Facilities Management (FM) is an initiative to improve the management of the state’s real estate portfolio, one of its largest expenses.
Cost Saving Analysis
The state released a report following months of analysis that projects a potential taxpayer savings of more than $35 million annually through a professional service provider approach. Visit the Facilities Management Business Justification page for more information. The entire report and supporting data provided by UT and TBR System campuses and general government along with presentations and workforce protection information is available at this link. Read the state's news release on the report here: News_Release_-_FM_Business_Justification_Report_FINAL_030816.pdf.
The three service areas the state is exploring as part of this initiative are:
- Maintenance and repair
Independent, Third-Party Inspection
Following a competitive procurement led by the state's Central Procurement Office, the state engaged the services of KraftCPAs PLLC ("Kraft") to perform the third party inspection of the data and methodology used in the business justification cost savings analysis. Founded in 1958, Kraft is one of the largest independent certified public accounting firms in Tennessee. (This engagement was guided by the American Institute of Certified Public Accountants' Statements on Standards for Attestation Engagements, Section 201.)
The engagement is now complete, and Kraft has issued a report which upon review of the results, the overall savings potential continues to be more than $35 million annually. Due to the significance of this opportunity, the state, UT and TBR leadership agreed to continue with the process to gather pricing information from potential providers through a Request for Proposals (RFP) in early December.
This and any other information gathering activities does not mean a decision has been made nor does it obligate the state to pursue a final arrangement.
The state is currently continuing to gather information through a multi-step, collaborative process that includes leadership from UT, TBR, FOCUS Act campuses, legislative and general government leadership.
The potential result of the exploration is a contract that any state facility could use if it so chooses for facility management services. The final decision on whether or not to use a service provider rests with the various state agencies. This effort simply provides options state facilities can consider, and the choice to utilize one service or more, as well as managing any contract an entity would enter into would be managed by that local agency/institution. This and any other information gathering activities does not mean a decision has been made nor does it obligate the state to pursue a final arrangement.
- State, UT, TBR Joint News Release - November 21, 2016
- Letter to Facilities Management Steering Committee from FM Core Team with Comments on Report Results
- Independent Accountant's Report on Applying Agreed-Upon-Procedures
- Fact Sheet on Report
Workforce Protections/Public Comment
Any potential contract with a professional service provider will require them to offer employment to all current facilities service state employees who pass background checks, verify work authorization and drug testing.
Employee compensation will not be less than a state employee's current salary and benefits.
If a state agency chooses to participate in a contract, continuous employment opportunities with comparable compensation and benefits will be offered, subject to satisfactory job performance to current state facilities service employees. No current qualified and productive employee will lose their job because of a contract.
The state has included strict language prohibiting a potential vendor from initiating any reduction in force at any time during a potential contract period, and required any vendor submitting a response to the state to sign a certification stating they understood these terms in order be considered in the evaluation process. Read the joint statement by State, UT, TBR: 2016-02-17-Joint-Statement-FM-Exploration.pdf.
The state also held a public comment period following the release of the FM report and continues to work with UT, TBR, and FOCUS Act campuses, as well as general government and legislative partners through the FM Steering Committee to understand the many perspectives on this effort.
More about Facilities Management
- FM utilizes industry best practices to create sustainable facility and building management programs across a broad real estate portfolio to provide cost savings and process efficiencies.
- The state has a diverse portfolio of over 7,500 aged buildings and facilities that are costly to maintain. The goal of this process is to further explore opportunities to provide the best service at lowest cost.
- This initiative can result in lower costs that can be redirected in programs and services, while lowering the overall cost of government and improving resource management.
The Need for Transformation
- All state government agencies have a responsibility to the 6.5 million Tennesseans we serve to make sure we’re providing the best service at the lowest possible cost.
- Real estate management is one of the state’s largest budget expenditure categories following health care, human service, transportation and education programs.
- As a result of the success and efficiencies from a current facilities management arrangement, it is in the best interest of all Tennessee taxpayers who own these buildings to explore whether similar opportunities exist:
- Cost savings achieved in the last two years has saved the state a total of more than $13 million as result of its current facilities management arrangement (including energy).
- Increased preventive maintenance resulting in more efficient building operations and less system down time.
- Better training for staff, allowing them to perform additional services, make repairs more quickly, and at a lower cost to the state.
- Increased satisfaction of state employee with building services.