Nebraska State Auditor Mike Foley reports a serious breach of state government contracting rules regarding conflicts of interest involving the Department of Corrections. The finding was discovered during an audit of the department.

A psychologist employed by the department requested and received approval for a $4,800 contract to an outside corporation known as First Step. The corporation is apparently owned by the psychologist’s wife. He also serves as the corporation’s President and Clinical Director. The unnamed psychologist also authored a $200,000 contract for additional purchases. He was also instrumental in the development of the scoring criteria used in evaluating any proposals received.

First Step was awarded the contract by a review panel composed of three subordinates of the psychologist who he assigned to serve on the review panel. A notice of intent to award the contract was withdrawn when a competing bidder filed a complaint. An investigation commenced and the psychologist resigned his position with the Department of Corrections.

The review disclosed that others within the department had various levels of knowledge of the psychologist’s involvement with First Step and that department personnel ignored obvious evidence of a conflict of interest.

State Auditor Foley noted the need for a greater awareness among state government employees of the requirement that outside financial interests and government service must be properly segregated.