VOL. 132 | NO. 64 | Thursday, March 30, 2017
Lawmakers Blast Haslam Administration for Process Toward JLL Contract
By Sam Stockard
The Tennessee Department of General Services is set to award a statewide contract for facility management services to Jones Lang LaSalle, a company that already handles 10 percent of state office space and estimates a 15.9 percent savings if all higher education institutes participate.
In its winning bid, JLL projected a 12.15 percent cost savings at the University of Memphis and a 12.97 percent savings at the University of Tennessee Health Science Center in Memphis, both of which were toured by three bidding firms, in addition to UT-Knoxville, Tennessee Tech and Tennessee School for the Blind. The School for the Blind would not be included in the package because JLL showed it could cost more than 30 percent more to manage.
The state’s Central Procurement Office led an independent evaluation team of higher education and general government officials to evaluate responses from three bidding companies, including Aramark and Compass Group, and determined Chicago-based JLL, a multinational company, made the highest score at the most competitive price, according to state officials.
The Department of General Services announced Tuesday, March 28, it plans to award a five-year contract to JLL, but officials said the contract is a work in progress and announced no total bid price. Critics contend the process has been secretive and shaped by the companies trying to get the job.
“This is part of a two-year process. Our job is to provide the very best services for the very lowest cost to taxpayers,” said Jennifer Donnals, spokeswoman for Gov. Bill Haslam. “Individual campuses will make their own determination whether to participate in this proposal or not. If they do participate, the proposed contract will protect the livelihoods of current facilities management employees. This is another tool for campuses to keep their costs low while providing high-quality service.”
JLL will subcontract with Diversified Maintenance of Birmingham, Ala., for janitorial and housekeeping work and BrightView Landscapes of Pennsylvania for outdoor work, according to the bid.
State officials say employees who shift from the state to JLL employment cannot earn less or lose benefits under the proposed contract, which is still being worked out.
“As we have consistently said, the proposed contract will protect the livelihoods of current state facilities management employees, and is another tool for state departments and institutions to use to keep their costs low, avoiding an otherwise potentially necessary service cost or tuition increase,” said Michelle Martin, spokeswoman for the state’s Office of Customer Focused Government.
But Randy Stamps, executive director of the Tennessee State Employees Association, said the contract will affect 3,000 state employees, putting their jobs at risk because even though they’ll be offered positions with JLL, “great restrictions” will be placed on those transitions.
“I find it mystifying that we’re awarding a contractor that’s proven incapable of managing this building, the Legislative Plaza, with the largest outsourcing contract in the history of the state of Tennessee,” Stamps said. “I don’t understand it. I don’t understand why we want to send Tennessee tax dollars overseas to a multi-national corporation.”
A business justification study completed in 2016 showed the state could save more than $35 million by outsourcing facilities management at the state’s universities.
However, JLL received some bad marks in a 2016 state comptroller’s report and for problems in its handling of state leases through a separate contract.
Several state legislators also have questioned the potential for cost cutting, including Sen. Lee Harris, a Memphis Democrat who said the projected savings at the University of Memphis and other campuses sound “made up” and “arbitrary.”
“Why not 20 percent savings, why not 25 percent savings. It raises all sorts of questions about how these savings are going to be produced. Where’s the slippage right now? Where are the problem areas right now, because I’ve been on the campuses and I haven’t seen a whole lot of problem areas,” Harris said.
Universities and other state facilities and departments will be given the option to use JLL’s services, receiving a quoted price and then be allowed to develop a local agreement, which will be based partially on its “level of excellence,” according to Martin.
The move comes even though Comptroller Justin Wilson stated in a letter to Sen. Janice Bowling, a critic of outsourcing, that the state has no “reliable information” for comparison on the cost of similar services before it started outsourcing facilities management to JLL.
The state has paid JLL more than $112.35 million over the last five years and an average of $30 million over the last three full years, according to the comptroller’s letter, which he put together in response to questions from Bowling.
Bowling has criticized the Haslam administration’s outsourcing efforts, calling it hypocritical to say it can save money by avoiding subcontracting work as the state has done when outsourcing the hiring of a subcontractor.
The United Campus Workers was not surprised to see JLL get the winning bid.
“We’re deeply disappointed that the state continues to ram its radical outsourcing experiment through without any meaningful checks and balances to protect Tennessee taxpayers,” said Tom Walker, spokesman for United Campus Workers. “There’s been no economic impact statement produced. There’s been no audit of the state’s claims about savings. There’s been no investigation or verification of this unprecedented outsourcing method.
“Worse, Comptroller Justin Wilson, in a letter to Sen. Janice Bowling, just said that there is no reliable information on the cost of services prior to JLL taking over, nor is there any solid number of how much the state has paid JLL, making it impossible to believe any claims about savings or efficiencies at all.
“In what would be the largest corporate takeover of public services and jobs in Tennessee history, the Haslam administration can and must do better before moving ahead.”
The governor has drawn criticism as well for his connections with JLL.
Previous news reports showed Haslam had investments with JLL and that his administration paid the company a $1 million consulting fee to study state buildings before it landed a $330 million, five-year contract to manage Tennessee’s buildings.
Donnals said the governor has no conflict of interest in the contract being awarded to JLL and pointed out it was an independent evaluation process led by the state’s Central Procurement Office.
“We found out (Tuesday) with the rest of the world who won this contract,” Donnals said. She pointed out Haslam’s investments have been in a blind trust since he became governor and that he held no investment in JLL when he entered office more than six years ago.
State Rep. John Ray Clemmons, who has been battling the governor’s outsourcing plans with Harris, said he is concerned about the livelihood of state employees, as well as the quality of work that will be done and the safety of students and faculty on campuses across the state.
The Nashville Democrat said Tennesseans should be “outraged how this process went down behind closed doors.” Details weren’t released until Tuesday after two years in the making.
“It should come as no surprise to anyone that JLL was awarded this contract by Gov. Haslam and his cronies,” Clemmons said. “As we have said all along, JLL appears to be the only company with the capacity to handle the massive scope of services that this governor wants to outsource, so the entire charade of this privately orchestrated process was possibly cooked from the start.
“At this time, I call on every member of the Haslam administration and those involved in this whole scheme to disclose any and all financial interest in JLL, whether covered by Haslam’s first executive order or not,” Clemmons said.
Sam Stockard is a Nashville-based reporter covering the Legislature for The Memphis Daily News. He can be reached at firstname.lastname@example.org.