UPDATED 3:35 p.m. Thursday.
CHICAGO — As exoected , the University of Illinois' Board of Trustees on Thursday followed a state board's recommendation and voided a controversial $4.3 million contract with BLDD Architects of Champaign.
Meanwhile, the Illinois Procurement Policy Board's vote Tuesday — the second time it has recommended voiding the contract — will be referred to the state executive inspector general's office for further review because it was based on a violation of the state procurement code, officials said.
The full UI Board of Trustees discussed the matter with administrators today at its meeting in Chicago, but in an interview Wednesday, Chairman Christopher Kennedy said the university must hold itself to a higher standard when it comes to conflicts of interest. State regulators initially raised questions about the contract because a top UI construction planner, Jill Maxey, is married to a BLDD employee, a fact the procurement board didn't learn until after the contract was signed.
"They gave a clear recommendation, and we should accept that. I have no interest in second-guessing them," Kennedy said of the board's vote.
"We believe the integrity of the university is more important than any other consideration," said Kennedy, who became a trustee just after the Category I admissions scandal and was chairman during the controversy that led to the resignation of former President Michael Hogan and his chief of staff, Lisa Troyer, earlier this year.
Procurement board members said the university violated state law by not reporting the potential conflict to the state's chief procurement officer, Ben Bagby, who in turn failed to notify the board until after the contract with BLDD was signed.
Kennedy said Wednesday he had not heard from the inspector general's office, and Cole Kain, chief of staff for the office, said under ethics rules he could not confirm or deny when or if the office will investigate the matter.
A state law that took effect in July 2010 requires that when a potential conflict of interest is identified, the state's chief procurement officer must send the contract to the Illinois Procurement Policy Board for review.
The UI didn't notify the board about the potential conflict until March 2012, more than a year after BLDD beat out 33 other firms for a $368,000 contract for conceptual design work on the renovation of the 120-year-old Natural History Building. The UI expanded the contract in December 2011, agreeing to pay BLDD $4.3 million for architectural and engineering services for the duration of the $70 million project.
BLDD disclosed the conflict, and the UI identified it as a "serious concern," but UI lawyers concluded the statute didn't apply to Maxey because she did not meet the salary threshold in the state procurement code. The UI also argued that no potential conflict existed because it had an internal procedure, or "firewall," to remove Maxey from the decision-making process, though records show she was later copied on several emails about the scope of the project. Bagby, who was still assembling a staff at the time, didn't learn about the matter until later.
Bagby rejected the board's April vote to void the contract on conflict-of-interest grounds. He disagreed with the UI's interpretation of the law but said a hearing turned up no evidence of improper activity or influence. And he said it would be too expensive to void the contract, citing UI cost estimates approaching $1 million.
Board member Ed Bedore on Tuesday harshly criticized Bagby for not doing further investigation, noting that the other two finalists were willing to take over the project using BLDD's original designs at far less cost. And he said both Bagby and the UI had "misled" the board on the potential cost and delays.
Kennedy said taxpayer-funded institutions should go beyond the standards used in commercial settings, in which a firewall to prevent actual conflicts is sufficient. Even the appearance of a conflict is troublesome for a public university, he said.
"We need to hold ourselves to a higher standard," he said. "People should feel confident in public institutions."
Kennedy said he doesn't want UI employees trying to use their own interpretation of state laws, but also said they "lived up to the letter of the law as they understood it. It's incredibly complicated."
Trustee James Montgomery said the responsibility for eliminating any appearance of a conflict rests with those who created the situation in the first place. He said the contract should be rebid, "at least."
Also Wednesday, Vice President and Chancellor Phyllis Wise reported more than 10,000 enrollments overnight in UI courses offered online through Coursera, a Silicon Valley company offering free classes to students around the world.
An agreement between Coursera and more than a dozen universities, including the UI, was announced Tuesday. The company, founded by two Stanford professors, offers not-for-credit courses in a variety of subjects and has attracted 680,000 students from 190 countries and more than 1.55 million enrollments.
The UI plans to offer courses in microeconomics principles, organic chemistry, introduction to sustainability and more. One "esoteric" computer-science course already has 700 students, Wise said.
Wise had asked UI faculty this spring to consider a possible agreement with the company, then fast-tracked it when she learned Coursera was planning to expand its partnerships. The agreement was finalized just before Tuesday's announcement.
The partnership proves the UI can be "nimble" and seize new opportunities in today's challenging financial environment, Wise told trustees at the board's retreat Wednesday.