Comptroller questions Haslam privatization plans

State Comptroller Justin Wilson, is raising concerns and questions about the size of and processes involved in Gov. Bill Haslam’s controversial initiative to outsource the management and operation of virtually all state-owned property, including state parks and college campuses, reports Richard Locker.

In a letter to the Haslam administration last month, Wilson called the project “a fundamental change in how the State manages its real properties” and said the new private-sector-oriented procurement process being used “is largely untested” in government and should be tested first on a smaller scale.

The comptroller noted that the procurement approach itself — “vested outsourcing,” in which potential contractors are involved in the development of the contract early in the process, before it is awarded — was developed for use within the private sector. “Though I understand it is being tailored to fit within state procurement laws, we all must step back and ensure the fundamental tenants of government procurement are addressed,” Wilson wrote.

“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. The concept of Vested Outsourcing is largely untested in the state government environment,” he wrote.

The state comptroller’s concerns — outlined in an Oct. 1 letter to Terry Cowles, director of “customer focused government” with operational oversight of the initiative — represent the highest-level questioning yet of the governor’s initiative. It echoes concerns and questions raised by state employees at levels from university maintenance workers to University of Tennessee President Joe DiPietro since the project’s existence was publicly revealed in media reports in August.

…In the letter, Wilson suggested that “because this approach is a fairly significant change from existing practices,” the administration may want to consider “how best to involve the State Building Commission. I am sure other members of the (commission), like me, would like to hear more about the data gathered and the business case for such an endeavor as your team comes closer to a decision.”

Wilson noted in the letter that he met with Cowles before writing the Oct. 1 letter and that “several potential concerns were identified in our meeting and in conversations following. … We must look at this potential change as more than just a procurement. It would be a fundamental change in how the State manages its real properties.

“The management structure should certainly be defined before award of the contract. How would the contract be managed? What level of involvement would be expected from state staff to ensure adequate management of our buildings? This approach leans towards the contractor being responsible for the major decisions. Where will the line be drawn regarding what is controlled by the State and what is left in the hands of the contractor?” Wilson wrote.

He said in the letter that none of the issues he raised “are necessarily insurmountable,” and told The Commercial Appeal and Knoxville News Sentinel Thursday that outsourcing, “if done properly, may well save the taxpayers considerable money and deliver better services to the people of Tennessee. I’m all for that but I think any proposal needs to make sure that it does those things.”

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