“Notwithstanding Any Other Provision of Law…”

It is hard to read the newspaper or watch cable news without seeing coverage of the Department of Veterans Affairs. As both a former career senior executive and a political appointee, I was particularly surprised when on May 21, the House of Representatives passed H.R. 4031 – the “Department of Veterans Affairs Management Accountability Act of 2014.” The House Veterans Affairs Committee says the Bill will “give the Secretary of the Department of Veterans Affairs authority to remove employees of the Senior Executive Service, whose performance the Secretary believes warrants removal, from the government service completely or transfer them to a General Schedule position within the current civil service system.” Passed in response to the scandal over alleged misconduct at 26 VA medical facilities, the Bill is a sweeping piece of legislation that may have many unintended consequences.

On its surface, this legislation is simple. It says in part “Notwithstanding any other provision of law, the Secretary may remove any individual from the Senior Executive Service if the Secretary determines the performance of the individual warrants such removal.” Its simplicity belies the risks it presents. “Notwithstanding any other provision of law” is language that has been used before. I first encountered it in Section 111(d) of the Aviation and Transportation Security Act (ATSA) that created the Transportation Security Administration. ATSA allowed TSA to create hiring and firing rules “notwithstanding any other provision of law.” When the Bush Administration used the provision to ban collective bargaining for TSA employees, federal employee unions went to court. The courts consistently ruled that the plain language of the law means exactly what it says. Current TSA Administrator John Pistole used the same provision to implement collective bargaining after crafting a labor relations construct that protected the TSA security mission while still offering collective bargaining to Transportation Security Officers. Depending on your views, one of them made a mistake and the other did something very good. The language of 111(d) gave them unfettered ability to make that call.

Why should we care if the same language is used again? Particularly if the legislation gives the Veterans Affairs Secretary the ability to fire poor performers? We should always care when the law grants one person the ability to ignore any other law and deprive people of their rights without due process. H.R. 4031 would grant that power to the Secretary. It provides for no review, no third party to check the broad power it grants, and no restrictions on how it can be used. Should Secretary Shinseki or any future VA Secretary choose to fire senior executives because he believes they too aligned with the priorities of the previous Administration, he can do it. In fact, he could describe virtually anything as performance that warrants removal. Laws regarding discrimination and equal employment opportunity, political activity, reprisal for protected activities, and anything other law on the books today will provide no protection. Notwithstanding any other provision of law means any law, not just the due process of law that some people are describing as “red tape.”

The unintended consequences of this Bill would be dangerous. In effect, it converts every Senior Executive Service position in the Department of Veterans Affairs to a political appointment. The positions will be covered with the veneer of a career appointment, but the ability to fire any executive for poor performance as defined by one person makes them “at will” employees. In the federal government that makes them political appointees in reality if not in name. How many people argue government would be better off with all executive positions filled with political appointees? When a future scandal occurs, the career executives are far more likely to become the sacrificial lambs than political appointees who are a part of the Administration.

Another, more dangerous, risk of the Bill is the chilling effect it will have on the willingness of executives to report misconduct. Whistleblowers are already taking significant risks when they disclose misconduct in their agency. Those who choose to do so rely on the protections of laws such as the Whistleblower Protection Enhancement Act and the requirement for due process before they can be removed from their jobs. This Bill would make any VA executive think twice before questioning actions of their leaders or revealing misconduct that might embarrass the VA Secretary of this or any Administration.

If the Bill is successful and it results in termination of a large number of executives, how will they be replaced? Who would take an executive position under these circumstances, with all of the risks of a political position and none of the benefits? VA executive ranks could quickly be depleted and it will be difficult, if not impossible, to replace them. Current Senior Executives with proven records in other agencies would have no interest in putting their livelihood and career at risk by moving to VA.

The people who crafted this legislation no doubt had intentions to improve the state of affairs of healthcare for our Veterans. If that is what they want to accomplish, they should do the hard work of crafting well thought out legislation that provides a more effective means of addressing poor performance and misconduct. Casting aside every law already on the books is an overreaction and one that will do far more harm than good.

Virtually everyone agrees that our Veterans should receive excellent health care, quick responses to benefit applications, and our undying respect and thanks for their service. Depriving people of the due process of law that Veterans fought to preserve, politicizing the Senior Executive Service, discouraging whistleblowers and giving unrestricted power to one person is not the way to honor Veterans and deliver the benefits they earned.


The Problem with the Senior Executive Service

The Office of Personnel Management announced it is restarting the Presidential Rank Awards program that was suspended last year with budget pressure cited as the reason. The news about Rank Awards reminded me I have planned to write about SES issues and address some of the problems with the SES today. Let’s start with a little history.

