Report I2011-0837 Recommendation 2 Responses
Report I2011-0837: California Department of Veterans Affairs: Wastefulness, Failure to Comply With State Contracting Requirements, and Inexcusable Neglect of Duty (Release Date: October 2013)
Case Number I2011-0837
Recommendation #2 To: Veterans Affairs, Department of
For all contracts that involve recreation fund moneys or involve recreation fund enterprises, institute policies that require the contracts to be approved by a Veterans Affairs attorney prior to being executed.
Agency Response From December 2014
In December 2014, Veterans Affairs reported that similar to the manner in which state agencies address General Fund contracts, recreation fund contracts will only be reviewed by a Veterans Affairs attorney on an as-needed basis. As Veterans Affairs action on this recommendation appears to be reasonable, we have deemed this recommendation to be resolved.
California State Auditor's Assessment of Status: Resolved
Agency Response From September 2014
In July 2014 Veterans Affairs stated that it planned to complete the new policies and procedures by October 2014. In addition, Veterans Affairs stated that certain staff participated in training regarding writing contracts and contracting processes. However, Veterans Affairs has not specified whether its new policies and procedures will involve Veterans Affairs' attorneys, as we recommended.
California State Auditor's Assessment of Status: Pending
Agency Response From May 2014
In late March 2014 Veterans Affairs reiterated that it does not have the necessary resources for its attorneys to review every contract or expenditure. Nevertheless, Veterans Affairs stated that it would continue to process recreation fund contracts like its other contracts, in accordance with the State Contracting Manual and the State Administrative Manual. It also clarified that contract analysts review contracts and request interpretation and guidance from staff attorneys on an as-needed basis.
As Veterans Affairs had not stated previously that it processes recreation fund contracts like its other contracts, we requested Veterans Affairs to provide us with the date this change in process occurred. Veterans Affairs responded that its procedures always included having contracts reviewed by the legal office when warranted, but enforcement began by the undersecretary for veterans homes when she assumed decision-making authority for the recreation fund in August 2013. It also stated that overall, the legal office has reviewed recreation fund contracts more frequently since Veterans Affairs discovered the zip line issue.
Veterans Affairs stated subsequently that it remains committed to adopting the State Contracting Manual and State Administrative Manual guidelines for recreation fund contracts and that it should complete new written policies by July 1, 2014. However, until Veterans Affairs provides us with the formal policy manual for our review, we cannot determine whether Veterans Affairs has fully implemented this recommendation.
Veterans Affairs provided no new information in May 2014 as it was undergoing a major reorganization of responsibilities.
California State Auditor's Assessment of Status: Pending
Agency Response From March 2014
Veterans Affairs reported that it remains unwilling to require all of its contracts involving recreation fund money or enterprises be reviewed by an attorney prior to execution. It noted, however, that its procurement and legal staff are working with the veterans homes to review existing contracts and provide guidance to the homes regarding how to ensure vendors adhere to contract provisions. While this action could be of some value, it will not protect the State from becoming enmeshed in unlawful contractual arrangements, as described in our report, as a result of Veterans Affairs staff entering into contracts without receiving advice about the legal implications of their intended actions.
California State Auditor's Assessment of Status: No Action Taken
Agency Response From November 2013
Veterans Affairs has not provided any additional information.
California State Auditor's Assessment of Status: No Action Taken
Agency Response From September 2013
Veterans Affairs stated that it is unable to comply with the recommendation that all recreation fund contracts be reviewed by one of its attorneys prior to execution. It stated that Veterans Affairs enters into hundreds of recreation fund contracts and that its legal office currently is not staffed to absorb this responsibility. Instead, Veterans Affairs reported that within the next 90 days it intends to develop greater controls within the homes division over recreation fund spending. In addition, Veterans Affairs stated that it plans to propose legislation to amend the relevant portions of the Military and Veterans Code. Veterans Affairs did not specify the types of controls or the amendments it plans to propose. Therefore, we are unable to determine whether its intended actions will address our recommendation satisfactorily, which we see as necessary to protect the State from entering into legally binding contracts without the approval of an attorney trained to look for potential legal problems.