Outsourcing plan could undercut ‘Drive to 55’

By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — An internal report on the potential outsourcing of building management at public colleges and universities warns Gov. Bill Haslam that the changes could undermine his signature “Drive to 55” initiative to improve graduation rates in Tennessee.

The report titled “Strategies for Efficiency in Real Estate Management” was first obtained by WTVF-TV in Nashville. (Note: Previous post HERE.) Among a series of recommendations aimed at cutting $184 million in costs per year, the report proposes reducing office space in higher education through greater use of telecommuting and temporary offices.

But the report acknowledges that the new approach would require a culture change within higher education, and adds that the reduced space “may be inconsistent” with Haslam’s effort to boost graduation rates and the Complete College Tennessee Act because “data indicates student success is correlated with level of student engagement with faculty and staff members.”

The report also calls for getting rid of what it calls obsolete and expensive-to-maintain buildings on campuses, but notes that “decommissioning historic buildings can result in public pushback.”

Haslam spokesman Dave Smith would not answer specific questions about the report.

“You’re putting the cart way before the horse,” Smith said in an email. “No decisions have been made, and there’s no timeline from the governor’s office. We’re committed to working with higher education through a thoughtful and deliberate process to determine if any changes should be made.”

The governor told reporters last month that his “Drive to 55” proposal was part of his reasoning for considering more outsourcing at state colleges and universities because of efforts to expand the numbers of people earning degrees.

“There’s a huge pressure on everything from keeping tuition costs minimal to expanding the populations that we serve,” Haslam said. “Colleges feel the pressure to do both of those things, and what we’re saying is the answer can’t always just be more money, more money, more money from the state.”

Haslam has insisted that it will be up to the state’s two higher education systems to decide whether they want to participate in the outsourcing program. But University of Tennessee President Joe DiPietro has raised concerns that the state’s preferred procurement method would make opting out of the program problematic.

“We are seeking clarification that the university’s ability to opt-out if it is in our best interest is not constrained,” DiPietro said in an Aug. 27 email to Greg Adams, the chief operating officer in the Haslam administration.

Adams responded that “leaked” documents have sewn confusion about the outsourcing plan.

“Any decision to proceed or not for any of the facilities will be made by you when and only when you have all the information needed to make a good business decision,” he said.

Note: See also the Commercial Appeal report. An excerpt:

Internal documents and emails indicate that top officials in Gov. Bill Haslam’s administration worked for months trying to put together estimates justifying their plans to privatize the management and operations of all state-owned real estate, including the state’s public college and university campuses.

…The group is working under state government’s first “chief operating officer,” retired IBM executive Greg Adams, who Haslam hired two years ago. The group’s most recent full-time hires this summer include outsourcing consultant and author Mike Ledyard as director of facilities management outsourcing. Ledyard is an advocate of “vested outsourcing” in which buyers and vendors have closer business relationships with mutual incentives for successful results.

A string of emails written among top project officials shows frequent review and revisions of cost estimates and potential savings, between an original report to the governor in March and a revised presentation dated Aug. 7, and in the weeks since.

At the center of that discussion is Bob Oglesby, the governor’s appointee as commissioner of the Department of General Services, where facilities management has traditionally been housed. The emails show him frequently questioning estimates.