The SES was created by the Civil Service Reform Act of 1978. It replaced the GS-16, 17 and 18 “Supergrades” with a completely new system of hiring, classification and pay. It was intended to create a cadre of executives that, rather than having very specific program-related qualifications, would have broad executive management skills and be mobile across government. The SES would have six pay levels, with rank in person rather than rank in position, to further encourage mobility and to facilitate their use in a wide variety of situations. In order to incentivize performance, SES members would be eligible for substantial annual bonuses and for Presidential Rank Awards. Currently bonuses range from 5% to 20% of base pay. Rank awards were originally either $10,000 (later raised to 20% of base pay) for “Meritorious” awards or $20,000 (later raised to 35% of base pay)  for “Distinguished” awards. Up to 5% of career SES can receive a Meritorious Rank Award. Only 1% can get a Distinguished Rank Award. The larger bonuses were part of the plan to have an at-risk component of SES compensation. (For more on the SES, the Congressional Research Service did a great review of the history of the SES that is available here)

So – how did that work out? Not very well. Agencies did what most organizations do and tried to make the new system conform to their existing way of doing business. SES pay levels were often treated as grades, the higher pay levels were limited to certain positions, and so many technical qualifications requirements were placed on jobs that they were very much like the old Supergrades. Because the top SES pay rate was tied to Level III of the Executive Schedule used for senior political appointees, it did not go up at the same rate as the General Schedule. Pay compression became so bad that the top 3 SES pay levels were paid the same amount.  In 2004, the National Defense Authorization Act eliminated the pay levels, raised the pay cap to Level II of the Executive Schedule, and lowered the bottom end of the SES pay range by eliminating locality pay. The intent was that Senior Executives would earn pay raises through performance, Senior Executives could get higher pay, and agencies would see better results. Some agencies quickly took advantage of the demise of pay levels to “Tier” their SES positions into 3 tiers. I suggested at the time (only half-joking) that the tiers be called GS-16, GS-17 and GS-18.

The idea that SES pay could be raised seemed like a good idea, but it hasn’t worked out the way proponents had hoped. True – some senior executives have higher pay (currently the max is $181,500). But – the overall result is that SES pay relative to GS-15s has not done well at all. In December 2004, the average pay for GS-15s was $119,143 and the average career SES made $142,276. That equates to 119.4% of GS-15 pay. In December 2013, the average GS-15 salary had increased by $28,799 (24.2%) to $147,942. Average career SES pay has increased by $23,898 (16.8%) to $166,174. That equates to 112.3% of GS-15 pay. The “reform” that was supposed to make SES pay more competitive and make up the difference through performance-based pay raises resulted in SES members losing ground in a big way. In fact, average SES pay peaked in FY2010 at $167,765 and dropped to $167,198 in FY2011, $166,644 in FY2012, and $166,764 in FY2013. We are potentially headed toward a pay inversion where SES will make less than GS-15s.


Why should we care? After all, I have heard a lot of people say SES members make very good money relative to the average American worker. Shouldn’t that be enough? The truth is comparing Senior Executive pay to average pay in the US is a specious argument. Comparison to the pay of the people they lead and to executives in the private sector is a far more accurate measure. By that yardstick, SES pay is too low to recruit top talent from outside government and the pay difference between GS-15 and SES is so small now that many superb GS-15s are losing interest in becoming SES. Why go for more responsibility, more headaches and more time at work for 12% more pay? On top of that, SES members are increasingly becoming the target of people who want to change how government works. Recent proposals to suspend performance bonuses for executives in the Department of Veterans Affairs are a great example. Does the VA have issues? Yes. Should 400 SES members in VA be punished because some are not performing? No. How do we expect to attract top talent if the message they get coming in is that they cannot get a bonus regardless of how well they perform? How do we drive better performance at VA if we make compensation policies that incentivize high performers to go elsewhere to work?

The pay and bonus freeze, furloughs, and political attacks have taken their toll on the SES workforce. A survey by the Senior Executives Association revealed that 51% of SES members rated executive morale in their agencies as low or very low. More than a third (34%) were unhappy with their agencies performance rating processes and thought they had gotten worse in the past year. There was widespread dissatisfaction with the growing pay compression between GS-15s and the SES. Low SES morale, coupled with pay that will not attract new talent to the SES, puts the government at risk of not being able to fill SES positions as vacancies occur. And vacancies are happening. More than 700 career SES members (about 10%) left government in FY2012 and again in FY2013, up from 581 in Fiscal 2009.

It is clear that the Senior Executive Service never became what its creators envisioned. In many respects, some of those hopes were not realistic. The master manager/leader who can lead anything may be more fantasy than reality. Many executive roles require very specific skills and experience. Mobility doesn’t always occur, in part because people often like the work they do and the agency where they work. They do not see a reason to go elsewhere. I served in SES positions in 3 Departments, but that is not the norm. We often see people concluding that mobility is good because a large number of high performing executives have been mobile. Perhaps the truth is that whatever characteristics cause a person to be mobile may be the same characteristics that make them better performers. If that’s the case (and I believe it is), then better assessments of SES applicants can help those folks float to the top. Whatever the solution to improving the SES may be, suppressing pay, reducing or eliminating bonuses, and targeting SES members as the cause of the government’s problems are not the answer. It is time to have a real public policy debate about executive compensation in government, informed by facts and focusing on the steps we can take to ensure the government has the executive leadership it needs to carry out the vital operations our country needs to survive and thrive.