Chicago company wins bid to manage Tennessee higher education facilities

Critics slam Gov. Haslam's 'radical outsourcing experiment'

Tennessee Governor Bill Haslam talks about the commitment the state has to Volkswagen Wednesday outside the Tennessee Department of Transportation Management Center in Chattanooga. Tennessee General Assembly House Speaker Gerald McCormick listens, back right. The governor had just come from visiting with workers inside the plant Wednesday afternoon, Oct. 7, 2015.

I don't support outsourcing because the jobs really help to kind of underpin the communities.

NASHVILLE - Chicago-based real estate giant Jones Lang LaSalle is the winning bidder of a potentially massive government outsourcing contract that could put facilities of all Tennessee higher education buildings under private management.

Republican Gov. Bill Haslam's administration made the decision public to bidders on Tuesday.

Haslam press secretary Jennifer Donnals said in a statement the facilities management plan "is part of a two-year process. Our job is to provide the very best service for the very lowest cost to taxpayers."

Donnals said "individual campuses will make their own determination whether to participate in this proposal or not. If they do participate, the proposed contract will protect the livelihoods of current facilities management employees. This is another tool for campuses to keep their costs low while providing high-quality service."

Jones Lang LaSalle already manages a large number of general state government buildings under a process that generated enormous amounts of criticism from some lawmakers, as well as critical findings in an audit last year by state Comptroller Justin Wilson.

And some lawmakers are already taking aim.

"I don't support outsourcing because the jobs really help to kind of underpin the communities," said Rep. JoAnne Favors, D-Chattanooga. "And those state jobs do have benefits, health insurance, and it puts money back into the community. When you outsource, especially with out-of-town companies, the bulk of those dollars aren't coming back into the communities."

Rep. Bo Mitchell, D-Nashville, said he thinks outsourcing is "probably great for the stockholders and shareholders of Jones Lang LaSalle, but for state employees in Tennessee and higher education, it's not great at all. It's going to harm Tennesseans. It's probably going to hurt services to students in the long run."

JLL won the bid over Aramark and Compass Group, which also submitted proposals. All three companies were among an undisclosed number involved in a secretive process in which potential vendors were allowed to have input on how the contract would be shaped.

But the contract is not yet final. JLL and the Haslam administration will have to negotiate final price details before the five-year contract is signed.

According to the proposal, JLL plans to subcontract with Birmingham-based Diversified Maintenance for janitorial and housekeeping services, and with Pennsylvania-based BrightView Landscapes for groundskeeping and landscaping.

"It's not final until it's signed," said Michelle Martin, spokeswoman for the governor's Office of Customer Focused Government, which has led Haslam's outsourcing efforts in areas across state government.

Martin emphasized that leaders at individual campuses in the University of Tennessee and Tennessee Board of Regents systems, which include UT-Chattanooga, Chattanooga State and Cleveland State, will decide whether to take advantage of the statewide contract.

In their technical responses, the companies were asked to submit individual cost savings for five facilities.

JLL estimated it could cut Tennessee Tech's costs by 8.86 percent; UT-Knoxville by 17.61 percent; University of Memphis by 12.15 percent and the UT Health Sciences Center by 10 percent. The Tennessee School for the Blind, however, was estimated to increase in cost by 31.17 percent.

Martin said the School for the Blind will not be a candidate for outsourcing.

If both the entire UT and Tennessee Board of Regents systems opt for JonesLang LaSalle's building management services, the savings in a business justication plan would come to 15.9 percent, according to figures provided by Martin.

Martin also defended pay and benefits for any state workers who will begin new careers working for JLL. The overall compensation should be comparable to what they now have, she said.

In a statement, Thomas Walker with United Campus Workers denounced what he called the "largest corporate takeover of public services and jobs in Tennessee history."

He charged the Haslam administration with continuing "to ram its radical outsourcing experiment through without any meaningful checks and balances to protect Tennessee taxpayers."

No economic impact statement has been produced, Walker said, adding that "there's been no audit of the state's claims about savings. There's been no investigation or verification of this unprecedented outsourcing method."

Haslam has shown a penchant for outsourcing, saying he favors it where it makes sense, can save the state money and serve Tennesseans effectively. The governor, a billionaire who has refused to release his tax returns since his first 2010 campaign and since, did make available in 2010 a list of his investments in companies.

Among the companies he held stock in was JLL, although no precise dollar amount was mentioned.

But the governor, who put nearly all of his investments, except for his stake in the family owned Pilot Flying J Travel Centers chain, in a blind trust when he took office in 2011, says he has no idea whether he still owns any JLL stock.

Sen. Janice Bowling, R-Tullahoma, who is battling Haslam's attempt to outsource operations at Fall Creek Falls State Park, recently wrote Comptroller Wilson a letter questioning the higher education venture.

Noting the venture is based on the administration's "supposed success" of 2013 outsourcing of major government buildings to Jones Lang LaSalle, Bowling said "exact numbers and evaluations on the success of JLL's contract for facilities have been hard to come by."

She also noted to Wilson that his own auditors "revealed significant operational deficiences" in the state's real estate asset management of JLL and found the state "was negligent in mandating that JLL perform adequate inspections and provide regular reports."

Among her questions to Wilson were what total payments the state has made to JLL for facilities management of existing buildings and how they compare to similar services performed by state workers before the JLL contract.

Wilson replied last week in a letter, stating "we do not have reliable information on the cost of similar services required prior to the facilities management outsourcing."

Moreover, Wilson wrote, "the agency has not even been able to produce a number." It would require a full-fledged audit by his staff to figure payments to JLL, Wilson noted.

General Services spokesman David Roberson said "certainly our office has good records about payments to JLL, and we can share those with you at any time."

UT President Joe DiPietro sent a system-wide email to faculty and staff, telling them to "please be aware that nothing about the University of Tennessee's long-stated position has changed: Each campus retains the option to evaluate the contract-based services proposal and to make the campus' own determination whether to pursue use of such services."

DiPietro also said, "Remember that no one will be forced to implement an approach that is not in the overall best interests of our University, its personnel or its students."

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