A Veterans Affairs Department official who retired last month as head of the agency’s cemetery network gave preferential treatment to a contractor and created a special position for a friend, among other troubling practices, according to a federal watchdog report.

Steve Muro. (Courtesty: Veterans Affairs). Steve Muro. (Veterans Affairs).

The VA inspector general’s office determined that Steve Muro, former undersecretary for memorial affairs, developed a “less-than-arm’s length relationship” with the head of a firm that contracted with the National Cemetery Administration.

The report, released Thursday, said Muro improperly gave a sole-source contract to the firm and gave the company’s president  “an unfair competitive advantage” with a letter of recommendation that she used to procure additional NCA contracts.

Muro told investigators that he provided the letter to use when the contractor was competing for work with other organizations. The report said he “minimized the significance of the letter as nothing more than reflecting what he thought of her work.”

The inspector general’s office also said Muro created a staff position and “preselected an employee, who was also a friend, for that position.” When retention incentives no longer enticed the retirement-eligible worker to stay, Muro developed a new promotional opportunity that “raised the employee’s salary by approximately $10,000 annually,” in addition to increasing the individual’s retirement annuity by about $400 each month.

Muro was not available for comment Friday when a reporter called his home.

The findings add to an already mixed legacy for the former cemetery chief, who left the VA last month after more than 40 years of service with the federal government.

The VA’s cemetery network earned the highest rating among all organizations in the American Customer Satisfaction Index in 2010, when Muro was interim chief. But his tenure was also marred by burial problems, as a 2012 review by the VA found hundreds of problems with unmarked and mismarked graves, as well as remains buried in incorrect plots and other issues. VA officials said the mistakes were due to sloppy work during renovations by contractors.

The VA agreed with the inspector general’s recommendations, which called for the agency to determine whether any remaining contracts with the firm represent conflicts of interest and whether any corrective actions are needed to make up for overlooking applicants who were not given preference for the position Muro created.

Here is the report.