incentives are sweeteners that can attract skilled workers to government in lieu of higher base salaries, relocation incentives are used to provide financial aid to prospective employees who would have to move to accept a position and retention incentives are used to keep talent that might otherwise be lured away from public service.

Auditors reported that about one-third of the estimated 1,546 recruitment bonuses awarded by VHA in fiscal year 2014 were not properly authorized, amounting to about $6.7 million in unsupported spending. Two recruitment incentives were improperly awarded to SES employees, valued at $97,000.

The most frequent violation of VA policy was that the department advertised recruitment incentives for job openings that had first not received appropriate approval. Additionally, auditors noted that almost two-thirds of the 727 relocation incentives awarded by VHA were not properly authorized, and seven of the nine relocation incentives granted to non-SES VA central office employees were not properly authorized. Auditors valued these incentives at around $8 million in unsupported spending.

Of the 19 relocation incentives VA awarded to SES employees in fiscal year 2014, none received appropriate clearance. Auditors reported these incentives represent about $728,000 in unsupported spending.

Officials said that part of the oversight problem was because of their Personnel Accounting and Integrated Data system, which has since been replaced by HR Smart -- a system that supports greater monitoring capabilities.

Auditors recommended that VA assess and update procedures to certify incentives are being properly authorized, strengthen internal controls to monitor succession plans to reduce the need for retention incentives and ensure the HR Smart system can reduce the department's incentive repayment liability risks.

VA concurred with the recommendations and submitted an action plan to address deficiencies.