Short answer, no. Long answer yes, but you have to put the smart cover on the back of the Ipad while it's docked in the case. Since I got this thing, I just stopped using the smart cover.
Kind of ironic that I got the smart cover after my keyboard case cause it was a little cumbersome to pry open and dock my iPad in a crowded lecture hall. Don't get me wrong though! It is extremely useful where space isn't limited.