This story has been updated.
Senior executives would not be eligible to receive bonuses during sequestration under a new bipartisan bill.
The Senate legislation, sponsored by a Democrat, would prohibit agencies from doling out performance awards to members of the Senior Executive Service while the sequester is in effect. Current law requires the government to pay annual performance awards to eligible senior executives, the top career civil servants in federal agencies. The government spent more than $340 million on cash bonuses for SES employees between 2008 and 2011, according to Office of Personnel Management data compiled by the office of Sen. Claire McCaskill, D-Mo.
“The idea that some of the highest paid federal government employees could be getting bonuses while others are being furloughed is outrageous,” said McCaskill, who sponsored the legislation (S. 986) along with Republicans Tom Coburn of Oklahoma and Ron Johnson of Wisconsin. McCaskill chairs the Homeland Security and Governmental Affairs Subcommittee on Financial and Contracting Oversight.
Annual salaries for SES employees in 2013 range from $119,554 to $179,700 and senior executives make up less than 1 percent of the federal workforce. OPM guidance states that the amount of a performance award must be between 5 percent and 20 percent of the senior executive's rate of basic pay as of the end of the performance appraisal period. The OPM director must approve individual awards of more than $10,000, which agency guidance says are “quite rare.” Cash bonuses exceeding $25,000 must be approved by the president.
A June 2011 memorandum from the Office of Management and Budget directed agencies to limit SES performance awards to no more than 5 percent of an individual’s aggregate salary.
Senior executives also are eligible for special Presidential Rank Awards, the highest annual awards for career civil servants. Distinguished Rank recipients receive a lump-sum payment of 35 percent of their annual basic pay, while Meritorious Rank award winners receive 20 percent of their annual salaries. The president honored fifty-four senior executives with the Distinguished Rank Award in 2012, the smallest number of recipients in recent years.
President Obama in 2010 ordered a freeze on bonuses for political appointees.
Advocates for senior executives have argued for years that the structure of the SES pay-for-performance system impedes the government’s ability to recruit and retain top employees. In some cases, the pay of senior executives overlaps that of workers in the top tier of the General Schedule; that pay compression can discourage employees at the GS-14 and GS-15 levels from applying for SES jobs and taking on more responsibilities while receiving less money.
Bill Bransford, general counsel for the Senior Executives Association, said that while senior executives might earn higher salaries than some feds, they are still underpaid as a group for the work that they do. Performance awards, as outlined in the statute, were designed to be part of their compensation, he said. “Performance awards are not bonuses. They are awards to promote excellence, and are given to the senior executives who do the best jobs,” Bransford said. “When you consider it that way, they really shouldn’t be attacked.”
Bransford argued that McCaskill’s legislation isn’t fair to senior executives because GS employees are still eligible for within-grade step increases and promotions during sequestration. Even during the sequester, “you still have to make meaningful distinctions based on performance,” he said.
But the optics of top federal workers receiving thousands of dollars in bonuses when others are losing money because of furloughs is not good, particularly when government mismanagement is front and center. Seventeen Republican senators on Friday sent a letter to FAA Administrator Michael Huerta demanding to know why some FAA employees received bonuses in February before sequestration kicked in on March 1. Earlier this week, The Wall Street Journal reported on the pay increases, which averaged about 1.6 percent and were awarded to about 25 percent of the workforce, according to an FAA statement.
The agency said it met more than 93 percent of its fiscal 2012 performance goals and identified more than $93 million in cost savings. “These are not bonuses,” said a statement from FAA spokeswoman Laura Brown. “In fact, the FAA has a bonus and pay freeze in place.” Brown said, adding the pay increases were for work performed in the previous year.
The Internal Revenue Service controversy over inspector general findings that the agency had inappropriately singled out conservative political groups applying for tax-exempt status exploded this week and doesn’t look like it will abate any time soon. The Washington Examiner compiled federal bonus data for IRS employees between 2009 and 2012, finding the agency paid out more than $92 million in bonuses during that time, including to IRS Director of Exempt Organizations Lois G. Lerner and former acting commissioner Steven T. Miller.
And on Thursday, the inspector general of the General Services Administration released a report concluding that the agency circumvented processes required by law in giving out executive bonuses under a since-discontinued awards program. “We identified deficiencies in the GSA SES program that illustrate a willingness by GSA to violate legal requirements that resulted in an opaque evaluation and award system, with a manufactured process that failed to protect the rights of SES members, made review of the validity of individual awards impossible, and impeded review of the overall program,” the IG report said.
"Last year as part of a review of all agency operations, Acting Administrator Dan Tangherlini cut executive bonuses by 85 percent,” said GSA spokesman Dan Cruz in a statement. “Additionally, the entire performance awards system has been reviewed, and the new leadership at GSA has worked to reform the system,” he said, adding that the agency no longer has “peer to peer” awards and that GSA bonuses “are coming down to their lowest levels in five years.”
GSA came under fire last year for throwing an $835,000 training conference in Las Vegas in 2010.