Jeffrey Mills, former director of food and nutrition services for D.C. Public Schools, was fired from his job after he alleged mismanagement and fraud. He filed a federal lawsuit and settled for $450,000. (Ricky Carioti/The Washington Post)

The District has agreed to pay $450,000 to settle a lawsuit brought by the city public schools’ former head of food services, who had alleged he was fired for raising alarms about the system’s mismanagement of a money-losing contract with its largest food vendor.

Jeffrey Mills argued in a federal complaint that Chartwells-Thompson Hospitality overcharged the school system, billed the schools for spoiled produce and shorted the city millions of dollars it was due in rebates. Mills also alleged that top D.C. Public Schools officials ignored evidence of what he said was the company’s waste and abuse.

Mills sought back pay and other damages from the District and two other defendants: Schools Chancellor Kaya Henderson and Anthony deGuzman, the school system’s former chief operating officer.

D.C. Attorney General Irvin B. Nathan announced the city’s settlement with Mills on Thursday. In a statement, Nathan said that the defendants “did not admit any liability for the claims alleged in the lawsuit.”

“In reaching this settlement, DCPS Chancellor Kaya Henderson stated that she commends Mr. Mills for his dedication and commitment to providing quality and healthy food to students,” the statement said.

A spokesman for Mills said he was unavailable for comment Thursday, and his attorneys did not respond to a request for comment. Chartwells officials also did not immediately respond to a request for comment Thursday.

Henderson’s predecessor, Michelle A. Rhee, hired Mills in 2010 and directed him to control costs, improve food quality and increase the number of meals served in schools. Mills, who got rid of strawberry-flavored milk and replaced fish sticks with ­Cajun tilapia, was fired in January 2013, prompting protest from parents who appreciated his efforts.

His lawsuit focused on a contract worth more than $30 million a year to serve meals for students in the city’s traditional public school system, including many poor children who rely on schools as their primary food provider.

Mills alleged that Chartwells purposely ordered much more in perishables than could be used and then charged schools for the stockpiled food. He also said the company kept vendor discounts that it was required to pass along to the school system.

At the time the suit was filed, Chartwells said those claims came from a “disgruntled employee” and had “no basis or merit.”

D.C. parents, activists and politicians have been criticizing Chartwells’s agreement with the school system, which began in 2008, for years. In 2012, an independent audit commissioned by the school system backed up many of Mills’s concerns, finding that District taxpayers had subsidized a meals program that had operated at a loss of more than $10 million a year since Chartwells’s contract began.

The District’s inspector general began investigating the Chartwells contract in 2012, according to documents obtained through the Freedom of Information Act. After the office concluded its work in March, it wrote to D.C. Council Chairman Phil Mendelson (D) that “Chartwells may have overbilled or overcharged DCPS” and recommended that the school system work with the attorney general “to recoup the monetary loss.”

The attorney general is looking into the school system’s contract with Chartwells, according to several people close to the inquiries, including two who said they had been interviewed by investigators. They spoke on the condition of anonymity so they could discuss an ongoing investigation. A spokesman for the attorney general declined to comment.

Becky Levin, a parent at Capitol Hill Montessori School at Logan, said she is disappointed that the school system lost Mills and was glad he reached a settlement. “But even more than a payment, there needs to be greater accountability in school food service in D.C.,” she said.