I was dismayed by the story “Outsourcing Tennessee” in the Flyer‘s June 1st issue, for two reasons. The first reason was the number of incorrect statements in the article, which I detailed in an email to the author and to the editor, and which I summarize here:
1) “… [T]he state quietly sent out feelers …” This Request for Information (RFI) was posted on the state website, exactly the same way we put out hundreds of RFIs, Requests for Qualifications, and Requests for Proposals each year, and in the same place that our vendors know to look for them. We want maximum response to these requests, so there is no reason we would issue them quietly. We didn’t.
2) “No state has attempted to auction off swaths of campus workers’ jobs.” The contracting process cannot with any accuracy be called an auction, since cost is only one of several elements considered. Also, contracting with external vendors for work formerly done by campus employees is widely practiced in Tennessee and elsewhere. Many universities in Tennessee already contract out their food service and custodial work, and some contract out their groundskeeping — all of which are jobs formerly held by state employees.
The business case for this new procurement, posted on the CFG website for many months now, specifically cites the experience of Texas A&M University in contracting out its facilities management. The National Association of College and University Business Officers even held a conference on outsourcing in 2015. Saying that no state has done this before is not remotely accurate.
3) “JLL … is about to rake in billions in profits.” The estimated maximum cost within this contract is $1.9 billion, and the majority of that amount represents costs that the state would be paying anyway, regardless of who managed the state’s buildings. JLL will simply pass those costs on to the state without markup. Specific details of JLL’s cost proposal are spelled out in Attachment F3 of the contract.
4) A paragraph describing the history of JLL’s contracts with the state contains several errors. The first contract JLL signed was for a facilities assessment, and it was followed by a second competitively awarded contract for facilities management for properties operated by the Department of General Services. An amendment to that contract required JLL to act as a lease broker for the state. That amendment expired in 2016 and was not renewed. The original contract for facilities management was for five years and is still in effect.
The second reason for my dismay is that the article is devoted to attacking outsourcing without providing your readers any context for understanding why outsourcing facilities management might provide significant benefits for Tennessee and the taxpayers who pay the bills.
Maintaining buildings is not — nor should it be — a core competency of the state, which should instead focus on providing education, health care, safety, and other services needed by all our citizens. The idea of having professional facilities management is well established in the private sector, where it is understood that companies do better by focusing on their main business while allowing third parties to handle ancillary tasks.
Most Fortune 500 companies and most major companies in Tennessee — including Nissan, Volkswagen, General Motors, and Coca Cola — employ vendors to handle their facilities management.
Tennessee’s own experience with outsourcing facilities management on about 10 percent of state buildings has been excellent: In the first three years, it has saved taxpayers more than $26 million, while customer satisfaction of building occupants is consistently above 95 percent.
No one in state government is claiming that outsourcing of services is a panacea or that it’s always the right answer. The state has experimented with outsourcing some functions, such as capital projects management, and has then decided that the work can be done more efficiently or cost-effectively by state employees, so the operation was brought back in-house. Also, the specialized nature of some state buildings might mean that they are not good candidates for outsourced facilities management.
The right answer for Tennessee and its taxpayers is to outsource services when it makes good business sense. Available evidence from the private sector, from higher education institutions across the U.S., and from Tennessee itself indicates that outsourcing facilities management is a tool that will reduce administrative costs while improving customer service. That’s a good thing for our state, and Tennessee should use that tool when it is appropriate.
David Roberson is director of communications for the Tennessee Department of General Services.
