The U.S. Department of Agriculture cites significant violations of regulations designed to protect taxpayers' money.
In addition, an Iowa food broker claims in a lawsuit that it has been unfairly squeezed out of the state's school lunch business.
An obscure corporation that helps buy millions of dollars' worth of food for Iowa's school lunch program has allegedly violated federal purchasing regulations and steered public money to a company with close ties to the group's top executive.
The private corporation, the Iowa Educators Consortium, was formed by the state's publicly funded Area Education Agencies to purchase supplies such as paper, furniture and food for schools.
The consortium buys food for 375 school districts in four states. In theory, its buying power enables it to negotiate a better price on the food consumed by students in those districts.
USDA officials told the Department of Education in December that there were "serious questions" about the consortium's status as a purchasing cooperative and "significant instances" of a failure to conform to purchasing regulations.
Specifically, the USDA said the consortium's contract with one unspecified food vendor allowed Iowa schools to skirt competitive bidding requirements.
The USDA also alleged that the consortium committed a "clear violation" of purchasing regulations by arranging for the schools to pay fees to the vendor that are based on a percentage the cost of the food they buy.
The article notes the allegations have been denied.