WASHINGTON - Nearly two dozen officials who received hefty performance bonuses last year at the Veterans Affairs Department also sat on the boards charged with recommending the payments.

Documents obtained by the Associated Press raise questions of conflicts of interest or appearances of conflicts in connection with the bonuses, some of which went to senior officials involved in crafting a budget that came up $1.3 billion short and jeopardized veterans' health care.

The documents show that 21 of 32 officials who were members of VA performance review boards received more than half a million dollars in payments themselves.

Among them: nearly a dozen senior officials who devised the flawed 2005 budget. Also rewarded was the deputy undersecretary for benefits, who manages a system with severe backlogs of veterans waiting for disability benefits.

Deputy undersecretaries who sit on the review boards, which are appointed by VA Secretary Jim Nicholson, also had input on bonus recommendations involving themselves, fellow members and spouses that made questionable performance claims and neglected agency problems.

The VA, which has defended the bonuses as necessary to retain hardworking senior employees, says board members do not participate in bonus decisions that involve themselves or fellow board members. In those cases, recommendations are made by agency heads in consultation with deputy undersecretaries, who usually serve as supervisors to their fellow board members, the agency says.

Government watchdogs were harshly critical, saying the process did little to instill public confidence in the fairness of awards. In its last known report on the issue - one involving NASA - the Government Accountability Office in 1980 urged that performance boards add credibility and objectivity to their decisions by including "one or more impartial members from outside the agency," although agencies are not required to do so.

With the exception of a panel tasked with reviewing the VA inspector general's office, all the VA's performance board members come from within the agency.

In one case, Michael Walcoff, associate deputy undersecretary for field operations who sits on two of the review boards, and his wife, Kimberly, a VA director, received a package of bonuses totaling $42,000.

"This is a scandal in the making," said Paul C. Light, professor of public service at New York University who specializes in government reform. He said the VA bonuses pointed to possible "featherbedding" and other favoritism.

Light said given the current problems in veterans' care, the department would be best served if Nicholson restricted most performance bonuses for at least a year except in cases of clear improvement.