Haslam claims outsourcing plan will save Tennessee $35.8 million a year

In this Feb. 11, 2016, photo, Tennessee Gov. Bill Haslam answers questions about his priorities for 2016 during an interview in Nashville.

NASHVILLE - Gov. Bill Haslam's administration claimed Tuesday its plan to outsource management and operation of all state-owned buildings and real estate will save $35.8 million a year if existing state employee jobs are protected and all state property is included.

Almost a third of that, or about $10.6 million, is projected for the University of Tennessee's statewide campuses if existing employees are protected, according to a long-awaited "business justification" for outsourcing virtually all state real estate and facilities management to a private contractor. The "justification" was unveiled Tuesday in a legislative committee.

The plan also projects savings of $17.6 million a year across the Tennessee Board of Regents' 46 campuses. And privatizing the rest of state government facilities not already under the state's three-year-old contract with Jones Lang LaSalle would save another $7.7 million - if jobs are protected, according to the plan.

The numbers essentially are the governor's team's sales presentation to the public and the Legislature to justify the massive, unprecedented project. But the plan's chief architect, Terry Cowles, told lawmakers and reporters afterward the numbers only are "projected potential. This is not definitive and it won't be definitive until we receive proposals [bids from private contractors], at which point we have actual numbers to work with."

Cowles, director of customer-focused government for the governor, also acknowledged the facilities-management industry standards used as benchmarks in the plan for state government are "almost impossible to work with because [the benchmark] does not include prisons and parks, just to name a few of our properties that are unique in nature." The Haslam plan envisions a single statewide contract that would outsource, by early 2017, the management and operation of all state property, including parks, prisons and college campuses.

The savings figures projected would be larger if current state employees' jobs and benefits were not protected. Without that guarantee, the overall savings would total $58.8 million, including UT system savings of $17.3 million, Board of Regents system savings of $28.8 million, and general government savings of $12.7 million.

But more than 100 campus maintenance workers from Knoxville, Memphis and elsewhere, plus several members of the Senate State and Local Government Committee, were not convinced.

Sen. Richard Briggs, R-Knoxville, told Cowles and state Finance Commissioner Larry Martin "privatization is not necessarily going to accomplish the goals of effectiveness, accountability and efficiency. The University of Tennessee is in my district and the operations and maintenance workers are my constituents, as are the students, the UT faculty and the UT administration. Privatization impacts many small businesses, as well as professional services companies in the Knoxville area that serve UT.

"To date, I've not received any complaints from anyone about the quality of operations or the maintenance of the services. On the contrary, I hear nothing but compliments. And in private conversations with senior UT officials and administrators they also have expressed concerns that special events such as football games, conferences and snow days will not be adequately covered or covered at a great expense."

Sen. Steve Dickerson, R-Nashville, told the outsourcing team the idea of a for-profit company saving money while maintaining existing jobs and benefits and negotiating larger cost savings than state government, which has a $33 billion annual state budget, "strains credulity."

He added, "I don't fully embrace this moving forward. I know I don't get a vote on it, but I'm not comfortable with this the way it's presented now."

Martin told the committee the responsibility of the administration and lawmakers is "to the taxpayers of Tennessee to get the best value for their taxpayer dollars."

Haslam's chief operating officer, Greg Adams, and Cowles said the plan calls for a contract of about five years, with tiered pricing based on which state entities and campuses decide to participate. They pledged that each agency and campus will get to decide, and that even among the administration, the decision to move forward won't be made until after potential contractors submit bids and the real costs of the project are known.

Legislative Democratic leaders pushed for an independent review of the proposal. Senate Minority Leader Lee Harris, D-Memphis, has a bill requiring legislative review and prior approval of all contracts of at least $5 million. He called the state's contract with a North Carolina vendor for TNReady student testing "a colossal failure" after its online testing was scrapped last month and paper tests are late getting to several school districts, including Hamilton County.

Tom Anderson, a buyer in the UT Knoxville facilities services office, traveled to Nashville with other campus workers to hear the governor's plan and was not impressed.

"No, it sounded like a really good sales job, frankly. They've been working on this since early last year, in secret, and [what's] particularly concerning is they won't let anybody see these numbers.

"Contracted employees don't do more with less. They do what they're contracted to do. Anything else you have to pay for. And they're claiming they can do a better job with no loss of service, no job cuts, no benefit cuts, no other cuts, everything is going to be better but you're going to cost less with no evidence to back that. That's just a sales job that I won't buy," he said.

Contact Richard Locker at locker@knoxnews.com or 615-255-4923.