The state is outsourcing the management of its portfolio of its office properties, a move that will require about 125 employees to apply for jobs with the vendor taking over that work, reports The Tennessean. Officials expect to save roughly $50 million over the next five years from Chicago-based real estate services firm Jones Lang LaSalle taking over facilities management for 10.5 million square feet of state-owned and leased office properties statewide starting July 1.
Under a previous contract, Jones Lang LaSalle conducted an assessment of 33 major state properties that led to the recommendation that the state should reduce its footprint to 1.4 million square feet by the second quarter next year.
That will come from a combination of moving some employees to space in underutilized state-owned buildings and completely leaving state-owned properties deemed as too costly to maintain and operate.
“We’re having an expert handle the facilities management for us,” said Steve Cates, the state’s General Services commissioner, who in addition to the $50 million in savings sees Tennessee avoiding $25 million in one-time costs, plus $3 million annually, by not having to purchase and maintain the necessary technology and equipment, as well as set up a call center.
…Under the five-year contract, Jones Lang would be paid a management fee of up to $5 million a year. The company also will continue to help General Services with business
analysis to determine whether to spend on buildings and capital projects across the state.
The affected state employees were informed last month the state would no longer be employing people in job categories such as facilities administrators, facilities managers and building maintenance workers. They’re eligible for interviews for positions available under the new operating model, said Peter Uber, a Jones Lang managing director.
In a Phil Williams report, WTVF-TV is raising questions about the Haslam administration’s contract with Enterprise Rent-a-Car as a state motor pool. “This is not good business,” said Rep. Mark Pody, R-Lebanon, who sits on the legislature’s Fiscal Review Committee, after seeing the documents that we uncovered.
…(D)uring his first two years in office, Haslam’s administration has been quietly taking jobs from state employees and turning them over to big business. It’s an effort that’s been spearheaded by Haslam’s General Services Commissioner, Brentwood developer Steve Cates.
…In the case of the motor pool, Haslam’s Department of General Services decided in late 2011 to outsource the program to Enterprise and the car-sharing program that it calls WeCar.
The major push for that contract began about that same time that Cates hired former Enterprise executive Kathleen Hansen to head the department’s motor vehicle management division.
In fact, NewsChannel 5 Investigates discovered, the Haslam administration made a conscious decision not to put the state’s business up for bids, citing the “difficulty” of going through that process.
“The rental of cars has not been solicited by the Purchasing Division in the past; therefore it does not have experience in developing the specifications,” a justification memo said.
That notion “does not hold one drop of water for me,” Pody said.
…General Services officials justified the Enterprise deal in a memo, saying it would “piggy-back” on the “University of Tennessee’s WeCar” program — which had been put up for bids.
But, in a statement to NewsChannel 5 Investigates, said: “The University of Tennessee does not have a WeCar program.”
UT’s statement “causes me a great deal of concern,” Pody said.
Instead, our NewsChannel 5 investigation discovered, UT’s contract with Enterprise was just for a rental discount program for university employees and alumni who were traveling.
UT never outsourced its own motor pool.
And only one other company even bothered to submit a bid for the university’s business.
…”As a business man, if one of my managers came in and had done this with my money, I probably would have fired them,” Pody added.
…NewsChannel 5 Investigates went online looking for discount codes, then trying to reserve a car.
We found a mid-size car for $26 a day; the state’s price: $31. Our weekly rate: $148. The state’s: $184.
Compared to other states, Oklahoma has a deal with Enterprise to get the same car for less than $160 a week.
And even though WeCar boasts that it offers great rates for quick trips, Tennessee’s contract has no such deal.
The same car in other states is less than $10 for an hour. Tennessee pays the full daily rate — $31 — three times as much.
“There is something bad wrong,” Pody said. “If I can rent it cheaper as an individual or as one car, compared to the state renting a hundred a day, there has to be something wrong somewhere.”
When state employees need a car, they can go to an Enterprise location — or they can come to a state WeCar lot, like one located in the shadow of the state Capitol.
But our investigation discovered, under the Haslam administration’s deal with Enterprise, the company gets paid for just leaving cars there, waiting to be rented.
During the last 12 months for which bills are available, state employees actually used almost $450,000 worth of WeCar services. But Tennessee paid Enterprise $739,000.
…(General Services officials) argued that one of the big advantages of this contract is that the state can get a rebate of as much as 8 percent — money that comes back to taxpayers. The question, critics told us, is whether the savings have been even more if the contract had been put up for bids.
A plan to demolish the Cordell Hull Building faced questions Tuesday from legislators lawmakers concerned about the historical value of the building and future plans for the site next to the Capitol, reports The Tennessean. Members of the House Finance Committee sought assurances at a budget meeting that Department of General Services officials would consider other ways to dispose of the 60-year-old building on 5th Avenue North and would not sell the land beneath it to private developers.
