TN LWV Calls for Outsourcing Pause, Criticizes Haslam Privatization Efforts


Voters group calls for outsourcing pause, criticizes Gov. Bill Haslam's privatization efforts

Chattanooga Times-Free Press by Andy Sher - Concerned by what it calls a "lack of transparency" in Gov. Bill Haslam's ongoing privatization efforts, the Tennessee League of Women Voters is asking further moves be put on hold until a "transparent and robust decision-making process" can be established.

"When governmental entities consider the transfer of governmental services, assets and/or functions to the private sector, the community impact and goals of such transfers must be identified and considered," League President Marian Ott wrote in a letter to Haslam. "Further, the LWV believes that accountability and preservation of the common good must be ensured."

The state also needs to first establish "compelling evidence of need," the nonpartisan good-government group said.

But Haslam's administration is pushing back as it continues to weigh outsourcing management and maintenance at 90 percent of state structures not under private management.

"The state's facilities management efforts are national award-winning, have resulted in more than $12.9 million in cost avoidance over the last two years and have improved service and maintenance in the 10 percent of its real estate portfolio where it's been implemented," Haslam spokeswoman Jennifer Donnals said in a statement to the Times Free Press.

Donnals said "no decisions have been made" whether to actually outsource any more state property management.

Administration officials say other states see Tennessee's initial round of outsourcing in 2012 as a model. That's when the state handed over management, maintenance and leasing of major state office buildings to Chicago-based real estate giant Jones Lang LaSalle.

Haslam was quietly exploring further privatization across vast swaths of state government — from public colleges, universities and prisons to National Guard armories and hospitality services at 11 state parks — until the behind-the-scenes efforts erupted publicly in news accounts last summer.

Alarmed higher education workers, fearful of losing their jobs, have attended forums, including one at the University of Tennessee at Chattanooga. Park employees and other state workers have concerns as well.

Haslam has said that in a no-tax increase environment among fellow Republicans in the General Assembly, he has little choice but to explore state spending and find cost savings.

The Tennessee League of Women Voters said it is not ideologically opposed to privatization of government services and operations, but it wants the process to ascertain actual needs and build in protections. The national LWV adopted that position in 2012 with Tennessee input.

Recently, the Knoxville LWV, the Tennessee Coalition on Open Government and the Knoxville News Sentinel sponsored forums focusing on transparency issues.

Private business unpersuaded

Haslam considered outsourcing hospitality services such as the golf course and marina at Harrison Bay State Park in Hamilton County as well as the 26,000-acre Fall Creek Falls State Park and its restaurant and inn. Fall Creek Falls, which straddles Bledsoe and Van Buren counties atop the Cumberland Plateau, has long been considered the jewel of Tennessee's park system.

He argued that private businesses could operate restaurants, golf courses, inns and marinas better and less expensively.

When prospective vendors hesitated, state Environment and Conservation Commissioner Bob Martineau earlier this month requested $55 million to upgrade park facilities. But still no companies bid for the contracts. Some were critical of state red tape and uncertainties about approvals and funding.

Brock Hill, deputy commissioner of Environment and Conservation told reporters that vendors who toured the parks were "shocked, to some degree, that they were in as bad shape as they were."

"They hadn't been reinvested in to the degree they should have been over the last few decades," he said.

Administration officials have said they are looking at how to regroup.

Questions over process

Recently state Comptroller Justin Wilson raised questions about the process, The Commercial Appeal in Memphis reported.

In a November letter to the Haslam administration, Wilson called the project "a fundamental change in how the state manages its real properties."

The administration's planned procurement process — called "vested outsourcing," where potential contractors help shape the contract — may be used in the private sector but it's "largely untested" in state government, Wilson said.

In his letter, Wilson wanted to know, "Is the process fair? Is the process transparent? Was there a level playing field?"

"The answers to these questions should be clear, but I still have some questions that can only be answered by having seen the process work," Wilson wrote.

He suggested a small-scale test that could be monitored for success. But a Wilson spokesman told The Commercial Appeal the Haslam administration said "they didn't have any other procurements for which this method would make sense."

Wilson also wrote Oct. 1 to Terry Cowles, the governor's czar over "customer focused government," with questions about the proposed outsourcing. A confidential timetable obtained by Nashville's WTVF-TV indicated the administration envisioned having contracts in place by next summer. But Cowles has said that was premature and nothing has been decided.

Wilson suggested the five-member State Building Commission be brought in. The panel approves state building projects and facilities-management contracts. It adopted Haslam's initial round of outsourcing in 2011 and 2012, which got JLL involved and led to its contracts to manage those buildings and negotiate leases.

The JLL study led to the closure of six state office buildings, including the Chattanooga State Office Building and James R. Mapp Building, which JLL said needed millions of dollars in repairs.

JLL said new buildings would be the least costly but state officials chose to lease private office space for its dislocated agencies. Under a separate contract, JLL negotiated those leases and received 4 percent commissions.

The state recently announced it was not extending JLL's statewide contract and was reopening the process and breaking it down by region. But JLL will be able to bid, too.

State Senate Minority Leader Lee Harris, D-Memphis, and Rep. John Ray Clemmons, D-Nashville, meanwhile, have called on Wilson to call for an audit of JLL's expiring leasing contract.

The Times Free Press reported in October that JLL's 4 percent commission amounted to $3.35 million on 19 office leases negotiated across the state.

Earlier this month, the Times Free Press reported JLL received nearly $133,000 in additional lease commissions as the last state agencies were finally moved from the former Chattanooga State Office Building to privately leased space.