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VOL. 132 | NO. 87 | Tuesday, May 2, 2017

Lawmakers Still Seek Answers as Outsourcing Contract Gets Underway

By Sam Stockard

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A majority of Tennessee’s legislators, including several Shelby County lawmakers, are asking the state to hold up on a facilities management outsourcing contract with Jones Lang LaSalle.

The University of Tennessee Health Science Center could save roughly $2 million a year by outsourcing facilities management to Jones Lang LaSalle, according to JLL figures.

(Daily News File)

Seventy-five of the General Assembly’s 132 members, 17 in the Senate and 58 in the House, have signed a letter to Terry Cowles, director of the Office of Customer Focused Government, asking the office to slow down on outsourcing so it can “study and understand the effect” on public services, the economy and state employees.

The jump in signatures, up from 41 initially, comes after the company signed a contract with the state a week earlier than expected and while 17 legislators waited for economic impact statements about the outsourcing proposal. The letter also went to Gov. Bill Haslam.

“It’s not really been proven that outsourcing gives a long-term savings to the state taxpayers, and it deeply affects a large number of people who have invested most of their lives in service to the state,” said state Rep. Dwayne Thompson, who signed the letter.

The Memphis Democrat pointed out one of the main advantages of working for the state is “relative job security,” and he said he’s concerned the outsourcing plan will upset work morale and hurt effectiveness of state employees.

The Chicago-based company inked the deal April 21 even though state lawmakers asked for reports in early April on how the privatization plan could affect universities and other state departments in their districts.

“The fact is, the impact of this contract on local economies and business is completely unknown, questions about the efficacy and governance of such contracts remain unanswered – but the state is rushing ahead anyway,” says a statement by the United Campus Workers.

The contract is being reviewed by the Comptroller’s Office, which is finalizing notes on the document, according to spokesman John Dunn.

The Department of General Services denies claims by United Campus Workers that it isn’t responding to lawmakers’ requests for economic impact statements.

“Our department has begun to work on your request and will provide you a response to the extent practicable within a reasonable time,” General Services Commissioner Bob Oglesby wrote in an April 10 letter to Sen. Janice Bowling, a Tullahoma Republican who has questioned whether outsourcing saves the state money.

Legislative concerns

State Rep. John Ray Clemmons, one of the 17 legislators who requested the impact statement, predicts it won’t be finished until after the comptroller’s office reviews the contract.

Clemmons, who has toured state universities and parks with Sen. Lee Harris, a Memphis Democrat, says his concerns are twofold: maintaining the quality of services and the jobs and benefits of state employees.

The contract calls for state employees to keep their jobs and benefits if a university or state department opts to set up a facilities services contract with JLL. But these employees also will be required to go through a background check, undergo drug testing and could be transferred to another location if they aren’t considered a “regular” facilities management employee. Any differences in health insurance benefits are supposed to be offset by higher pay.

The Tennessee State Employees Association contends the restrictions placed on employees who shift to JLL or two subcontractors could cost them their jobs or benefits.

“Our state has fast-forwarded this process behind closed doors with very little transparency, I would contend with very little honesty, and they’re going to jeopardize not only the educational experiences of Tennessee children and others attending our state colleges and universities, but also the quality of life of the state employees who have proved themselves worthy of that title and who have made our state proud for years,” Clemmons says.

Several Democratic lawmakers have sponsored legislation this session to stop outsourcing, including privatization of state parks, such as Fall Creek Falls, which is to undergo a $20 million inn reconstruction project, which would then be turned over to a private vendor, based on the state’s plan.

Rep. Rick Staples, a Knoxville Democrat, was set to bring a joint resolution late Monday, May 1, to stop outsourcing, with several other efforts failing this year.

Republican Senate leaders aren’t taking that same hard line against outsourcing, saying they support the governor’s efforts to save money, but also will back university presidents who choose not to contract with JLL.

“The leadership of the universities should not feel like they’re being pressured adversely to make a decision one way or the other,” Lt. Gov. Randy McNally says.

Though the Legislature has had little oversight on the process, other than updates by the Department of General Services on cost savings, McNally points out the Fiscal Review Committee can review the contract and call people in to ask questions when it is renewed.

The contract

Officials with the state’s Procurement Office say JLL made the best of three bids, scoring the highest on technical areas with the lowest cost. But the deal with JLL has no total value. Instead, JLL will be paid through a management fee tied to performance measures.

One hundred percent of that fee is at risk if the company fails to meet its own savings projections.

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 competing firms.

JLL’s contract cost breakdown shows a baseline for operations at University of Memphis at $21.7 million, in contrast to three scenarios in which its costs would come in at $18.6 million to $19.1 million. In those three ranges, it shows contractor and management fees totaling from $902,375 to $1.2 million for labor administration, contractor management, janitorial management, grounds management and governance labor administrations fees.

The breakdown for UTHSC shows a baseline cost from the state of $17.59 million, with JLL making proposals ranging from $15.3 million to $15.8 million. Fees would range from $691,480 to $973,845.

University of Memphis and UTHSC officials have not committed to the facilities management proposal.

Sam Stockard is a Nashville-based reporter covering the Legislature for the Memphis Daily News. He can be reached at sstockard44@gmail.com.

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