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Did Haslam Administration Tell Whole Truth About Contract?

Did Haslam Administration Tell Whole Truth About Contract?
Posted at 11:29 AM, Jan 23, 2016
and last updated 2016-01-23 12:31:06-05

(Story originally created Aug 30, 2013)

NASHVILLE, Tenn. - New emails raise questions about whether the Haslam administration told a legislative committee the whole truth about a big state contract.

That contract turned control of the state's buildings over to a major corporation that the governor once listed among his own investments.

Last month, Haslam administration officials appeared before the legislature's Fiscal Review Committee to defend two big contracts that outsourced the management of state buildings to the  Chicago-based corporation Jones Lang Lasalle.

And they were asked point-blank if contract watchdogs from the state Comptroller's Office had raised any concerns.

"Did the Comptroller's Office have any comment on the way it was being done as it moved along?" asked state Sen. Douglas Henry Jr., D-Nashville.

Department of General Services lawyer Chloe Shafer responded that the comptroller's staff had provided "feedback."

"They asked for information about what we had looked at, just as you did... and we provided them with answers that we believe they found satisfactory," Shafer told Henry.

But what the General Services lawyer did not tell the committee was that she had received emails from the Comptroller's Office just two months earlier, urging that a portion of one of those contracts be scrapped.

That portion lets JLL handle lease negotiations for the state and ask for a 4 percent commission from landlords who want to lease the state a building.

"This was negotiated with JLL with no opportunity for anyone else to offer their services," wrote Melinda Parton, director of the comptroller's Office of Management Services.

"Don't agree with continuing to negotiate services without competition," she concluded.

We showed the email to House Democratic Leader Craig Fitzhugh.

"'Don't agree with continuing to negotiate services without competition.' To me, there's a difference of opinion, to say the least," the Ripley Democrat said.

"If the administration - or whomever - had said that the comptroller thought the contract ought to be rebid, I think there should have at least been further conversation about it."

But when lawmakers gathered to review that contract, they only heard the administration's side. That's because the Comptroller's Office is now in the middle of the a big audit of the Department of General Services -- and they weren't ready to talk about their findings.

Still, the committee's chairman, Republican Sen. Bill Ketron, suggested the contract had the full blessing of the Comptroller, who -- our investigation discovered -- had written in an email last year: "A commission to JLL at first blush seems very wrong."

"We've asked our staff, Fiscal Review, and they feel that everything is square -- as far as the contract is concerned," Ketron told the committee, adding: "The comptroller has done the same."

In fact, Haslam administration officials have argued that the commissions should not matter since the money would be paid by the landlords, not the state.

But in another email that the committee never saw, Melinda Parton wrote: "This is a cost to the State of Tennessee no matter how the payment is set up."

"If a commission was not being charged, the costs to the State would be lower," she added.

That why Parton suggested the lease contract should be rebid to make sure the state is "getting a good rate" for taxpayers.

"When the Comptroller raises an issue about the competitiveness of a contract, I can't see why -- if anybody knew what they were talking about -- would not say that there's something amiss here," Fitzhugh responded.

A spokesperson for the Department of General Services emphasized that the Comptroller ultimately signed off on all these contracts.

Still, the comptroller's spokesperson explained that's only a reflection that the Office did not find anything blatantly illegal about the contract.

As to whether the office had concerns about how taxpayer money was being spent, he said the office will formally speak to that when the audit is finally released.

Meanwhile, only one lease negotiated by JLL has been publicly released.

Despite the Haslam administration's claim that the deal will save taxpayer money, in that case, the state is now paying 44 percent more -- to the same landlord -- than it was before JLL got involved.