Tennessee officials back closer look at no-bid contract

Tennessee officials back closer look at no-bid contract

June 14th, 2013 by Andy Sher in Local Regional News

Tennessee Gov. Bill Haslam

Tennessee Gov. Bill Haslam

Photo by Associated Press /Times Free Press.

NASHVILLE - Lt. Gov. Ron Ramsey and House Speaker Beth Harwell said Thursday that lawmakers should look at reviewing no-bid elements added to a consulting contract awarded to Chicago-based real estate services firm Jones Lang LaSalle.

Both lawmakers emphasized they don't think there was any intentional wrong-doing in the state's contract with the firm in which Gov. Bill Haslam reported having a $10,000-plus investment in 2010.

"We need to look at this sole sourcing group," Harwell told reporters following a State Building Commission meeting. "We're more than happy to look at that and re-evaluate it.

But, Harwell said, "every indication I have received is that the state will end up saving money, which is good for the taxpayers. And it will allow us to use the money for much-needed programs rather than buildings that are no longer used, not needed, not necessary."

Ramsey said he approves of state General Services Commissioner Steve Cates' push to outsource state functions and save taxpayer dollars.

But he noted "obviously if you recommend something and you wind up being the one to get the contract that's always going to be suspect. But what I look at, is results. And I look at do I think anything that was done illegally and or unethically, and I don't think there was anything illegal and I don't think there was anything unethical and I'm extremely satisfied in the way that department is being run right now."

Both lawmakers' comments come in the midst of news accounts about one of two contracts awarded to Jones Lang LaSalle and subsequent expansions, approved by the State Building Commission.

The firm's initial $1 million contract in 2012, which was competitively bid, mushroomed into $7.65 million through subsequent amendments that sometimes added operational responsibilities.

In one amendment, officials authorized the publicly traded firm to charge commission fees of 4 percent on leasing contracts it strikes on behalf of the state with commercial real estate owners.

State Comptroller Justin Wilson, a State Building Commission member, said Thursday he has been out of the country for the past eight days and was unaware of details about the controversy.

"Let me say first of all, and I think this is important to discuss, is that the state property, the state office space, was deteriorating and really not properly inventoried or managed, and the Haslam administration is dealing with a very serious problem that needs to be addressed."

He said that in light of "some questions raised about the JLL contract, I think in the next few weeks we'll be looking at the procedures to see whether or not they need to be modified or changed in any way. I don't want to say more than that" until he does.

In April, the state inked a second, competitively bid contract with Jones Lang LaSalle in which the firm will operate and maintain most state office buildings. The contract is worth about $38 million to the company over five years, General Services officials said, and will save the state $50 million plus a one-time "cost avoidance" of $25 million.

On top of that is another projected $3 million in annual cost savings because the state will not have to purchase technology systems, manage training and operate its own call center.

Haslam officials said that because the governor, a multimillionaire, put most of his investments into a blind trust, they cannot say whether he still has any investment in the firm. But they emphasize that regardless, he would not be swayed by that.

As a result of the outsourcing, General Services is laying off 126 employees. They are among 200 employees who are losing their jobs by July 1. State employees this week filed suit seeking to block the layoffs, saying the Haslam administration has not provided employees with counseling and opportunities to transfer elsewhere within state government as required.

A Nashville judge has blocked the layoffs and scheduled a hearing Monday to hear the issue.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.