Watchdog says FDA should fine-tune processes for handing out bonuses

Report follows OPM memo calling for more scrutiny of incentive payments governmentwide.

To get the maximum benefit out of recruitment, retention and relocation bonuses, the Food and Drug Administration should enact tighter internal controls and engage in more strategic planning, according to a new report from the Government Accountability Office.

The watchdog did not find any cases in which FDA failed to justify handing out the so-called 3Rs incentives, which are cash bonuses worth up to 25 percent of an employee's annual salary. But the report (GAO-10-226) noted that agency officials sometimes failed to follow proper procedures for making the payments. The bonuses also were not always tied to a strategy for filling skills gaps, according to GAO.

The study comes as the Office of Personnel Management is taking a harder look at use of incentive payments to attract and hold onto talent. In a Feb. 3 memorandum, OPM Director John Berry asked agencies for more information about their use of the bonuses and said stronger regulations are on the way. He cited concerns about increased use of the awards, especially given the economic climate.

The sum paid out governmentwide more than doubled in two years, increasing from $140 million in 2006 to $284 million in 2008. The number of payments also grew during that period, rising from 22,764 to 39,512.

GAO's review of FDA was prompted partly by bipartisan anger over reports that the agency has used bonuses generously in recent years, making payments approaching $50,000 to some top officials. But it also stemmed from concerns about the makeup of FDA's workforce, and its ability to attract and retain key personnel. According to the report, 70 percent of career employees will be eligible to retire by 2014. That estimate was based on FDA's 2008 staff.

"FDA lacks an updated strategic workforce plan that would help it determine how its use of 3R incentives is contributing to its human capital goals," the report said. "Despite positive enhancements over the past three years, FDA's internal controls have weaknesses related to requesting, approving and processing 3R incentive requests." GAO reviewed a random sample of incentive files from 2007 and 2008 and found that all contained enough documentation to justify the awards. But in some cases, officials didn't take appropriate steps when handing out the payments. For example, sometimes they failed to collect proof that employees receiving relocation incentives had moved.

GAO noted that FDA's use of 3Rs incentives far exceeded that of other agencies within the Health and Human Services Department. For instance, in 2008, FDA distributed more than half of the department's 3Rs incentives payments, even though its staff accounts for just 16 percent of the HHS workforce.

The report recommended that FDA beef up its internal controls to encourage proper documentation for 3Rs payments and to ensure the agency stops giving employees bonuses once the incentives have served their purpose.

FDA officials said they agreed with GAO's recommendations, and had already taken steps to shore up their practices.