Trustees approve deal with Trammell Crow

The approval finalized Penn's decision to outsource facilities management to the firm. The University Board of Trustees approved the plan to outsource facilities management to Trammell Crow Co. in a unanimous vote Friday, bringing a quiet end to a month of angry outcry and campus-wide debate about the deal. The vote finalized the administration's October 8 decision to hand over management of Penn's approximately 10 million square feet of buildings to the company effective March 1. The University and Trammell Crow will sign a definitive contract by December 8. Trustees expressed their faith in the administration's decision. "The business of the University is teaching, education and research," Board of Trustees Chairperson Roy Vagelos said. "Outsourcing is something that is being done throughout America today? Our operation will be improved." During the Budget and Finance committee meeting Friday morning, Executive Vice President John Fry said the deal will save the University between 5 and 15 percent -- including 20 percent on construction costs -- on facilities management expenses. The department's budget currently stands at about $100 million. Several campus groups, however, had urged Trustees to reject the deal because of concerns that the small group of administrators that oversaw the deal failed to adequately consult members of the University community. "People who are in no way, shape or form directly affected by the situation are extremely concerned, extremely afraid and aware of an extremely divisive situation in the campus community," Graduate and Professional Student Assembly Vice Chairperson for Policy Matthew Ruben said. He added that the approval indicated that "the Trustees are comfortable with the deal" while "a large part of the campus community is not." In an effort to stop the deal from going through, a group of University employees sued Penn and Trammell Crow October 24 in federal court, alleging that the deal's goal was to avoid paying benefits to the workers. Campus outcry climaxed with employees' "Save Our Jobs" rally on College Green last Thursday. Many employees not directly affected by this deal said they fear that future outsourcing of departments such as Dining Services may be handled in a similarly secretive manner. University President Judith Rodin would not comment about whether the consultative process would be opened up in the future. But officials maintain that closed discussion of the Trammell Crow deal was both necessary and appropriate, explaining that consulting facilities managers would have compromised the objectivity of the deal. "I challenge anyone to tell me how we can negotiate the kind of consultative letter of intent that we negotiated in full public view," Fry told the Budget and Finance committee. With the approval finalized, the approximately 180 employees affected by the deal have begun to brace themselves for upcoming changes. Fry reported that about 158 University employees signed up for interviews with Trammell Crow beginning this week. Among those who have signed up for an interview is Physical Plant Executive Director Jim Wargo, who said he must "apply for a job like everybody else." The deal stipulates that Trammell Crow must hire a minimum of 70 percent of the 180 employees affected by the outsourcing. The Dallas-based company will interview employees this month and send out offers by December 5. Employees' spouses will lose tuition benefits after next spring, Fry said. Children's benefits will be extended indefinitely -- past the 2001 cut-off date set when the deal was first announced -- at a cost of $4 million to $5 million to the University, Fry added. And current employees rehired by the company will have their base salaries increased to make up for any differences in medical and dental benefits after the transition, Fry said. The University struck the deal -- hailed as a landmark agreement -- in an effort to simultaneously cut management costs and improve services. Trammell Crow will help hold down campus construction costs and respond to maintenance requests faster, Penn officials said last week. The company already manages Penn's for-profit real estate firm, University City Associates. For the new deal, it will form a new division, Trammell Crow Higher Education Services, and will move its regional headquarters to University City, creating 30 jobs for area residents. The University will pay Trammell Crow at least $5.25 million each year to manage the properties, but the company will give Penn $26 million up-front and another $6 million later for helping it start its higher education venture. Daily Pennsylvanian staff writer Scott Lanman contributed to this article.

Please note All comments are eligible for publication in The Daily Pennsylvanian.