Jones Lang LaSalle outsourcing bid is higher than UTC's current cost

Jones Lang LaSalle outsourcing bid is higher than UTC's current cost

October 18th, 2017 by Andy Sher in Politics State

Students walk across the campus of the University of Tennessee at Chattanooga.

Photo by Doug Strickland /Times Free Press.

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NASHVILLE — The University of Tennessee at Chattanooga would pay a quarter million dollars more than it does now on combined institutional maintenance and student housing during the first year of a proposed outsourcing contract with real estate giant Jones Lang LaSalle.

The Chicago-based company acknowledged in documents the $263,217 additional cost as the for-profit company made its pitch to UTC and other UT System campuses.

Jones Lang LaSalle seeks to get university facilities management contracts across Tennessee's two systems of higher education after being awarded a statewide contract from Gov. Bill Haslam's administration.

The governor has aggressively pushed outsourcing amid an uproar from workers and legislators, among them a number of Haslam's fellow Republicans.

Last spring, a bipartisan group of 70 lawmakers — half of the entire 132-member General Assembly — asked the Haslam administration in a letter to stop planned outsourcing of building management services at state universities, colleges and several agencies in order to give them more time to study it.

The administration ignored them.

UTC Chancellor Steve Angle has yet to say whether he will enter into a contract. Meanwhile, the Chattanooga City Council went on record Tuesday opposing any outsourcing at UTC.

University of Tennessee at Chattanooga Chancellor Steve Angle delivered his annual state of the university address on the parking garage of the new West Campus Housing on September 15, 2017.

University of Tennessee at Chattanooga Chancellor Steve Angle...

Photo by Robin Rudd /Times Free Press.

Jared Story, an administrative assistant with University of Tennessee at Chattanooga Housing and Residence Life, as well as a member of United Campus Workers, praised the council's 9-0 vote.

"I think it makes a strong statement that city councils, faculty senates and student government associations across the state, as well as grassroots people and workers, have publicly spoken out against the outsourcing," Story said, adding he hopes UTC officials notice that.

Like other Tennessee public higher education campuses, UTC was allowed to pick and choose what areas of service local officials thought made sense to examine for outsourcing to Jones Lang LaSalle.

In its presentation to UTC, the company said that "based on our site tours of the UTC campus, data provided to JLL, and available scope limitations, we have not identified cost reduction opportunities within the main campus," the company said in its "business case" document.

Company officials noted, "We have identified modest annual savings within Housing of $42,000."

The overall $263,217 lower costs on services performed by UTC now represents the combined services figure.

UTC said last week that it was continuing to look over Jones Lang LaSalle's offer.

In dealing with Jones Lang LaSalle, the university asked the company for figures to handle institutional custodial and groundskeeping services on a campus-wide basis. UTC also sought the company's offer on building services for student housing services.

In many instances, the for-profit company's fees, governance costs and items for management and a service desk drove up its costs beyond what UTC spends, judging by Jones Lang LaSalle's cost breakdown.

The company said in making its case to UTC officials that it expected to find further cost savings after the first year. That would be a result of learning more about operations.

The company also pointed out that UTC did not offer it the ability to run some services including heating and air conditioning and the physical plant.

"The removal of several core facility management functions reduces synergies and dilutes our ability to deliver overall savings, which impacts our projected savings in the proposal to UTC," Tom Foster, a Jones Lang LaSalle executive vice president and account director for the state of Tennessee account, said in a statement to the Times Free Press.

Foster added that "however, there remain opportunities for UTC, in areas like its housing management services, which when separated out results in around $42,000 in savings by outsourcing."

UTC officials on Tuesday referred questions about the company's argument to Gina Stafford, the UT system assistant vice president and communications manager, who did not respond to an email by early Tuesday evening.

According to figures presented to UTC by Jones Lang LaSalle, the company's expenses, including fees, came to $6,959,799 for the combined services the university wanted estimates on. UTC's expenses were $6,696,581 or $263,217 lower.

Under the Jones Lang LaSalle contract signed by Haslam and administration officials, current state workers would go off the state payroll and begin working for JLL. In Haslam and JLL's initial outsourcing — the company handles about 10 percent of the state's buildings — a number of employees lost their jobs.

University of Tennessee President Joe DiPietro speaks at a Senate subcommittee hearing in Nashville in May 2013 about fees being used to pay for speakers at a student-initiated Sex Week program.

University of Tennessee President Joe DiPietro speaks at...

Photo by Associated Press /Times Free Press.

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But the state contract requires Jones Lang LaSalle to hire them. Their jobs would be protected, provided workers pass background checks and drug tests, with pay and benefits at the same overall amount. But workers nonethless remain alarmed and note other provisions that allow them to be moved to other JLL-managed facilities.

There are up to 1,100 UT System employees that could be affected under the contract.

In an interview last week, UT System President Joe DiPietro said all five UT campus proposals were in and "each of those chancellors are going to have to come into our board meeting — obviously with my concurrence — and say, 'Here's the proposal. Here's what we're recommending and here's our justification for our position."

He said it would likely take "a few weeks in my mind to get through these documents and evaluate them."

The UT Board of Trustees meets Nov. 2 and 3.

DiPietro said, "the board has said to us clearly that what they would like to have happen is that the chancellors come in and it's their [chancellors'] decision. It's an informational item for our board. It's not a motion item" that requires formal action.

State Rep. Mike Carter, R-Ooltewah, said he once supported the idea of government outsourcing. But he said he discovered what he called a "prime example" that "theory often doesn't meet practice" with Jones Lang LaSalle's contract at the Legislative Plaza complex.

He said his initial concern at the time was JLL was low-balling its charges, in effect using Legislative Plaza as a "cost leader," only to hike charges after five years.

"I never got to that [five-year point] because I could not get soap and paper towels in the men's washroom," Carter said. "Think about it. If they don't provide soap and towels to the very people who vote on their contract, what will they do to the people who have no say?"

As the General Assembly moves to a new building, legislative leaders have said they've opened up the facilities management contract to various companies for bids.

Jones Lang LaSalle has said it generally has high approval marks from survey responses.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1.

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