Audit finds fault with some aspects of state outsourcing

A new audit of the Department of General Services by the state Comptroller’s office finds some shortcomings but is less critical of Tennessee’s outsourcing efforts than in a 2013 review, reports the News Sentinel.

Policies since adopted have resolved most of the previously cited problems, the new audit says, but auditors still found fault with oversight in privatization by the department’s division known at State of Tennessee Real Estate Asset Management or STREAM. A list of “findings” that were deemed troublesome by the auditors:

“STREAM executive leadership did not establish adequate processes, did not maintain updated policies and procedures, and did not provide adequate direction to staff related to leasing processes.” In general, the issues involved failure to keep track of leases, related documents and building owner compliance with terms of the leases.

“When executing lease procurements, STREAM management did not comply with State Building Commission policy or department policies and procedures.” The neglected policies included obtaining and filing conflict-of-interest disclosures and renewal of leases involving a period of more than five years or a value and/or $150,000 in value without getting official commission approval.

“STREAM’s lease management team failed to effectively track and address the state’s leases before they expired.” In a sample of 25 leases reviewed, the auditors found that in 13 cases STREAM did not review renewals and simply defaulted to a “holdover” clause in the existing lease. In six cases, STREAM had no communication with the state agency using the leased building prior to an automatic renewal.

“STREAM management did not always ensure Jones Lang LaSalle submitted all monthly reports and performed property inspections as required by the facilities management contract.” The contract with JLL calls for the company to physically inspect each building every three months if it covers more than 20,000 square feet of space; annually if less than that. In a majority of cases, the deadlines were missed, auditors said, by anywhere from as little as 10 days to as much as 957 days.

The auditors also surveyed officials of state agencies that used leased building and found that a majority declared themselves satisfied with arrangements and many complimented JLL on its handling of issues raised.

Note: The full audit is HERE.

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