Privatization

Haslam renews defense of outsourcing as most legislators seek delay

A majority of both House and Senate members have now asked that Gov. Bill Haslam’s administration delay implementation of privatization plans for the state’s higher education institutions. But the governor has renewed his defense of the plan, indicating he’s ready to push ahead.

Continue reading

New outsourcing contract gives JLL a bonus if cost-cutting exceeds expectations

Jones Lang LaSalle’s new contract potentially covers work now performed by about 3,000 state employees who are supposed to keep their positions though the pact gives the company a financial incentive to cut costs as much as possible, reports the Nashville Post.

The contract doesn’t specify an actual number the state will be paying JLL to pay other subcontractors for custodial, landscaping and maintenance work at state universities and agencies across Tennessee, as that will depend on how many campuses opt in or out of the contract. And how much JLL will get paid will also depend on the company meeting benchmark goals and customer satisfaction metrics.

However, the contract also includes a clause that awards JLL 10 percent of any cost savings above and beyond its projected baseline savings in the first year. After that, the percentage decreases each year by one percent, down to 1 percent of savings awards in year 10 of the contract. (The five-year contract has the option of being expanded another five years before the state would have to rebid it.)

…”That’s to reduce operational costs. If you look, it specifically prohibits a reduction in force, period. They cannot reduce the force,” said Mike Perry, the state’s chief procurement officer, during a press conference Thursday.

Yet the terms of the contract include multiple loopholes as to who can be considered “transition employees” and continue on with the subcontractors JLL will hire. Employees must have worked for the state for over 6 months at 30 hours a week or more and be considered to “provide services selected to be performed by the Contractor at a minimum of” 51 percent of their job duties. They must pass whatever background checks JLL deems necessary, along with a drug test. Currently the state does not require either for the majority of its positions.

…Even if employees do pass all the required checks, there’s still no guarantee they’ll be offered the same job, at the same campus. The contract only requires a position be offered in a 50 mile radius. Rehired employees are supposed to be given equitable compensation, but in JLL’s own bid proposal, it admits that an employee with a family of four would have their health insurance premiums double and the out-of-pocket max increase by $2,150. Meanwhile, paid time off will decrease. (A single employee’s health insurance costs will go down, the proposal says.) An employee would ostensibly be paid more to make up for the higher health insurance costs and lack of vacation time, but Perry admitted he had no idea how this would work in practice as far as taxes go.

Note: The post has a copy of the contract posted HERE.

42 legislators ask delay in outsourcing; contract signing ahead of schedule

A week or so after 42 state legislators called for a delay in finalizing higher education outsourcing plans, Jones Lang LaSalle officials signed the company’s contract with the state ahead of schedule.

The Times-Free Press initially reported on the legislators’ letter to Gov. Bill Haslam’s outsourcing czar, Terry Cowles. It asks “that the outsourcing process wait until the General Assembly is able to study and understand the effects on our public services, economy, and state workers.”

The Nashville Post reported Tuesday in an overview of recent outsourcing developments that JLL officials actually affixed their signatures to the contract document on Friday, a week earlier than planned.

The contract is under review by the comptroller’s office before the state can officially sign off on it, but that review could be complete by the end of the day Friday, according to comptroller spokesperson John Dunn. The state’s bond counsel is also reviewing the contract to insure compliance. According to Dunn, that office has been asked to expedite its review but no firm time frame for its completion exists.

But criticism is pouring in from legislators and students, as letters and complaints fly to and fro, and University of Tennessee at Knoxville students held a large protest on Monday.

Continue reading

Bill to block state park privatization moving in House & Senate

Republican-controlled committees of both the House and Senate have approved a Democrat-sponsored bill that would block new privatization efforts at Tennessee state parks.

Key sentence in the bill (SB1110/HB1208), sponsored by House Minority Leader Craig Fitzhugh, D-Ripley, and Sen. Sara Kyle, D-Memphis:

“The management, operation, and preservation of state parks, including the management, operation, and preservation of any buildings, facilities, structures, or improvements upon state park property must not be the subject of any private contract or otherwise outsourced to any private company or individual.”

It doesn’t apply to contracts in place before July 1, 2017. But Fitzhugh says that existing contracts coming up for renewal after that date could be subject to the prohibition when they expire and come up for renewal.

In the Senate Energy, Agriculture and Natural Resources Committee, Kyle’s bill was approved quickly Monday without discussion  – Chairman Steve Southerland seconded the motion for passage — on a vote of 7-0-1. Sen. Delores Gresham, R-Somerville, abstained.

On Wednesday, the House Agriculture and Natural Resources Committee approved the bill on voice vote with no apparent opposition after a short discussion, including Fitzhugh declaring privatization of parks “is something the people do not want” and there is a danger of “overpricing” park visits under current plans so that average Tennesseans cannot afford them “when we try to make a profit out of state parks.”

At Fall Creek Falls State Park, current plans call for demolishing the present Inn, building a new one at a state cost of $22 million, then turning operations over to a private company with anticipation that the average cost of a room would be $151 per night, compared to $75 at the existing Inn.

Near unanimous Republican support for a Democrat-sponsored bill even remotely controversial is an oddity. But it remains to be seen whether the committee votes are a symbolic gesture that will be scuttled later in the process, a genuine defiance of the governor’s plans or something in between.

Note: See also Sam Stockard’s report following Senate committee approval, but prior to the House sub’s vote. The article notes that current Haslam administration plans call for getting a contract signed for the Fall Creek Falls private operations in May, which could mean the deal gets included in the grandfather clause for contracts in place by July 1.

JLL wins higher education privatization contract

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, according to the Times-Free Press.

