[Senate Report 114-406]
[From the U.S. Government Publishing Office]
Calendar No. 720
114th Congress } { Report
2d Session } SENATE { 114-406
_______________________________________________________________________
BONUSES FOR COST CUTTERS ACT OF 2015
__________
R E P O R T
OF THE
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
TOGETHER WITH
ADDITIONAL VIEWS
TO ACCOMPANY
S. 1378
TO STRENGTHEN EMPLOYEE COST SAVINGS SUGGESTIONS PROGRAM WITHIN THE
FEDERAL GOVERNMENT
December 20, 2016.--Ordered to be printed
Filed, under authority of the order of the Senate of December 10
(legislative day, December 9), 2016
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Mary Beth Schultz, Minority Chief Counsel
Katherine C. Sybenga, Minority Chief Counsel for Governmental Affairs
Laura W. Kilbride, Chief Clerk
Calendar No. 720
114th Congress} {Report
SENATE
2d Session } {114-406
======================================================================
BONUSES FOR COST CUTTERS ACT OF 2015
_______
December 20, 2016.--Ordered to be printed
Filed, under authority of the order of the Senate of December 10
(legislative day, December 9), 2016
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 1378]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1378) to strengthen
employee cost savings suggestions programs within the Federal
Government, having considered the same, reports favorably
thereon with an amendment in the nature of a substitute and
recommends that the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................4
VII. Additional Views.................................................6
VIII.Changes in Existing Law Made by the Bill, as Reported............7
I. Purpose and Summary
S. 1378, the Bonuses for Cost-Cutters Act of 2015, seeks to
strengthen employee cost savings suggestions programs within
the Federal Government by improving incentive structures for
Federal employees to report unneeded funds that can be returned
to the Treasury for the purposes of deficit reduction and
reallocation.
II. Background and the Need for Legislation
The practice by Federal agencies of expending funds at the
end of the fiscal year has long been a concern for the
Committee. For example, in 1980, the Committee issued a report
titled ``Hurry-Up Spending,'' which found that the rush to
spend money at the end of the year led to unnecessarily high
prices, lack of competition, and generally poor adherence to
contracting regulations.\1\ In 2006, then-Chairman of the
Subcommittee on Federal Financial Management Tom Coburn held a
hearing titled ``Unobligated Balances at Federal Agencies,''
that examined how various Federal agencies work around
unobligated balances at the end of the year.\2\
---------------------------------------------------------------------------
\1\Subcomm. on Oversight of Gov't Mgmt. of the S. Comm. on
Governmental Affairs, ``Hurry-Up'' Spending (1980), U.S. Gov't Printing
Office.
\2\Unobligated Balances at Fed. Agencies: Hearing Before the
Subcomm. on Fed. Fin. Mgmt., Gov't Info. & Int'l Sec. of the S. Comm.
on Homeland Sec. & Governmental Affairs, 109th Cong. (2006).
---------------------------------------------------------------------------
Continuing this oversight, on September 30, 2015, the
Committee's Federal Spending Oversight and Emergency Management
Subcommittee held a hearing titled ``Prudent Planning or
Wasteful Binge? A Look at End of the Year Spending.''\3\ The
hearing examined the incentive structure currently in place for
Federal managers making decisions about how to use money at the
end of each fiscal year.\4\ Witness Dean W. Sinclair, from
Changing the Culture of Washington, argued that the problem is
with the incentives for the use of funds: ``if a manager
returns money to the Treasury, it will have a negative career
impact.''\5\
---------------------------------------------------------------------------
\3\Prudent Planning or Wasteful Binge? A Look at End of the Year
Spending: Hearing Before Subcomm on Fed. Spending Oversight & Emergency
Mgmt. of the S. Comm. on Homeland Sec. & Governmental Affairs, 114th
Cong. (2015).
\4\Id.
\5\Prudent Planning or Wasteful Binge? A Look at End of the Year
Spending: Hearing Before Subcomm on Fed. Spending Oversight & Emergency
Mgmt. of the S. Comm. on Homeland Sec. & Governmental Affairs, 114th
Cong. 60 (2015) (statement of Dean W. Sinclair, Changing the Culture of
Washington).
