contracts

With $700K spent, new Reelfoot Lake State Park building may be torn down rather than finished

State officials are tentatively planning to demolish an interpretative visitors center that has been under construction at Reelfoot Lake State Park rather than complete it, reports the Commercial Appeal. That comes 18 months after a ceremonial groundbreaking, expenditure of up to $700,000 in taxpayer dollars and an audit indicating possible bidding improprieties in awarding a construction contract.

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State officials give final approval to five-year outsourcing contract with JLL

News release from Department of General Services

The State of Tennessee has executed a five-year contract with Jones Lang LaSalle (JLL) to provide statewide facilities management services.  The contract is effective today (May 26, 2017).

JLL was selected following a two-year multi-step procurement process led by the state’s Central Procurement Office that included representatives from higher education, general government and the legislature.

As we have consistently said, the contract will protect the livelihoods of current state facilities management employees, and is another tool for state departments and institutions to use to keep their expenses low, reducing the need for cost and tuition increases.

To view the contract, (go HERE.)

 Contract Background and Highlights

 ·         The State of Tennessee began to look at opportunities in professional facilities management services after studying results from 10 million square feet of state-owned office buildings currently under a similar arrangement in which taxpayer savings of about $26 million were achieved over three years. An additional third-party inspection of the cost analysis upheld forecasted savings if the program were expanded to more state buildings.

·         Participation by state agencies and institutions is voluntary.

·         The contract includes strict provisions that JLL will retain all current state facilities employees (provided they pass a background check and drug screening).

·         JLL will provide compensation equalization for every employee that is transitioned to ensure that they are made whole at the time of transition.

·         Tennessee’s facilities management program implemented in 2013 is considered innovative nationally, receiving awards from the National Association of State Procurement Officials (NASPO) in 2014 and from the National Association of State Chief Administrators (NASCA) in 2015.

Today the state is also announcing Charles Burkett as the contract governance executive.  A Memphis native, Burkett is a 41-year veteran of the financial services/ banking industry, and most recently a member of the University of Memphis leadership team serving as advisor to the president.  In his role at the university, Burkett was responsible for a range of strategic initiatives including implementation of quality improvement measurements of student satisfaction and managing residence life and dining.

In his new contract governance role, he will be responsible for ensuring the overall oversight of the statewide contract to ensure best service across all stakeholders, and for serving as the main point of contact for interested entities that would like to request a quote for service.

Burkett is a former member of the state’s FM Steering Committee, and will continue to serve as a liaison between the statewide contract with JLL and committee members, which will transition in name to Board of Advisors. Representatives on this advisory committee are from higher education and general government leadership.

Note/UPDATE: The Nashville Post reports Burkett will be paid $95 per hour under a contract, which would be $197,600 for a full year of 40-hour week – more than $20,000 more than his salary at the University of Memphis. Further:

He (Burkett) also was a member of the Facilities Management Steering Committee, which oversaw the secretive two-year process that resulted in JLL’s contract. Roberson said the steering committee will transition to a “Board of Advisors” overseeing the contract.

Roberson said the membership of the new board of advisors could be shaken up, but as it currently stands it consists of the head of the Department of Customer Focused Government, Terry Cowles (salary: $150,000); Bob Oglesby, the commissioner of the Department of General Services (salary: $159,996); Mike Perry, the head of procurement in General Services (salary: $147,900); Larry Martin, the commissioner of the Department of Finance and Administration (salary: $190,260); Brock Hill, a deputy commissioner of the Department of Environment & Conservation (salary: $146,532); Russ Deaton, the deputy executive director of the Tennessee Higher Education Commission (salary: $155,004); Rick Nicholson, the budget analysis director for the Senate (salary: $110,220); and David Miller, the CFO of the UT system (salary: $310,000). TBR has not had a member on the committee since Warren Nichols left for a new job at the beginning of the year but is expected to appoint someone soon.

Nonprofit Mississippi River group dissolves after audit questions arise

A nonprofit group established protect and promote the Mississippi River in the stretch along Tennessee’s border has ceased operations after state auditors alleged improper bidding procedures in the design and construction of a $2 million visitors center, reports the Commercial Appeal.

The board of directors of the Mississippi River Corridor-Tennessee voted to dissolve because the Tennessee Department of Transportation terminated a contract with the group and quit paying invoices, said Diana Threadgill, president and executive director. “We just ran out of money,” she said.

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Outsourcing update: Discontented legislators, JLL satisfaction survey questioned, etc

Some state legislators are not satisfied with Department of General Services Commissioner Bob Oglesby’s response to their request for an economic impact statement on the impact of a new contract for outsourcing management of more state buildings — or with Jones Lang LaSalle’s performance under its current, more limited contract. So  reports the Nashville Post in reviewing the status of Gov. Bill Haslam’s privatization efforts.

An excerpt:

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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.

Outsourcing plan developed in secrecy with potential contractors

For almost a year and a half, a small group of highly paid state executives have been regularly meeting in secret, determining the future of more than 3,000 state employees whose jobs could be outsourced, according to the Nashville Post.

From late August through November of this year, the (10-member “steering committee) was joined by representatives of the company or companies — name and number unknown — that will bid on the contract to hire outside workers for physically laborious state jobs.

Officials issued a request for proposals on Dec. 1, with a timeline that will have the state accepting a bid in late March — and only companies that have been involved in the process so far are allowed to apply.

The unprecedented secrecy of the process has already led to questions about the results of an outside accounting review by KraftCPAs, a Nashville firm with strong ties to Gov. Bill Haslam’s administration. Now, documents obtained by the Post via an open records request, along with the RFP itself, show that the state’s claims to protect all current employees’ jobs and provide the same level of benefits are misleading at best — although critics of the plan use much harsher language.

“The Governor is already breaking his own promises about outsourcing, and the proof is right there in the RFP,” said Thomas Walker, a spokesperson for United Campus Workers.

(While the governor has said no employees will lose their jobs or have compensation reduced, the article notes that employees are not covered by the promise if they work less than 30 hours a week, have been employed less than six months or fail a background check not now required. Also, the job can be moved to a new location up to 50 miles away. And when vacancies occur, the contractor need not fill them and, if so, can hire new employees at lower pay.)

…Despite making many qualifying statements about how nothing is set in stone until a contract is signed, it’s apparent that the steering committee itself is considering the outsourcing move a virtually done deal.

…Keep in mind that “vested” or “collaborative value development” procurement is basically designed to result in a done deal. Under the process… the contractor is involved in creating the RFP to which it will respond in the hopes of getting a contract. It is a process that has been used by some large companies but is virtually untested in the public sector.

Respondents to the RFI were given the opportunity to reply to a RFQ, or request for qualifications, that was issued April 11. Only the companies deemed qualified were allowed to participate in the vested creation of the RFP, which occurred during meetings every Thursday and Friday from Aug. 25 to Nov. 21, per PowerPoint slides from April and August steering committee meetings. And only those companies will be allowed to respond to the RFP itself.

How many companies are there? Is there even more than one company involved? Only the people involved in the process know, and they’ve all signed non-disclosure agreements.