Pioneers: A Managed Service Contract for Facilities Management in Tennessee
This case study explores the leadership challenges developing effective public-private partnerships, approaches to creating new governance models, strategies creating key performance indicators, leading change, contract management, and scaling innovations.
In 2013 as part of an effort to improve facilities management and customer service for tenants in state buildings operated by the Tennessee Department of General Services, and to do so at less cost, the state entered into its first comprehensive managed service contract. This case examines how Tennessee navigated this change, developing a comprehensive contract governance system, establishing contracted key performance indicators, and having the vendor put in place a work order request and a continual customer survey system. During the transition, the state developed strategies to address the existing workforce, track actual cost avoidance and benefits of the new program, and address concerns about existing service levels. At the conclusion of the first three years of its new contract, the vendor had already exceeded its five-year cost avoidance goals with a validated cost avoidance of $25 million (including utilities) and customer satisfaction levels far exceeding industry standards at a three-year average of 92%. As a result of this positive experience, involving only about 10% of Tennessee’s total real estate portfolio, the state began taking the program’s best-in-class performance and lessons learned and pursuing expanding its facilities management outsourcing to the remaining 90% of state facilities, including higher education.