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.

…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.

Opposition develops to demolishing Henry Horton State Park Inn

Marshall County residents are rallying to preserve the inn at Henry Horton State Park, which is scheduled to be demolished under the governor’s budget proposal for the coming year and two legislators representing the county are trying to help, reports the Marshall County Tribune.

As it stands, Governor Bill Haslam’s proposed budget for 2017-18 includes $10.05 million for capital projects at the park, but is missing the approximately $6.7 million that TDEC asked for to renovate the inn at the park.

The budget request includes, among other projects, funding to build a new restaurant and visitor center at the park, but, as it is currently written, would demolish the 60-room inn, without replacement. The request would leave the 12-room motel facility at the park as well as the five cabins that the park offers.

Continue reading

Fall Creek Falls Park privitization to proceed with revised oversight

The State Building Commission will now have firmer control over building-related aspects of Republican Gov. Bill Haslam’s plans for outsourcing Fall Creek Falls State Park’s operations under amended rules for bidders approved on Thursday, reports the Times-Free Press.

But Treasurer David Lillard, a commission member, made it clear during the commission’s executive subcommittee meeting that the panel’s oversight jurisdiction does not extend to the request for proposals’ other major area: The outsourcing of hospitality functions at the popular Upper Cumberland Plateau park in Van Buren and Bledsoe counties.

Statutorily, those are “not within the Building Commission’s purview,” Lillard said, noting the excluded list includes current workers’ continued employment, pay and benefits in operational areas ranging from the park inn, restaurant and convention center to the golf course and gift shop.

But the SBC will retain strict oversight within provisions of the request for proposals over the park’s chosen vendor, who will be called upon to spend $22 million in taxpayer money to tear down the existing inn and rebuild it.

Members unanimously approved the tighter oversight in efforts to resolve a revolt by professional Tennessee-based architects and engineers.

…Critics see the revised request for proposals as the template for renewed administration efforts. Haslam’s proposed budget calls for new capital expenditures at several other parks.

Rep. John Ray Clemmons, D-Nashville, an outsourcing critic, said the amended request for proposals provides “more legislative oversight” over the park’s demolition and construction.

Note: The TDEC press release is below.

Continue reading

AG opines that Fall Creek Falls privatization is legal

Attorney General Herbert Slatery has opined that Gov. Bill Haslam’s plans to privatize operations of Fall Creek Falls State Park are legal, reports the Times-Free Press.

In response to a question about whether department officials violated a statute that governs the Department of Conservation and Environment’s outsourcing of services, Slatery said that statute “is not applicable to the proposed transaction.”

Rather, Slatery said, another statute “provides specific and separate authority for the Tennessee Department of General Services to enter into an agreement for the private redevelopment, construction, and operation of the facilities at Fall Creek Falls State Park.”

Because General Services is involved, Slatery said, that authorizes the outsourcing proposal. (Note: Full opinion HERE.)

… Tennessee State Employees Association Executive Director Randy Stamps, whose group opposes park outsourcing over fears about employees’ jobs, sought to downplay Slatery’s legal opinion.

“I think what it points out is that they did not follow strictly existing laws,” said Stamps, an attorney himself. “The attorney general’s opinion had to point out a new statutory construction, to pick the law that they [the administration] wanted to work to make this legal.”

“Right now the RFP is postponed,” Stamps said, but he said he hopes for more changes from the State Building Commission. “We feel like with the facts that have stepped forward, there’s a real chance they’re going to step back. At least that’s what we hope.”

McNally: Administration revising Fall Creek Falls privatization plan

Lt. Gov. Randy McNally says Gov. Bill Haslam’s administration is revising its plans to privatize Fall Creek Falls State Park and will change provisions seen as bypassing the State Building Commission, reports the Times-Free Press.

Speaking with reporters Thursday, McNally, the Republican Senate speaker, shed additional light on the controversy that forced Department of Environment and Conservation officials to abruptly drop a request for proposals from companies interested in operating the 26,000-acre park in rural Van Buren and Bledsoe counties.

The plan includes giving whomever is eventually picked as the concessionaire some $22 million appropriated in this year’s budget to tear down and build a new park inn and convention center.

“Well, the administration has backed it up, and I think they’re going to go back through the Building Commission process, which is what we wanted,” McNally said. “They’ll have to have the plan approved there, and then the Building Commission will also have to approve the design.” 

McNally described the controversy as “somewhere between a bump in the road and a roadblock. It’s not a roadblock, but it’s not as insignificant as a bump in the road.”  Continue reading

Fall Creek Falls privatization postponed; Democrats declare victory

The Haslam administration has abruptly abandoned the Thursday deadline originally set for companies interested in taking over operation of Fall Creek Falls State Park to file bids with the Tennessee Department of Environment and Conservation, reports the Times-Free Press.

Eric Ward (TDEC spokesman)…  said today in response to a Times Free Press (inquiry) that “the RFP has been postponed to incorporate amended process language which will be made available soon.”

It was not known how long the proposal would be postponed or what the specific issues leading to it are.

There was no immediate elaboration but the administration’s process has been under fire from the Tennessee State Employees Association as well as several lawmakers who have raised questions not only on that issue but the effort to privatize hospitality services at the park, which straddles Van Buren and Bledsoe counties in a remote area of the Upper Cumberland Plateau.

 

Democrats opposing privatization opponents promptly sent a statement declaring victory. It’s  below.

Continue reading

ABOUT THIS BLOG

Former Knoxville News Sentinel capitol bureau chief Tom Humphrey writes about Tennessee politics, government, and legislative news.

Subscribe by Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.