Outsourcing Savings Estimates Strain Credulity


The Daily News, May 19, 2016

By: Sam Stockard

Terry Cowles flashes a photo of ceiling lamp fixtures on the screen and tells state legislators a vendor’s state Capitol team used its electrical training to remove, repair and reinstall fixtures, saving taxpayers $15,500.

Instead of taking three to six weeks and costing $16,000, as quoted by a local company, workers with Jones Lang LaSalle, the state’s facilities management contractor, finished the job in only three days, says Cowles, director of Tennessee’s Customer Focused Government Office.

In addition, the state’s vendor “leveraged a multi-client bid process” and saved an estimated $125,000 on elevator maintenance in awarding the work to a Tennessee supplier, Cowles tells members of the Legislature’s Joint Fiscal Review Committee.

Even though Tennessee has a $35 billion budget, it uses only a small part of that to purchase items, thus its buying power can’t match that of a major company to save money on bulk purchases, Cowles says.

“These are just two examples of a large number of savings,” Cowles says, recently walking lawmakers through a business justification plan for setting up a statewide facilities management contract.

The plan, if all departments participate, is projected to save $35.8 million by the second year of a contract for building operations and services – with the requirement state workers keep their jobs, with comparable pay and benefits as long as they perform.

The contract would be available for all state properties, enabling colleges and universities, for example, to compare their costs to the contract in deciding whether to opt in, according to Cowles.

“That is their decision to make,” he says.

The Department of General Services started moving on the process in 2015, much to the chagrin of state employees, primarily United Campus Workers, who contend their jobs and pay will suffer. They rallied during the recent legislative session and then petitioned the governor again in late April.

Several state lawmakers also raised questions about the office’s plan when it went before the Senate State and Local Government Committee in March. Some called it “corporate rhetoric,” while others said it “strains credulity.”

Legislators continued to take a close look at it during the recent Joint Fiscal Review meeting, though they don’t have much authority other than through the state’s budget approval process.

Consequently, the Customer Focused Government Office is forging ahead.

In early April, the state made a request for qualifications from potential facilities management service providers to determine whether they can do the job.

It came soon after a March effort to find an independent third party to validate the office’s cost analysis.

The state appears to be head over heels in love with Chicago-based JLL, saying it has saved the state $10 million since it took over facilities management a few years ago.

Cowles points out in his presentation JLL is ranked the city’s best employer by the Nashville Business Journal.

United Campus Workers is questioning why the office started looking for qualified vendors before the independent review is complete. It also is pointing out the state is continuing to change its tone throughout this situation, now softening its stance to say colleges could choose just to go with a landscaping portion of the contract or janitorial services, for example.

Customer Focused Government spokeswoman Michelle Martin responds by saying, “Conducting these activities simultaneously in no way prevents the state from stopping the process should the results of the validation not provide the justification for moving forward.”

She points out state agencies and campuses can choose whether to participate, and final cost comparisons are done in early 2017.

More questions

Despite assurances the state would oversee a vendor’s performance and verify costs, state Rep. Johnny Shaw contends the report is more “impressive” than some of Cowles’ comments during the Joint Fiscal Review meeting.

“What I’ve seen is people who get contracts like this take advantage of them,” says Shaw, a Bolivar Democrat. “I do have some concerns about what I call the oversight.”

And even though Cowles points out the contract, which could be inked in 2017, would have to be managed like any other, Shaw notes the state hasn’t done a good job of managing other contracts.

The state’s contract with Measurement Inc. is a glaring example of contracting failure, after its TNReady test for children failed this year and put the entire state standardized testing program in limbo.

Similarly to Shaw, state Rep. Brenda Gilmore questions a portion of the report showing savings by Texas A&M in outsourcing building operations. Gilmore, a Nashville Democrat, says she received a report showing 1,000 jobs were lost at Texas A&M over a four-year period.

Cowles says the report is incorrect and says, in fact, Texas A&M employment increased to 2,100 from 1,604 with a retention rate of 60 percent, which seems to be a strange way to cut costs.

But even though Cowles says a contract would have strict language requiring a vendor to keep state employees on the job, state Rep. Pat Marsh, a Shelbyville Republican, asks why the state would want the vendor to keep someone who’s “lazy” or doesn’t perform.

In response, Cowles says, “They will have to perform.” In a proposal seemingly too good to be true, that might be catch.

State workers will be protected only if they meet the vendor’s standards, and those requirements aren’t defined.

Yet if the goal is for government to operate more like private business, does that mean Tennessee turns government over to private business or really starts to work more like a business?

It appears the former is more likely to hold true under Gov. Bill Haslam’s administration.

For instance, if JLL employees can be trained to fix light fixtures in the state Capitol, why can’t state workers go through training to handle the same tasks?

After all, Tennessee operates colleges of applied technology across the state where its employees could undergo training to improve their skills and eliminate the need for many subcontractors.

It seems the state doesn’t think much of its own people, apparently believing if only we turn our folks over to a private contractor, they’ll magically work a lot harder and smarter.

Maybe the problem lies with the employer and not the employees. If that’s the case, Tennessee needs to become a better employer, instead of lumping its employees into a pot of lazy, stupid bums.

Not long ago, an employee with the Tennessee Department of Transportation was killed in a terrible crash while working along I-40 west of Nashville. In their mourning, state leaders lauded the victim and other Tennessee employees for putting their lives on the line.

But if they could find a way to outsource those TDOT jobs, they’d do it in a New York minute.

Outspoken critic

Legislation by Sen. Lee Harris, a Memphis Democrat, and Rep. John Ray Clemmons, a Nashville Democrat, would have required Fiscal Review oversight of all contracts worth more than $5 million, enabling the committee, at its discretion, to communicate concerns with vendors’ contracts to the General Assembly.

They amended the bill from its original $1 million minimum to eliminate a troublesome fiscal note and pushed it through the State Government Committee. But it was zapped in a Finance subcommittee in the final days of the legislative session.

“The purpose was to shine some light on some of these large contracts that the governor is entering into. He’s obviously got this outsourcing and privatization scheme he’s cooking up behind closed doors,” Clemmons says.

Clemmons says the bill died because it would put a hurdle in front of the governor’s outsourcing plans. And make no mistake, even though Haslam says he’s not predisposed to privatizing government, he has repeatedly said he is trying to find ways to cut costs and keep tuition rates down with higher education.

Still, Clemmons says lawmakers need to take a stronger stand on private contracts, including delving into a conflict of interest the state comptroller targeted three years ago in a contract with JLL.

“These are the types of things we have to avoid and that we as legislators, who are charged with the duty of being good stewards of taxpayer money, we’re charged with knowing how tax dollars are spent and what these schemes are that are being cooked up behind closed doors in the state Capitol,” Clemmons says.

In spite of bipartisan questions about outsourcing state jobs, look for lawmakers to ultimately agree with these projected savings.