Pioneers: A Managed Service Contract for Facilities Management in Tennessee 

02-20-2018 14:07

One day in June 2012, officials from the Tennessee Department of General Services (DGS) listened intently as representatives of Jones Lang LaSalle (JLL) delivered a presentation that was simultaneously sobering and enlightening. Earlier that year, DGS had contracted with JLL—a large, multinational firm that specializes in real estate services—to prepare a master plan of the agency’ s facilities and make recommendations for improving the organization and management of those facilities. As the company’s officials now explained in their presentation, JLL had found significant problems, including a lack of accountability, an unnecessarily “high headcount,” inconsistent skill levels, and highly variabl e service. As discouraging as this analysis was, it also, as JLL officials added, presented an opportunity: If DGS were to revamp its approach to facilities management, the agency could save approximately $40 million over five years. JLL concluded, “The State of Tennessee can achieve substantial cost savings and workplace en hancements by implementing these actions.”

The analysis illustrated that DGS had a powerful incentive to change its approach to facilities management, but it also presented the agency’s officials with difficult questions. Should they outsource the transformation effort, and, if so, with which company should they partner? How could they design and implement a strategy to realize the service improvements and savings that JLL projected? Would any State employees be laid off? If the project succeeded, how could Tennessee add the rest of the portfolio, including non-office general government facilities (e.g., parks and prisons) and higher education?

A Cabinet-level agency with an operating budget of approximately $230 million, DGS’s primary responsibility is managing real estate and providing and procuring goods and services—including motor vehicle and equipment management, postal services, and warehousing and distribution—to other State agencies. DGS is also responsible for operating, managing, and maintaining a substant ial swath of the State’s real estate holdings. In particular, in 2011, DGS oversaw approximately 10 million square feet of State real estate assets in 550 locations, of the total State portfolio of 94 million square feet. 

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