Washington: President Obama on Monday will nominate Bob McDonald, a West Point graduate who served as chief executive of Procter & Gamble, to take over as head of the troubled Department of Veterans Affairs, according to White House officials.
The unorthodox pick of a retired corporate executive whose former company makes iconic household products such as Tide detergent and Charmin toilet paper — rather than a former military general — underscores the serious management problems facing the agency charged with serving more than 8 million veterans a year.
On Friday, White House Deputy Chief of Staff Rob Nabors submitted a report to the president finding “significant and chronic system failures” and a “corrosive culture” at the Veterans Health Administration, which has come under fire for record-keeping that was skewed in an effort to cover up the long waits imposed on former troops seeking medical care.
In recent years, the job of VA secretary has been filled by retired generals, medical professionals or politicians. McDonald’s background is a significant departure, though he and his wife have deep family ties to the military. McDonald graduated in the top 2 percent of his class at the U.S. Military Academy at West Point, N.Y., and served in the Army for five years, achieving the rank of captain in the 82nd Airborne Division before taking an entry-level job at P&G. He is the son of an Army Air Corps veteran of World War II, and his wife’s father was shot down over Europe and survived harsh treatment as a prisoner of war.
“The choice suggests a real focus on customer satisfaction, as opposed to what you might get from a retired general or medical leader,” said Phillip Carter, who follows veterans issues for the Center for a New American Security. “It is probably a wise choice given the concerns right now of veterans.”
In a statement, House Speaker John A. Boehner (R-Ohio), usually an administration critic, hailed McDonald’s experience as a veteran and as a leader in the private sector, calling him the “kind of person who is capable of implementing the kind of dramatic systemic change that is badly needed and long overdue at the VA. But the next VA secretary can only succeed in implementing that type of change if his boss, the president, first commits to doing whatever it takes to give our veterans the world class health care system they deserve.”
Another Ohio Republican, Sen. Rob Portman, praised Obama for selecting “someone with a wealth of experience managing a complex organization who has also had a distinguished military career.”
McDonald has financially supported Republican politicians in the past, according to federal election records, including Boehner and 2012 presidential nominee Mitt Romney.
McDonald, 61, graduated from West Point in 1975 and is about the same age as most of the senior generals in the Pentagon with whom he would have to work closely in the coming years. Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, graduated from West Point one year before McDonald, and Gen. Ray Odierno, the Army chief of staff, finished up at the academy one year after him. McDonald and acting VA secretary Sloan Gibson, who is expected to serve as his deputy, were West Point classmates.
“McDonald is right in the sweet spot of the current four-stars in the Pentagon,” Carter said. “He’s got that social connective tissue with them. The VA is more like a big business than a military organization, so his background probably makes him more qualified to run the VA than a retired general officer.”
Retired Maj. Gen. James “Spider” Marks, who served as a cadet with McDonald at West Point, described him as “an incredibly gifted guy” who stood out among his classmates for his intensity and commitment. Marks, who now serves as an executive dean at the University of Phoenix, said that during the recession, when McDonald was under pressure as P&G’s chief executive, he had to be “delivering numbers every day” but also took steps to cultivate senior managers who could steer the firm through the fiscal crisis.
“Bob was providing an immediate return on investment but simultaneously putting things in place for the future,” he said, adding that McDonald lived up to the line in the cadet’s prayer: “Make us to choose the harder right instead of the easier wrong, and never to be content with a half-truth when the whole can be won.”
VA “is a business. He’s not afraid to make the hard calls,” Marks said, adding that McDonald was a rugby player in college who always treated his classmates well but spared nothing on the field. “When he joined the scrum, you felt it.”
How McDonald relates to the younger population of veterans who served in Iraq and Afghanistan — smaller in numbers compared with the overall group of veterans but powerful politically — will be critical if he is confirmed.
McDonald has maintained his Army ties over the years as a major supporter of the U.S. Military Academy and as a life member of the U.S. Army Ranger Association and the 75th Ranger Regiment Association. He is also a member of the West Point Association of Graduates, and he established the McDonald Cadet Leadership Conference at the academy to address emerging global issues.