One member, state Rep. Matthew Hill, R-Jonesborough, also questioned the decision to tear down the building and five others across Tennessee at a time when thousands of state employees work in leased office space.
“Do we not want to make sure those leases are concluded before we go tearing down buildings?” he asked. The Haslam administration has proposed tearing down the Cordell Hull Building, arguing that the Truman-era building has grown obsolete and would cost $24 million to rehabilitate, far more than its actual value.
The Haslam administration has proposed tearing down the Cordell Hull Building, arguing that the Truman-era building has grown obsolete and would cost $24 million to rehabilitate, far more than its actual value.
General Services Commissioner Steve Cates told lawmakers that one of the building’s main flaws is a leaky foundation that, because of its massive size, would be difficult to repair.
By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — Tennessee General Services Commissioner Steven Cates said Friday that Occupy Nashville protesters on the Legislative Plaza near the state Capitol has cost the state thousands of dollars, but he didn’t give a specific figure.
Cates spoke to reporters following a budget hearing for his department. He said there are areas of the plaza that have required pressure washing because of a lack of sanitation facilities.
Republican Gov. Bill Haslam has said unsanitary conditions were part of the reason he implemented a curfew and protesters were arrested. A federal judge has since temporarily struck down the curfew. At least two donated portable toilets have been placed near the plaza.
Cates didn’t address the arrests because of litigation. He said the protesters’ occupancy of the plaza for nearly a month has been costly.
“It’s very, very expensive to pressure wash and use solutions that don’t totally damage the surface,” Cates said.
He said there’s also costs associated with protesters running long cords from inside state buildings to power their laptops, as well as safety concerns if “plugs … don’t have the right rating.”
The State Building Commission signed off Thursday on $346.2 million in state taxpayer funding to help build two large industrial plants in Clarksville and Cleveland, Tenn., plus $7 million for the Port of Cates Landing on the Mississippi River in Lake County. Richard Locker wrote the report: The $245.9 million in total state funding for the $1.2 billion Hemlock Semiconductor plant in Clarksville and $100.3 million for the $1.1 billion Wacker Chemie polysilicon production plant in Cleveland — plus a previously approved $100 million for a new Electrolux plant in Memphis — represent the first time state government has spent money on the actual construction and equipping of plants.
The projects, previously approved by the legislature, include a combination of current tax revenue and state bonds, to be repaid by general taxpayer revenue.
The new $26.2 million Cates Landing river port under construction near Tiptonville is funded by the $7 million from the state, $13 million from the federal government and $6.2 million in local funds.
Andrea Zelinski has done a TNReport on state cost-cutting ideas, including TSEA’s solicitation of suggestions from state workers and Gov. Bill Haslam’s plans to implement a new procurement system.
(Legislation setting up the new procurement plan was passed at the behest of Comptroller Justin Wilson during the last year of former Gov. Phil Bredesen’s administration. With Haslam’s approval, implementation was delayed by a bill passed in the Legislature this year.) The governor also supports restructuring the state’s purchasing practices — a reform that has saved the state of Indiana as much as $57 million since 2006.
The main idea there is to leverage for lower prices on bulk purchases like office supplies and computers by buying the items for all state agencies at once, said Nicole Kenney, Indiana’s deputy commissioner of procurement. Officials then negotiate multiple times over one contract to ink a deal for a lower price than what the vendor originally proposed.
Before, “you didn’t even question the price,” explained Kenney. Now, “we squeeze them as much as we can until they stop moving and we can’t do any better,” she said.
Savings could take years to build up, said General Services Commissioner Steve Cates, who is in charge of managing the state’s property.
“I have found areas that have almost 150 unique contracts doing the same thing,” he said. “You could have a lot fewer contracts and work on benchmarking with where the best prices are.” Meanwhile, his office is also brainstorming ways to better manage the state’s 6 million square feet of owned and leased office space.
If the state can save $1 or so per square foot a year, that’s millions of dollars in the bank, Haslam said.
“None of (these ideas) were something if you were on a campaign you’d run on, but all of them you go, ‘Oh, they make sense,'” Haslam told TNReport. “We keep chipping away to make it cheaper.”
The commissioner said he was not aware the TSEA hopes to propose a cost-savings action plan of its own, which is set for release in January.
NASHVILLE, Tenn. (AP) — Two new cabinet officials have investments that could cause conflicts with their duties to the state.
A review of disclosure statements by The Tennessean found Department of General Services head Steve Cates holds stakes in utilities; an equipment leasing firm; and one of the world’s largest makers of air conditioners, elevators and fire and security systems.
Richard Roberts, who will lead the Department of Revenue, holds investments in many companies that operate in Tennessee including banks, energy companies, insurers and an airline.
Although the officials have to disclose the sources of their income, they do not have to disclose how much they earn. That’s because of a policy change by Gov. Bill Haslam first reported by The Associated Press.
Both men said through spokeswomen that they will act with integrity.
Link to The Tennessean’s listing of investments reported by Haslam cabinet members is HERE.