A local businessman failed to disclose his personal ties to a top employee at the secretary of state's office when he obtained two state contracts this year worth nearly $184,000, documents obtained from that office reveal.

But agency officials decided to allow John Paulsen to keep his contracts because his services are needed for the November election, "and no other contractor can provide these services within the short time frame," agency spokesman Richard Coolidge said Monday.

Paulsen operates a software company - LEDS, LLC - from his home in Castle Rock. His company has two state jobs.

The first $84,900 contract, signed in April, is to provide counties with ballot information for this year's elections.

The second $98,900 contract, signed Aug. 29, is to compile data reports from the November election.

In early August, weeks before the second contract was signed, the secretary of state's office was notified by a county clerk that Paulsen had leased a downtown Denver apartment to Holly Lowder, according to an e-mail written Sept. 10 by chief administrative officer Jacque Ponder.

Lowder was the elections director at the secretary of state's office.

Coolidge said his office took action on that tip but he could not elaborate because of state personnel rules. Lowder resigned Sept. 4.

Coolidge said Lowder was not involved in Paulsen's contracts.

Lowder said in an interview Sept. 5 that she has known Paulsen for 15 years but did not have any conflict of interest in his business dealings with her agency.

Lowder and Paulsen could not be reached for comment Monday.

The ties between Lowder and Paulsen date back to 1993, when she was the clerk in Alamosa County and bought Paulsen's voter-registration software.

The two recently worked together on the new statewide voter-registration database known as SCORE.

E-mails obtained by the Rocky Mountain News show that agency officials were struggling with how to handle the Paulsen contracts.

"Question: We are in an awkward position right now with John Paulsen, with the election just a month away and John being the only person who bid on the last contract we signed with him," Ponder wrote in an e-mail Sept. 10 to other agency officials.

"He did violate the section of the contract which discusses conflict of interest, can we get him permanently barred from ever doing business not only with our office but also with any state agency?"

Judye Schneider, budget-policy analyst, responded:

"I don't know of any way we could do this.

"We probably would have more leverage regarding our denial of future contracts if we terminated the current contracts.

"If we don't impose some kind of remedy for his violation(s) of the current contracts, and we deny future contracts to him for which he would qualify, can we win, legally, if he challenged us?

"Even if we don't terminate now, or impose a remedy, I would suggest a strong letter about failure to deliver and the conflict of interest issue. At least we would have this in writing for the future."

Coolidge said his office decided to keep the contracts after reviewing the "practical and legal implications."

Agency officials met with Paulsen "to express our concerns and to put him on notice that additional oversight and reporting requirements will be necessary," he said.