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The Bonuses for Cost-Cutters Act of 2016 directly addresses
this incentives problem by expanding the existing awards
program for Federal employees to disclose waste, fraud, or
mismanagement that result in cost savings. Under the provisions
of the bill, an employee can identify unnecessary surplus
salary and expenses and refer them to the inspector general of
the agency or other agency employees designated to undertake
such reviews, as well as the Chief Financial Officer of the
agency for review. If both concur that the funds are not
necessary for their intended purpose, and the rescission of the
funds would not be detrimental to the execution of that
purpose, then the head of the agency shall transfer the surplus
or unnecessary funds to the general fund of the Treasury
Department. However, the head may retain up to ten percent of
any funds for reprogramming, or also for the purpose of paying
a cash award to the employee who identified the surplus. The
remainder of the funds would be used by the Treasury Department
for the purpose of deficit reduction.
III. Legislative History
S. 1378, the Bonuses for Cost-Cutters Act of 2015, was
introduced on May 19, 2015, by Senator Rand Paul (R-KY) with
Senators Mark Warner (D-VA), Michael Enzi (R-WY), Gory Gardner
(R-CO), and Pat Toomey (R-PA). Senators Kelly Ayotte (R-NH),
Michael Bennet (D-CO), John Cornyn (R-TX), Steve Daines (R-MT),
Joni Ernst (R-IA), Ron Johnson (R-WI), James Lankford (R-OK),
Mike Lee (R-UT), Claire McCaskill (D-MO), David Perdue (R-GA),
and Rob Portman (R-OH) later joined as co-sponsors. The bill
was referred to the Committee on Homeland Security and
Governmental Affairs.
The Committee considered S. 1378 at a business meeting on
May 25, 2016. A substitute amendment was offered by Senator
Paul. The substitute amendment adds protections that limit
spending affected by the bill to ``salaries and expenses'' and
truly ``use it or lose it money'' and also adds a six-year
sunset on the program.
The Committee adopted the Paul substitute amendment by
unanimous consent, and ordered the bill, as amended, be
reported favorably by a roll call vote of nine in favor and
five against. Senators voting in the affirmative were Johnson,
Portman, Paul, Lankford, Ayotte, Ernst, Sasse, McCaskill, and
Heitkamp. For the record only, Senators McCain and Enzi voted
in the affirmative by proxy vote. Senators voting in the
negative were Carper, Tester, Baldwin, Booker, and Peters.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1 establishes the short title of the bill as the
``Bonuses for Cost-Cutters Act of 2016.''
Section 2 amends the sections of the U.S. Code that provide
for awards for cost-savings disclosures awards by expanding
them to include surplus salaries and expenses funds that are
determined to be unnecessary.
Subsection (a)(1) defines key terms, such as ``surplus
salaries and expenses funds.''
Subsection (a)(2) establishes a process by which an
employee may identify surplus salaries and expenses that are
unnecessary. The agency Inspector General and Chief Financial
Officer will review the disclosure to determine whether the
funds are necessary and the recession of which would not be
detrimental to the full execution of the purposes for which the
amounts were made available. The remaining funds must be
transferred to the Treasury for the purposes of deficit
reduction, except that the head of an agency may retain up to
10 percent for reprogramming or to provide awards to the
employee or employees who identified the surplus funds. This
subsection also contains reporting requirements so that
Congress can assess the efficacy of the disclosure program.
Subsection (a)(3) modifies the table of sections in statute
to reflect the changes made by this bill.
Subsection (a)(4) provides that the authorities will sunset
six years after the date of enactment.
Subsection (b) identifies certain employees who are
prohibited from receiving a cash award: an individual serving
in a position at level I of the Executive Schedule; the head of
the agency; or a commissioner, board member, or other voting
member of an independent establishment. This subsection also
makes a technical amendment.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
July 29, 2016.
Hon. Ron Johnson, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1378, the Bonuses
for Cost-Cutters Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
S. 1378--Bonuses for Cost-Cutters Act of 2016
Under current law, inspectors general (IG) of agencies can
pay bonuses to federal employees who identify waste, fraud, or
mismanagement of funds. S. 1378 would authorize agencies to pay
bonuses to employees who identify unnecessary expenditures from
amounts provided for agencies' salaries and expenses. Under the
bill, if an agency's IG and its Chief Financial Officer agree
that funds appropriated to the agency are no longer required
then 90 percent of those surplus amounts would be transferred
to the Treasury. The agency would retain 10 percent of the
surplus funds and could pay a bonus to the employee who
identified those surplus amounts.
