State revises conflict-of-interest policy Audit detailed problems with contracts

DES MOINES - Administrators at the Department of Administrative Services say they have taken steps to avoid conflict-of-interest problems detailed in an audit issued Monday regarding a state-run center serving disabled Iowans.

State Auditor Mary Mosiman issued a report indicating that Woodward Resource Center improperly awarded no-bid construction contracts to BluePrint Homes LLC - a construction company co-owned by Lois Schmitz, a purchasing official within DAS' central procurement enterprise.

According to the state audit, the Woodward center awarded $505,506 in contracts to the company during the fiscal year that ended June 30, 2010, with most of the payments divided into amounts of less than $10,000 to avoid the competitive bidding threshold.

In the 51-page audit, Mosiman raised concerns about the transactions and alleged Schmitz did not comply with an Iowa law prohibiting a state employee from selling any goods or services in excess of $2,000 to any state agency unless the sale is made pursuant to an award or contract let after public notice and competitive bidding.

The report also indicated that Schmitz failed to disclose the payments to the Iowa Ethics and Campaign Disclosure Board as required by law.

According to the audit, Schmitz was terminated from state employment on Feb. 27, 2013, based on the conflict-of-interest concerns that were raised. She filed a grievance and an arbitrator reinstated her in January with $87,152 to in back pay after determining she had no role in awarding the contracts.

Following the release of the auditor's findings Monday, DAS Director Janet Phipps issued a statement saying: 'When the issue at hand was initially discovered, DAS took steps to ensure that it would not happen again”

Steps were taken to require employees of the Central Procurement Enterprise to sign a conflict of interest form and a related party policy form and to have DAS Fiscal and Policy Analysts monitor all Targeted Small Business activity for items which appear to not meet program guidelines, she said. The review includes an analysis for potential splitting of payments or projects to avoid the $10,000 threshold.

'We are committed to eliminating any potential conflicts of interest and maintaining a fair and ethical procurement process,” Phipps said in her statement. 'The department is committed to ensuring that all bids are done appropriately and without any conflicts of interest.”

Gov. Terry Branstad, during his weekly news conference, said he was pleased by the action DAS officials have taken to avoid any repeat situations in the future.

'I think it's wrong what occurred there,” Branstad said. 'I agreed with the auditor's report and it's my understanding that the Department of Administrative Services has stopped this practice.”

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