Board files ethics charges against Iowa purchasing executive over contracts to family business

In a rare enforcement case involving Iowa ethics laws, regulators have accused a state purchasing officer of dozens of violations related to no-bid state construction contracts received by her family-owned business.

Department of Administrative Services employee Lois Schmitz is accused of repeatedly violating a law that bars state employees' businesses from receiving state contracts worth more than $2,000 unless they go through public notice and competitive bidding. She is also accused of failing to file reports with the Iowa Ethics and Campaign Disclosure Board as required when state employees receive payments for selling goods and services to state agencies.

The violations are alleged in a "statement of charges" filed by the board Aug. 28 and released Tuesday to The Associated Press under the public records law. They will be the subject of a Nov. 19 hearing. If proven, the violations could lead to penalties such as a reprimand or Schmitz's dismissal from state employment.

Schmitz, 65, has denied having any influence over the contracts and is suing Iowa for sex and age discrimination and retaliation. Her attorney, Tom Duff, wrote in an email Tuesday that he was a bit surprised the board is moving forward with charges now, roughly 2½ years after receiving a complaint.

The allegations center around Schmitz and her husband's joint ownership of BluePrint Homes LLC, which received hundreds of thousands of dollars in no-bid contracts to perform work at Woodward Resource Center, a state-run facility for residents with intellectual disabilities about 30 miles northwest of Des Moines.

A state audit report last year said numerous contracts were improperly split up in increments below $10,000 to avoid competitive bidding requirements. BluePrint Homes could receive contracts up to $10,000 without competition because it qualified in 2009 for the state's Targeted Small Business program, which encourages agencies to buy goods and services from disadvantaged businesses.

Schmitz was involved with that program in her state position, and her responsibilities included providing training and answering questions from state employees and businesses on purchasing rules. On at least one occasion, she responded to a question concerning her family business without disclosing her ownership in it. Schmitz has said she is an owner only for tax purposes and wasn't involved in daily operations.

The department fired Schmitz in 2013 after her new boss, Bruce Greiner, discovered the payments to her business and accused her of having a conflict of interest. An arbitrator reinstated Schmitz in January 2014 with $108,000 in back compensation after finding her termination wasn't justified.

The arbitrator noted her previous bosses determined in 2010 that she didn't have a conflict because she had no involvement in the bidding process. Woodward Resource Center officials have said split up the contracts to expedite construction work and avoid delays that come with competitive bidding.

The state audit report criticized the 2010 determination that Schmitz didn't have a conflict and concluded that she did. The ethics board was waiting for that report to move forward with an investigation of a complaint Greiner filed against Schmitz in March 2013.

The board filed 40 charges, each representing a different contract BluePrint Homes received in 2010.

Schmitz's lawsuit against the state is scheduled for trial in January. Schmitz alleges Greiner was hostile and abusive toward her before firing her and replacing her with a younger worker.