TN Wins National Award for Facilities Management Outsourcing

Tennessee’s first experience with using a private company to manage state buildings has won a national award and sparked interest from other state governments across the US.

Tennessee’s facilities management outsourcing program won the Innovations in Government award in the infrastructure category on Oct. 7 at the annual conference of the National Association of State Chief Administrators (NASCA) held in Denver.   Three other states also winning awards were Pennsylvania, for its transformation of procurement business; Minnesota, for its MnSAFE (Safety Accountability for Everyone) financial management program; and Pennsylvania, for its Commonwealth Mentoring Program.

"The Innovations in State Government Awards program was established to recognize outstanding state administration departments’ programs that exemplify best practices and initiatives," said Doug Nelson, NASCA president and commissioner for Missouri's Office of Administration. "Each state's administration department is striving to improve the operations of government and the award recipients created both efficiencies and effectiveness in state government."

Tennessee Department of General Services Commissioner Bob Oglesby, who accepted the award on behalf of Tennessee, said the award represents a significant success not just for the department but for all Tennessee State Government.

“Governor Haslam consistently reminds us of our responsibility to provide Tennessee taxpayers with the best service at the lowest cost,” Oglesby said.  “Our facilities management outsourcing program has clearly proven that it is an effective approach to reducing administrative costs and improving customer service, and I am tremendously proud that our department has pioneered this effort, which I believe has the potential to become a model for other states.”

Under the program, Tennessee contracted with a private firm that specializes in real estate management to manage and maintain most multi-tenant state office buildings, which are operated by DGS.  DGS still provides oversight of the vendor and its work.

The vendor’s expertise in building management permits it to do the work more efficiently and less expensively, and allows state government to devote more of its attention and resources to its core business – serving the citizens of Tennessee.  In addition, customer satisfaction in vendor-managed buildings has increased to more than 95%, exceeding the 85% industry average.

Oglesby said facilities management outsourcing in DGS-operated buildings produced cost avoidance of $12.9 million in the first two years of the program.

“This means that those funds that were once spent on administrative costs of government can now be directed to vital programs and services like education and public safety that serve all the people of Tennessee,” he said.

The success of facilities management outsourcing has sparked an effort to examine whether the program and some other steps for reducing costs of real estate could be implemented in other state buildings in both general government and higher education.  That program, called Strategies for Efficient Real Estate Management (SEREM) is being operated by the Customer Focused Government (CFG) office.

Oglesby and CFG Director Terry Cowles made a presentation to the General Assembly’s Fiscal Review Committee on Oct. 12 about the success of facilities management outsourcing and about plans for implementing SEREM.

“It is encouraging that our effective approach to building management has the potential for producing even greater cost avoidance for our state,” Oglesby said.  “I hope everyone in our department understands that our effort in this regard will probably over time be recognized as one of the most innovative and productive cost-reduction programs in Tennessee in many years.”