- Associated Press - Tuesday, May 20, 2014

IOWA CITY, Iowa (AP) - An Iowa executive branch purchasing official has been reinstated with $108,000 in back compensation after an arbitrator determined she was unfairly fired over accusations that she helped her family business receive dozens of no-bid contracts.

The firing of Department of Administrative Services executive officer Lois Schmitz wasn’t justified because she had no role in awarding contracts to her husband’s construction company and had been advised by superiors in 2010 that she had no ethical conflict, arbitrator Andrea Kircher wrote in a Dec. 31 decision ordering reinstatement. Schmitz, who joined DAS in 1999, had no prior discipline and was widely considered effective, she added.

Schmitz will receive $87,000 in salary and $21,000 in benefits to replace what she lost while challenging her February 2013 firing, DAS spokesman Caleb Hunter said.

But the case isn’t over. The state auditor’s office is still investigating the contracts for Schmitz’s company, some of which were deliberately split by a state institution into smaller amounts to avoid competitive bidding. A complaint against Schmitz remains pending with the Iowa Ethics and Campaign Disclosure Board, which will proceed after the audit report is issued.

Schmitz, 64, says she hasn’t violated any ethics laws, was unfairly fired in retaliation for filing a complaint against then-DAS administrator Bruce Greiner, and was replaced by a younger woman who was given a $22,000 raise.

“The reasons given for her termination were a pretext for illegal discrimination,” said Schmitz’s attorney Tom Duff, who provided the arbitration ruling to The Associated Press. He said Schmitz plans to file a lawsuit.

The case is another mess for DAS under Gov. Terry Branstad’s administration, which has faced a two-month scandal involving legal settlements for fired workers and accusations of mismanagement.

At issue is whether Schmitz acted appropriately in working as a bidding expert while being 50 percent owner of BluePrint Homes, which is co-owned and operated by her husband, John Schmitz. Schmitz wrote policies, trained employees about contracting ethics and managed purchasing software. She says she had no involvement with BluePrint Homes but is listed as co-owner for tax reasons.

BluePrint Homes in 2009 joined the Targeted Small Business program, which encourages departments to work with businesses owned by women, minorities and the disabled. State officials certified the company due to John Schmitz’s disabilities - which include having polio as a child, a heart condition and asthma - and Lois Schmitz’s gender. Eligible companies can receive contracts of less than $10,000 without competitive bidding. Schmitz wrote procedures for the program, but doesn’t manage it.

BluePrint Homes landed $791,000 in contracts from 2009 to 2013, mostly for work at Woodward Resource Center, a state-run residential campus for people with disabilities. The payments to Schmitz’s company caught the attention of Greiner, the new state procurement administrator, after a routine 2012 audit. He asked for an investigation.

Investigators found that BluePrint Homes performed 102 projects at Woodward Resource Center without competitive bidding, but no evidence that Schmitz took any official actions to benefit the company.

Greiner nonetheless fired Schmitz for what he called a “clear conflict of interest.” He alleged that Woodward Resource Center officials and BluePrint Homes deliberately circumvented the bidding process by repeatedly splitting large projects into contracts less than $10,000, arguing that she was profiting from a practice that is barred in state rules and that she advises agencies against. He said she repeatedly failed to report contract payments to the ethics board - a law she argues doesn’t apply since her husband handled the work.

But Greiner, who has since left DAS, ignored a key investigation finding: that Schmitz’s supervisors cleared the arrangement during Gov. Chet Culver’s administration. After receiving an anonymous complaint, a 2010 DAS review determined that Schmitz didn’t have a conflict because she had no influence over award decisions and BluePrint Homes was properly certified. Schmitz said she saw no reason to tell her new supervisors about the company.

Former Woodward Resource Center official Doug Monahan said in a legal affidavit that he and other officials divided jobs into under-$10,000 increments for BluePrint Homes and others when “work needed to be done in a timely fashion” to avoid red tape, adding that Lois Schmitz had no involvement in those decisions.

John Schmitz said Tuesday the state’s accusations of wrongdoing have made it “the most horrific year in our lives.” He said his business continues to perform state work.

“We’re very honest people,” he said. “I would rather lose a bid than jeopardize her job.”



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