Paul Rieckhoff, chief executive of Iraq and Afghanistan Veterans of America (IAVA), said he had mixed feelings about the choice. “He’s got a good military record and a history of running a large bureaucracy, but no medical background,” he said. “Hopefully he’ll be meeting with us more regularly than the White House. This was not a pick that was socialized with the veterans community.”
Rieckhoff said that among his biggest concerns was that McDonald has not been involved with the most recent US wars. “He doesn’t come from our generation. He never served in Iraq or Afghanistan. He’s going to have to work very hard to get up to speed on our issues,” he said. Rieckhoff and IAVA have been very critical of Obama and former VA secretary Eric K Shinseki for not meeting more regularly with the veterans community before and during the current crisis. “The White House and Shinseki were surprised by this stuff because they didn’t listen to the veterans community,” he said.
Jim McNerney, who is chairman of Boeing and served on P&G’s board when McDonald headed the company, said in a statement Sunday that McDonald is “an outstanding choice for this critically important position.”
“Prior to retirement, he navigated Procter & Gamble through the difficult post-financial-crisis years, where he expanded business in developing markets and made substantial progress improving the efficiency of the company’s internal operations,” McNerney said.
Xerox chief Ursula Burns, on whose board McDonald sits as a member of its audit and compensation committees, said in a statement that his experience “managing and leading a global corporation was especially helpful during a multi-billion dollar acquisition we made in 2010, doubling our workforce and shifting our business considerably.”
McDonald stepped down from his post at P&G in May 2013 amid some controversy. Analysts reported at the time that large investors and some employees were losing confidence in his ability to expand the company in the face of increasing global competition.
The Wall Street Journal and other business publications also reported that McDonald had come under fire over the time he spent serving on an array of corporate boards.
Still, he has won plaudits from many of his fellow corporate executives and has experience running a global consumer-products firm with more than 120,000 employees and sales in more than 180 countries.
During McDonald’s tenure, P&G was recognized multiple times for its leadership development, including twice being named the best company for leaders by Chief Executive Magazine and being named No. 1 in Hay Group’s annual Best Companies for Leadership study, which analyzes more than 2,200 firms around the world.
The White House has yet to select a new head for the Veterans Health Administration, which remains a priority, but top officials were particularly intent on finding a replacement for Shinseki, who resigned as VA secretary a month ago.
It wasn’t immediately clear Sunday when the White House would formally send McDonald’s nomination to Capitol Hill. Congress is on recess this week and returns next Monday for the rest of July before a five-week summer break, leaving little time for a confirmation hearing and a vote by the full Senate before lawmakers leave on Aug 1. The two key committee chairmen issued cautious statements Sunday.
“The VA needs significantly improved transparency and accountability and it needs an increased number of doctors, nurses and other medical staff so that all eligible veterans get high-quality health care in a timely manner,” said Senate Veterans’ Affairs Committee Chairman Bernard Sanders (I-Vt.).
Rep. Jeff Miller (R-Fla.), chairman of the House Veterans’ Affairs Committee, said that if McDonald is confirmed, he will inherit an agency “under a specter of corruption.”
“The only way McDonald can set the department up for long term success is to take the opposite approach of some other VA senior leaders,” Miller said in his statement. “That means focusing on solving problems instead of downplaying or hiding them.”
Even if McDonald is confirmed quickly, the agency will remain under intense scrutiny. The House and the Senate are negotiating legislation that would make it easier to fire senior VA officials, while the FBI has opened an investigation into whether VA hospital administrators knowingly lied about wait times for veterans in order to receive performance bonuses.
Retired Gen Stanley McChrystal, who followed McDonald in the same 82nd Airborne infantry company, said in a statement that he knows McDonald “to be a man who cared for his fellow men and women in uniform when we served together in the 82nd Airborne Division. Bob’s business acumen, coupled with his dedication and love of our nation’s military and veteran community make his a truly great choice for the tough challenges we have at VA.”