To the extent that the process envisioned under S. 1378
results in fewer unnecessary expenditures, implementing the
bill could reduce federal spending; however, CBO has no basis
for estimating any reductions in spending under the bill.
Because salaries and expenses for some agencies are
mandatory appropriations, enacting the bill could affect direct
spending; therefore, pay-as-you-go procedures apply. Enacting
S. 1378 would not affect revenues.
CBO estimates that enacting S. 1378 would not increase
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
S. 1378 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contacts for this estimate are Megan Carroll
and Matthew Pickford. The estimate was approved by H. Samuel
Papenfuss, Deputy Assistant Director for Budget Analysis.
VII. Additional Views
ADDITIONAL VIEWS OF SENATORS CARPER, BALDWIN, AND PETERS
While we support efforts to provide incentives for federal
employees to find savings within their agencies, we have
serious concerns with the way this bill would delegate
Congress' spending authority to executive branch officials.
We believe we can all agree that it is important to curb
wasteful spending, including wasteful spending at the end of a
fiscal year when agency managers might fear that they need to
use the funds they've been appropriated or lose them. However,
this bill goes much further than that. If this bill were
enacted, it would allow agency Inspectors General and Chief
Financial Officers to make decisions on whether or not funds
appropriated for a specific purpose are necessary and redirect
that funding without congressional approval. Congress would
have no power to ensure that the money appropriated to a
specific purpose is actually used for that purpose and would
have no power to redirect the funding to other projects and
priorities.
During consideration of this bill, Senator Carper suggested
additional changes that would have helped address some of these
concerns by requiring that agencies return 50 percent of
surplus funds identified by this bill to the Treasury when they
expire, while allowing an agency to reprogram the remaining 50
percent for other uses. Senator Carper also suggested that the
bill should include a role for the head of an agency, an
official that is held accountable by Congress, in determining
which funds are actually surplus. We believe that with these
changes the bill would still provide an incentive for agencies
to make smarter spending decisions at the end of the year
without Congress ceding its spending power.
Allowing executive branch officials to determine whether or
not funds Congress has already appropriated for a particular
use are necessary effectively takes away Congress' ability to
control where these funds are spent and places far too much
power in the hands of unelected agency officials. Therefore, we
oppose this flawed measure.
Thomas R. Carper.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1818 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):
UNITED STATES CODE
* * * * * * *
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
CHAPTER--INCENTIVE AWARDS
* * * * * * *
Subchapter I--Awards for Superior Accomplishments
* * * * * * *
[SEC. 4509. PROHIBITION OF CASH AWARD TO EXECUTIVE SCHEDULE OFFICERS.
[No officer may receive a cash award under the provisions
of this subchapter, if such officer--
[(1) serves in--
[(A) an Executive Schedule position under
subchapter II of chapter 53; or
[(B) a position for which the compensation is
set in statute by reference to a section or
level under subchapter II of chapter 53; and
[(2) was appointed to such position by the President,
by and with the advice and consent of the Senate.]
SEC. 4509. PROHIBITION OF CASH AWARDS TO CERTAIN OFFICERS.
(a) Definitions.--In this section, the term `agency'--
(1) has the meaning given that term under section
551(1); and
(2) includes any entity described in section 4501(1).
(b) Prohibition.--An officer may not receive a cash award
under this subchapter if the officer--
(1) serves in a position at level I of the Executive
Schedule;
(2) is the head of an agency;
(3) is a commissioner, board member, or other voting
member of an independent establishment.
Subchapter II--Awards for Cost Savings Disclosures
* * * * * * *
SEC. 4511. [DEFINITION] DEFINITIONS AND GENERAL PROVISIONS.
(a) For purposes of [this subchapter, the term] this
subchapter--
(1) the term ``agency'' means any Executive
agency[.]; and
(2) the term `surplus salaries and expenses funds'
means amounts made available for the salaries and
expenses account, or equivalent account, of an agency--
(A) that are identified by an employee of the
agency under section 4512(a) as unnecessary;
(B) that the Inspector General of the agency
or other agency employee designated under
section 4512(b) determines are not required for
the purpose for which the amounts were made
available;
(C) that the Chief Financial Officer of the
agency determines are not required for the
purpose for which the amounts were made
available; and
(D) the recession of which would not be detrimental
to the full execution of the purposes for which the
amounts were made available.
