UTC, UTK Reject Outsourcing

Tuesday, October 31, 2017

UTC will announce to the UT board of trustees at their annual meeting on Friday in Knoxville that UTC will not participate in the outsourcing of campus facilities maintenance services with Jones Lang LaSalle Americas, Inc. (JLL).

In 2015, the University of Tennessee system was invited to participate in a process to identify possible opportunities to reduce costs for the operation of all state facilities including higher education.

Upon the identification of proposed costs for services by JLL, UT President Joe DiPietro asked the leadership of each campus to review the proposals and determine what is in the best interests of the campus. Each campus will present their decision to UT System Administration and the Board of trustees at the upcoming board meeting on FridayUTC Chancellor Steven R. Angle will explain the university’s decision.

“JLL made a sincere presentation and their ongoing conversations with us were specific and thorough,” Dr. Angle reported. “Our decision is to not participate based on the higher cost of services. Our data indicates our campus operates effectively and efficiently. I want to personally thank JLL for their candor and efforts in this matter where it has related to our university.”

JLL’s business case presented to the University of Tennessee campuses earlier this year followed campus site tours and data studies by the Chicago-based commercial services company. The specific proposal for facilities management services at UTC was developed over many months.

The analysis in the Chattanooga proposal did not add up to a cost savings. JLL’s proposal was higher than UTC’s annual costs for custodial, grounds keep and maintenance services by $263,217 with their estimate of costs coming to $6,959,799. The university’s yearly budget for these services is $6,696,581.

In the business case presentation JLL submitted to UTC, the company said, “Based on our site tours, and other data provided to JLL, and available scope limitations, we have not identified cost reduction opportunities within the (UTC) main campus.”

Also, UT-Knoxville Chancellor Beverly J. Davenport decided to reject outsourcing.

She wrote:

"I write to inform you that I have decided to opt out of the proposed plan to outsource facilities management. This decision was reached after considerable analysis of proposed savings and a close examination of our current and future operations.

"I am deeply indebted to our staff, led by Senior Vice Chancellor for Finance and Administration Chris Cimino, who has worked diligently since 2015 to evaluate outsourcing on the Knoxville campus.

"The goal of the proposed outsourcing plan was to improve efficiencies and determine what is in the best interest of our campus. We thank the state and the UT System administration for challenging us to engage in extensive cost analyses and an evaluation of our practices, which have led to cost-saving operational changes in keeping with the outsourcing goals.

"My decision to opt out was based on the extensive analyses of the financial considerations, the complexity of the work done on our research-intensive campus, and our commitment to the East Tennessee economy and our workforce. It is for these reasons that I have decided outsourcing facilities management is not the best option for our campus.

"Since the approval of the 2011 campus master plan, we have invested heavily in our facilities and infrastructure. In fact, we have increased the space we enhance and the buildings we maintain by more than 100 acres and one and a half million square feet.

"During this historic period of growth, we have reduced operating expenses, become more efficient, avoided costs and subsequently reallocated savings to the academic mission. In fact, we rank among the lowest in the SEC in administrative and maintenance costs per square foot. Five-year projections indicate an additional $3.3 million in savings.

"I want to thank the numerous people who have spent countless hours evaluating the outsourcing option. I have had dozens of meetings, received volumes of mail, and had detailed conversations with a wide range of constituents. I value all of this input and appreciate the opportunity to make a decision based on the best interests of our campus."

Most sincerely,

Beverly J. Davenport
Chancellor


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