NASHVILLE - Gov. Bill Haslam is defending his administration from a new state Comptroller audit criticizing what occurred on the already-controversial real estate management contract with Chicago-based Jones Lang LaSalle.
Speaking with reporters on Wednesday, the governor sought to brush aside findings in the audit, which covered a number of issues already raised in news accounts during a months-long controversy.
The move to outsource state real estate management functions is saving taxpayers' money, Haslam argued and is now considered a national model.
"The easiest thing in the world to do in government is to leave it all the same because if you just leave it the same, nobody ever says a word because, well, that's just how it's always worked," the governor said.
Among other things, auditors took aim at what they called the creation of an "organizational conflict of interest" in the contract. That means Jones Lang LaSalle stands to profit from its very own recommendations to shutter and sell off state-owned buildings, then move operations to privately leased space because the company gets up to a 4 percent commission in cutting real estate deals.
In Chattanooga, for example, the firm recommended closing the State Office Building and James R. Mapp Building and handled leasing for private space.
While General Services officials led by then-Commissioner Steve Cates did not violate state policy and procedures, auditors noted, they deliberately put out a very broad, vaguely worded initial contract that was amended repeatedly and expanded on a noncompetitive basis from a $1 million award to Jones Lang LaSalle to a $7.65 million contract.
"In our opinion, its work on the original contract gave JLL an unfair advantage to be paid for both recommending the Project T3 [office efficiency] plan and then ultimately supervising/administering the plan," the audit says.
"Also, because JLL can benefit financially from the advice it renders to the state, we believe that it cannot offer unbiased, impartial advice in the state's best interest," the audit notes.
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