Higher education

Conflict of interest? Departing regent connected with University of Iowa Children's Hospital contract

Board: 'Regent Andringa had no knowledge of the contract'

Mary Andringa, departing from the Board of Regents
Mary Andringa, departing from the Board of Regents

A member of the state Board of Regents who announced her resignation Wednesday was serving on the board of directors for a global furniture manufacturer — and receiving compensation from that company — at the time that company renegotiated a contract with the University of Iowa Hospitals and Clinics.

Mary Andringa — who began serving as a regent on May 1, 2015, and on Wednesday announced plans to resign April 30 — has been on the board for Herman Miller, a Michigan-based furnishings design and manufacturing company, since 1999. That company was involved in a 2010 bid and subsequent contract to provide furniture for the new UI Children’s Hospital.

In July 2015, months after Andringa started as a regent and began serving as chair of the board’s UIHC committee, the University of Iowa renegotiated the original contract that involved Herman Miller, extending it two years through March 31, 2018.

Within days of that contract being signed, Andringa filed a supplemental “conflict of interest” form with the Board of Regents office, reporting her membership with Herman Miller, “which may from time to time have operational staff members submit bids to sell office furniture and other goods to regents institutions.”

She had not included her involvement with Herman Miller in her initial conflict of interest report filed with the Board of Regents in May 2015. That report largely listed potential conflicts involving Vermeer Corporation, a Pella-based industrial and agricultural equipment company for which she is chair of the board, and a potential conflict involving her son’s work with Iowa State University President Steven Leath.

In her supplemental conflict of interest report, Andringa did not disclose details of the Herman Miller contract with UIHC, which had just been renegotiated. Josh Lehman, spokesman for the Board of Regents, said that’s because she didn’t know about it.

“Regent Andringa had no knowledge of the contract,” he said. “She did not know about the renegotiation that was ongoing. And she had no involvement.”

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Through her work with Herman Miller, Andringa receives compensation topping $100,000 in the form of salary and stock awards, according to multiple publications including Reuters and Bloomberg.

Lehman on Thursday told The Gazette that Andringa’s resignation was not related to the Herman Miller contract with UIHC. Andringa wasn’t available to comment directly on Thursday, Lehman said, but in a Wednesday news release announcing her resignation, Andringa said she simply “underestimated the time required to fully serve in this role, given my pre-existing commitments and responsibilities.”

In addition to chairing the board for Vermeer Corporation — which she led in various leadership roles over 33 years, including as CEO — Andringa serves as co-chair of the Iowa Governor’s STEM Advisory Council, member of the Iowa Business Council, board member for Milliken & Company, member of the President’s Export Council, trustee emeritus at Central College, and in other capacities, according to her Herman Miller biography.

“When I accepted the appointment, I was nearing the end of my tenure as CEO of Vermeer and was confident I would have the time to serve the state through the Board of Regents,” Andringa said in the Wednesday news release. “Unfortunately that is not the case.”

Lehman said Andringa’s July 2015 disclosure of her involvement with Herman Miller put her in compliance with board policy, which requires regents to “disclose employment, ownership of, or service on the board of directors of an organization that has or may have relationships with the board.”

He said she didn’t disclose her Herman Miller involvement in her first conflict of interest discloser in May because she was focused on her connections with Vermeer.

“As that month went on and she learned more about how the regents operate, she realized the scope needed to be a bit larger,” Lehman said.

Still, questions have emerged around the Herman Miller-related contract renegotiation and whether it was handled appropriately.

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Jeff Lewis with Groupe Lacasse, an out-of-state furniture design and manufacturing company, told The Gazette in an email the University of Iowa invited his company to compete for a furnishings award for the new Children’s Hospital.

“After two years of evaluation, we learned that UIHC awarded a multimillion-dollar contract to our competitor, Herman Miller,” Lewis wrote. “We were never permitted to provide pricing and believe that the award was made without any competitive bidding.”

He went on to question whether the contract was “an unlawful expenditure of public funds.”

UI and regent officials say the original Children’s Hospital furnishings contract did go out for bid in 2010 as part of a master agreement for furniture acquisition on behalf of both UI and the University of Northern Iowa. Multiple vendors were awarded contracts — including Herman Miller and partner Pigott, Inc.

Those original master agreements contained provisions for additional extensions, and UI purchasing contacted its vendors in 2015 to negotiate extended agreements.

Due to the additional purchasing volume, according to UI spokeswoman Tom Moore, “The pricing offered for the extension period decreased, resulting in significant savings for the university.”

UI officials on Thursday didn’t answer questions about how much has been paid to Herman Miller or Pigott to date or how much they are contracted to pay the firms. But a clause in the renegotiated contract states that all projects will be quoted at a design rate not to exceed $55 an hour and an installation rate up to $35 an hour.

And, in November, the university put out a news release praising the master contract as aligning with the mission of the Board of Regents’ sweeping efficiency review.

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“UI purchasing recently teamed up with administrators at the University of Iowa Hospitals and Clinics to re-evaluate one of the UI’s multiple furniture contracts,” according to the news release. “After about three months, the team was able to negotiate a discount structure with the furniture distributor that’s expected to save the university just over an estimated $750,000.”

Moore said the university followed all purchasing policies, and regent spokesman Lehman said competitive bidding is only required “when there is no contract in place.” He said regent institutions can renegotiate an existing vendor’s contract without going to bid.

However, the issue of no-bid contracts involving regent universities has been in the news lately after the Associated Press reported The Strawn Company — owned and operated by former Iowa Republican Party Chairman Matt Strawn — landed several UI contracts worth nearly $320,000 that were not competitively bid.

State and federal law and Board of Regents policy requires competitive bidding for the purchase of all university goods and services worth more than $25,000, unless the agency submits a sole source justification form –which occurred in the Strawn case.

Lehman said the board is planning to discuss the issue of no-bid contracts as part of a larger board policy review in June.

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