Lee Zurik Investigation: Washington bonuses cost taxpayers billions

Washington - Records requested by FOX 8 News show, in the past three years, the federal government has handed out billions in bonuses and incentives to employees. Around the debt ceiling and fiscal cliff crises, the government gave employees bonuses and incentives totaling $6,849,669,897 from 2010 through 2012.  This includes a total of 19 different bonuses, awards, and incentives the federal government can give to employees.

The agency that appears to have spent the most is the Veterans Health Administration: $157,054,082 in bonuses. The Internal Revenue Service spent $87,930,975 on bonuses. Another notable agency for New Orleanians, the U.S. Army Corps of Engineers, handed out $28,891,773.

The government allots most of the bonus money in two ways: through job performance reviews, or rating-based cash awards and special acts, or non-rating-based awards.  We have questions about both.

Last year, the federal government gave employees $995,750,291 in rating-based bonuses.   The law states that, to be eligible, an employee has to be graded as "fully successful" or higher.

According to government documents, a fully successful employee "usually assumes an appropriate amount of work/responsibility," and at least 60 to 80 percent of customers agree that the employee is willing to assist and that the information they receive is helpful.  Experts say a fully successful employee is basically showing up and mostly doing his or her job.

Congressman Cedric Richmond (D-New Orleans) says, "We don't give attendance awards in government.  Employees don't give attendance awards simply because you show up every day. You should have to go above and beyond or do your job very well to get one."

Richmond -- Louisiana's sole Democratic member of the U.S. House of Representatives -- and Republican colleague Steve Scalise both have questions about the Patent and Trademark Office.  That agency's records show 96 percent of the workforce qualified for a rating-based award.

Rep. Scalise says, "It seems to me like they set that bar really low and they're just using that to give more pay to every employee, as opposed to treating really good employees in a better way and reward them for going above and beyond the call of duty."

Brad Hill, a human resources compensation expert based in Chicago, says, "That's heavily skewed.  My fear with so many high performance ratings is the level of complacency which sets in, and that people will no longer be hungry to learn, grow and develop.

Hill also has concerns with the other type of bonuses the government hands out, those "special acts" or non-rating-based awards -- last year the government paid out about $400 million.

In most cases, no criteria exist for those awards.  Agencies can hand them out to whomever they want, no performance grade needed.  Realistically, taxpayer money can go to poorer-performing employees.

Hill says, "Discretionary bonuses give weak managers an opportunity to recognize and to reward weak employees."

What's to stop a manager from handing out bonuses to friends?

Scalise says, " There really needs to be more structure, because you really don't want cronyism to be part of this."

"I think all bonuses should have some aspects of performance-based criteria they have to achieve," says Richmond.

In 2011, the Obama administration acknowledged problems with the bonus system.  In a memo, they wrote that many employees "do not perceive the current… awards system to be fair or accurately reflect differences in performance levels."  In that memo, the White House wanted agencies to limit awards during tough financial times.

Since then, bonuses and incentives have gone down.  In 2010 and 2011, the government handed out $2.4 billion each year.  In 2012, they cut bonuses and incentives to $2 billion.

But while the government total went down, some agencies bucked that trend.

Nearly eight years after Hurricane Katrina, many New Orleanians don't need to say much to show their ill feelings for FEMA.  But that didn't stop FEMA from handing out $1 million in non-rating-based awards in 2011.  Last year that grew to $11 million.  FEMA told us a lack of funding in 2011 forced them to hand out two years' worth of awards in 2012.

The U.S. Army Corps of Engineers increased rating-based bonuses by $6 million.

And at the Patent and Trademark Office, all bonuses went up by $33 million.  That office told us by email that many of its awards are tied to a collective bargaining agreement.  Also, the office has hired more people over the past three years which has contributed to a rise in bonuses.  While the Patent and Trademark Office is a public agency, it is completely funded through fees it generates.

The government considers much of the rating-based bonuses private -- they won't disclose which employees have received them.  They only gave us a total number for each agency.

They do release the non-rating-based bonuses, though, down by employee.   Those records show a doctor with the Indian Health Service received the largest bonus last year.  The government paid Stephen Friedman a bonus of $66,078 on top of his $290,000 salary.

Louisiana native Robin Heard, a deputy assistant secretary in the U.S. Department of Agriculture received the next largest bonus, nearly $64,895.  Her base salary is $179,700.  Heard earned her bonus by receiving a Presidential Rank Award.

We've been trying to find out more about the bonus system and how they're handed out.  We tried to get an interview with the Office of Personnel Management, basically the human resources arm of the federal government.  They declined, but they did refer us to the White House Office of Management and Budget.  We never received any response from them to our interview request, though.

Some of the agencies that handed out the most bonuses also declined our interview request, such as the Patent and Trademark Office.  FEMA didn't decline -- they just ignored our repeated requests.

Data we compiled shows varying bonus levels when comparing agencies.  The Patent and Trademark Office averaged $4,848 of bonuses per employee, while employees at the Veterans Health Administration averaged $550.

Rep. Richmond says, "If it's just… we're going to grant just about everyone we  can a bonus, then really you're taking away the incentive for someone to work harder or to receive a bonus , And then if you're in another department  or another agency then you're at a disadvantage."

Apparently some federal employees feel the same way.  In that 2011 memo, the Obama administration wrote, "In many cases, awards are broadly and inconsistently allocated and some federal employees have come to expect awards as entitlements."

Scalise says, "I do think it looks like there's a big disparity between agencies, where it's not consistent at all or some agencies, that get big bonuses [and] some agencies give out smaller bonuses. And is that really fair to the employees of one agency, if somebody is really doing a good job?  They might not be treated as fairly as somebody at a different agency who's maybe just doing average work."

In the state of Louisiana, the attorney general has issued opinions that giving any public employee a bonus is against state law.

This year, the Obama administration released a memo that said the sequester would impact bonuses in 2013. In the memo, officials said only awards legally required would be allowed.  That would not eliminate all awards, but it should reduce the total dollars the government pays for bonuses and incentives this year.