What aging veteran wouldn’t want to knock back a few brewskies at a tavern and take a ride on a zip line at an adventure park right at the veterans’ home where he lived?

Apparently that was what an administrator for the California Department of Veterans Affairs (VA) was thinking when two contracts that ended up costing the state $652,919 were approved for the facility in Napa County’s Yountville, according to a report (pdf) from the California State Auditor.

The first contract, for construction of an adventure park with seven zip lines on the 200-acre state property, was cancelled in 2010 after $228,612 had already been spent from a recreation fund controlled by the home. The second contract, for construction and operation of a café and tavern, cost $424,307 over a two-year period before it was terminated.

State Auditor Elaine Howle called approval of the contracts an “inexcusable neglect of duty” for failing to determine if the “contracts complied with state contracting requirements, constituted a prudent use of the home’s resources, and served the best interests of the residents of the home.”

The auditor didn’t identify the home or the administrator, but the Sacramento Bee did. The official was Marcella McCormick, the first female administrator in the 116-year history of the Yountville home. McCormick, an appointee of Governor Gray Davis in 2000, served in the military for 20 years and was a Navy commander when she retired.

The auditor also called out McCormick’s former boos for not supervising her more closely. The unnamed official, a member of the Veterans’ Affairs executive staff, retired in 2011.

The auditor’s objections to the contracts had more to do with the process followed approving them than the nature of the endeavors themselves. The auditor said McCormick signed off on the adventure park based solely on a presentation made to one of her employees without determining its profitability, soliciting other vendors for bids or doing any independent analysis. The zip line was to be the park’s big moneymaker. When asked why she signed the deal, McCormick told the auditor she didn’t really know what a zip line was, but that it sounded more promising than other enterprises run by the home that were losing money.

The contractor had no experience building or operating an adventure park, but McCormick said the project fit with a former Veterans Affairs secretary’s goal to “look, dream, imagine.” The contract was executed without input from the agency’s legal office. After the contract was signed, crews bulldozed a forested area of the property, which had never been developed without an environmental impact report as required by the California Environmental Quality Act (CEQA).

Two weeks after residents and staff complained to the VA about the land clearing, the project was halted. The developer, Brad Dropping, threatened to sue and the VA settled with him for more than $200,000. The park will not be completed.

The café and tavern project was different, in that it was being built to replace popular facilities that had served residents of the home for years before burning to the ground in 2006. They had never been profitable, though, so this time around McCormick elected to contract out building and running the place. Again, there was no due diligence or approval from the VA.

The deal provided a subsidy to the contractor, Peter McCaffrey, along with a $75,000 annual management fee and a $1 rental fee to run the café and tavern out of the state-owned building. When the state Department of General Services got wind of the project, it reviewed the contracts, found them wholly unacceptable and recommended the VA terminate them.

The VA did not follow the advice and began dickering with the operator for more than a year. After continuing to pay some of the operator’s expenses for awhile, the VA finally terminated the deal in December 2011 after having paid $431,323.  

The auditor recommended that lawmakers take away control of the recreation funds, which each veterans home has, and turn it over to the VA.

–Ken Broder

To Learn More:

Audit Blasts Adventure Park, Tavern Contracts at Veterans Home (by David Siders, Sacramento Bee)

Auditor Scorches Contracts at Yountville Veterans Home (by Michael Gardner, U-T San Diego)

10 Questions for Marcella McCormack (by Jennifer Huffman, Napa Valley Register)

California Department of Veterans: Affairs Wastefulness, Failure to Comply With State

Contracting Requirements, and Inexcusable Neglect of Duty (California State Auditor) (pdf)