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VOL. 128 | NO. 224 | Friday, November 15, 2013

Audit Critical of Company Hired to Manage Assets

LUCAS L. JOHNSON II | Associated Press

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NASHVILLE (AP) – Tennessee Gov. Bill Haslam says the state has benefited from a company hired to manage its assets, despite a comptroller's report that suggests the company may have benefited from its own advice, creating a conflict of interest.

The report released this week was from an audit of the state Department of General Services. It said amendments made to the contract with Jones Lang LaSalle allowed the company to "reap the benefits of its own recommendations," creating a conflict of interest.

The report noted that the original contract with JLL was $1 million. However, there were later five amendments that increased the company's payout by more than $6.6 million. The report said it also wasn't clear exactly what services the company was providing.

"In two cases, the amendments created organizational conflicts of interest whereby JLL could profit from its own planning and leasing recommendations," the report said.

Both the state and the company disagree with most of the report's findings.

Haslam spoke to reporters Wednesday following one of his budget hearings with agency leaders that began this week.

The Department of General Services presented its budget on Thursday, and Commissioner Bob Oglesby acknowledged to reporters after the hearing that there were some things the agency could have done better.

For instance, he said JLL's services could have been defined more clearly.

"They were very broad in nature, and we're trying to be more definitive moving forward," Oglesby said.

Haslam said JLL has helped the state take care of maintenance problems, as well as reduced the amount of money the state spends on leases, among other things.

"One of the roles the comptroller plays is helping us think through how we can do things better and we'll take all the suggestions they've made," Haslam said. "But one point I will make is prior to this we had some very serious issues with real estate at the state and ... I honestly think the state is in a much better position than it was."

The company said in a statement that it particularly disagreed with the report's allegation of a conflict of interest.

"All recommendations JLL makes to the state are made exclusively in support of effecting the state's goals for real estate services," the company said. "The state provides criteria for our evaluations, and then either accepts, rejects or modifies our recommendations in its complete discretion."

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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