* * * * * * *
SEC. 4512. AGENCY AWARDS FOR COST SAVINGS DISCLOSURES.
(a) The Inspector General of an agency, or any other agency
employee designated under subsection (b), may pay a cash award
to any employee of such agency whose disclosure of fraud,
waste, or mismanagement or identification of surplus salaries
and expenses funds to the Inspector General of the agency, or
to such other designated agency employee, has resulted in cost
savings for the agency. The amount of an award under this
section may not exceed the lesser of
(1) $10,000; or,
(2) an amount equal to 1 percent of the agencys cost
savings which the Inspector General, or other employee
designated under subsection (b), determines to be the
total savings attributable of the employees disclosure
or identification.
For purposes of paragraph (2) the Inspector General or
other designated employee may take into account agency cost
savings projected for subsequent fiscal years which will be
attributable to such disclosure or identification.
(b) * * *
(c)
(1) The Inspector General of an agency or other
agency employee designated under subsection (b) shall
refer to the Chief Financial Officer of the agency any
potential surplus salaries and expenses funds
identified by an employee that the Inspector General or
other agency employee determines meets the requirements
under subparagraphs (B) and (D) of section 4511(a)(2),
along with any recommendations of the Inspector General
or other agency employee.
(2)
(A) If the Chief Financial Officer of the
agency determines that potential surplus
salaries and expenses funds referred under
paragraph (1) meet the requirements under
section 4511(a)(2), except as provided in
subsection (d), the head of the agency shall
transfer the amount of the surplus funds or
unnecessary budget authority from the
applicable appropriations account to the
general fund of the Treasury.
(B) Any amounts transferred under
subparagraph (A) shall be deposited in the
Treasury and used for deficit reduction, except
that in the case of a fiscal year for which
there is no Federal budget deficit, such
amounts shall be used to reduce the Federal
debt (in such manner as the Secretary of the
Treasury considers appropriate).
(3) The Inspector General or other agency employee
designated under subsection (b) for each agency and the
Chief Financial Officer for each agency shall issue
standards and definitions for purposes of making
determinations relating to potential surplus salaries
and expenses funds identified by an employee under this
subsection.
(d)
(1) The head of an agency may retain not more than 10
percent of amounts to be transferred to the general
fund of the Treasury under subsection (c)(2).
(2) Amounts retained by the head of an agency under
paragraph (1) may be--
(A) used for the purpose of paying a cash
award under subsection (a) to 1 or more
employees who identified the surplus salaries
and expense funds; and
(B) to the extent amounts remain after paying
cash awards under subsection (a), transferred
or reprogrammed for use by the agency, in
accordance with any limitation on such a
transfer or reprogramming under any provision
of law.
(e)
(1) Not later than October 1 of each fiscal year, the
head of each agency shall submit to the Secretary of
the Treasury a report identifying the total savings
achieved during the previous fiscal year through
disclosures of possible fraud, waste, or mismanagement
and identifications of surplus salaries and expense
funds by an employee.
(2) Not later than September 30 of each fiscal year,
the head of each agency shall submit to the Secretary
of the Treasury a report that, for the previous fiscal
year--
(A) describes each disclosure of possible
fraud, waste, or mismanagement or
identification of potentially surplus salaries
and expenses funds by an employee of the agency
to have merit; and
(B) provides the number and amount of cash
awards by the agency under subsection (a).
(3) The head of each agency shall include the
information described in paragraphs (1) and (2) in each
budget request of the agency submitted to the Office of
Management and Budget as part of the preparation of the
budget of the President submitted to Congress under
section 1105(a) of title 31.
(4) The Secretary of the Treasury shall submit to the
Committee on Appropriations of the Senate, the
Committee on Appropriations of the House of
Representatives, and the Government Accountability
Office an annual report on Federal cost saving and
awards based on the reports submitted under paragraphs
(1) and (2).
(f) The Director of the Office of Personnel Management
shall--
(1) ensure that the cash award program of each agency
complies with this section; and
(2) submit to Congress an annual certification
indicating whether the cash award program of each
agency complies with this section.
(g) Not later than 3 years after the date of enactment of
this subsection, and every 3 years thereafter, the Comptroller
General of the United States shall submit to Congress a report
on the operation of the cost savings and awards program under
this section, including any recommendations for legislative
changes.
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