Three senior employees at California State University say they lost their jobs after questioning whether the system’s chancellor, Charles B. Reed, misused public funds when he hired a labor-consulting firm without soliciting competitive bids, the San Francisco Chronicle reported.

Two lawyers who worked in California State’s labor-relations office — Paul Verellen and Joel Block — said their firings were directly related to their questions over the hiring of C. Richard Barnes and Associates, a Georgia-based firm, to represent the university in negotiations with labor unions and in arbitration with faculty members.

Mr. Verellen has filed a whistle-blower complaint with California’s Bureau of State Audits and said he plans to file a lawsuit against Mr. Reed and the university. A third dismissed employee has signed a legal settlement that prevents him from discussing the case, but others told the newspaper he too had lost his job after asking questions about the Barnes contracts.

The Barnes firm, which is led by C. Richard Barnes, a former director of the Federal Mediation and Conciliation Service, has received more than $2-million so far, the newspaper reported. The university says the no-bid contracts were necessary and legitimate.

Mr. Reed said that the former employees were let go in a staff reorganization, and that the Barnes contracts had been some of the office’s “best-spent resources.” The San Francisco Chronicle quoted him as saying: “I frankly got tired of all the labor-relations problems that we were having. I asked somebody who the very best labor person was in the country, and it turned out to be a guy in Atlanta who had worked in the Clinton administration. … And I asked him if he would help us with our labor problems.” —Kathryn Masterson