CHICAGO — Under scrutiny from state officials, the University has nixed a $4.6 million contract with a local architectural firm over a possible conflict of interest.

The board of trustees’ decision, which came during executive session at its meeting Thursday, was made two days after the state’s Procurement Policy Board advised the University, for a second time, to void a contract that called Champaign-based BLDD Architects to manage a plan to restore the Natural History Building.

“It was a unanimous decision to pull away from that contract and move forward with another firm,” board of trustees chairman Christopher Kennedy said.

Questions were raised around Associate Director of Planning Jill Maxey’s role of preparing “programs that are used for facilities and the development of professional service agreements” in the $70 million project. She is married to BLDD employee and partial owner Bruce Maxey.

An interview request for Jill Maxey was directed to University spokesman Tom Hardy, who said she was “temporarily reassigned on Wednesday to a position in (Facilities and Services) with duties that would preclude any conflict or appearance of conflict with BLDD.”

Under law, contract considerations that could raise ethical concerns are required to be brought up to Ben Bagby, the state’s procurement officer for higher education, who then alerts the procurement board for review — something the University didn’t do until more than a year after the original agreement was signed.

“While we are saddened by (Thursday’s) decision, we are gratified that all involved agree that BLDD made all required disclosures, showing its strong commitment to transparency throughout the process,” said Randy West, who manages higher education design projects for BLDD, in a statement.

Now the University plans to rebid the contract — likely adding to the cost of the overall project — despite the procurement board’s suggestion to negotiate with another bidder. Meanwhile, state’s executive inspector general’s office is reviewing the circumstances because of a possible violation of law.

The initial contract was awarded in December 2010 for almost $370,000 for the “conceptualization” phase after BLDD was chosen from 34 bids. About a year later, the University awarded the firm $4.3 million more to continue working on the project.

But the procurement board was only alerted in the spring, leading a member at the April meeting to say that the University feels like it’s “above the law.” However, Kennedy does not think that is the case.

“What we do believe is that we should be held to a higher standard than a private corporation, which involves keeping the trust of the public,” he said.

According to the minutes of the April meeting, senior member Ed Bedore said the University seems to have a one-track mind that it only awards the contract to Jill Maxey’s husband’s firm. He added that other firms that originally bid on the project are historically known as top firms working on historical buildings, but that doesn’t matter to the University.

During that meeting, board members recommended, in a 4-0 vote, that the University pull out of the multi-million dollar deal because it could appear as a conflict.

The vote was unanimous even though Bagby told members that Jill Maxey had been “walled off,” saying there was not much evidence that her responsibilities, from her job description, raise conflict-of-interest concerns. But ultimately, he ignored the advisory vote, giving the University the green light to proceed with plans.

A public hearing was held in early May because Bagby was required to do so after the board rejected the contract, according to the state’s procurement code. In the hearing, Jill Maxey testified that she and her husband did not talk about the contract.

However, at their meeting last Tuesday, board members again called out University officials, unanimously agreeing that the school should strike down the agreement.

Aaron Carter, the board’s executive director, said after the University’s decision that the procurement board was pleased with the “assertiveness without hesitation.”

“The difficulty lies with the fact that BLDD contracting with the University of Illinois creates a potential conflict of interest too concerning to disregard,” he said in a separate statement.

But this is not the first time the University has been questioned by the procurement board. Minutes of the July 2011 meeting show that members advised that BLDD’s response to a proposal to renovate the Assembly Hall should be disregarded. This came after Jill Maxey’s role as a top construction planner dominated discussion.

At the trustees’ December meeting that year, they chose to move forward with Chicago-based AECOM as the engineering firm for the Assembly Hall project — the same day they approved an extension for the National History Building without notifying state officials.

Meanwhile, Kennedy said he does not believe this hurdle will delay the timetable for work on the 120-year-old Natural History Building, which houses geology, zoology and integrated biology classes within LAS.

_Jordan Hughes contributed to this report from Champaign._