U. hands over facilities mgmt. to outside firm

By Tammy Reiss By March, an outside firm will handle the management of every University-owned building both on and off campus, officials said yesterday. Administrators signed a letter of intent yesterday morning with the Dallas-based Trammell Crow Company, in a deal to outsource nearly all aspects of facility management. The bold reorganization took many University employees by surprise. The deal means that the University will no longer employ any of the 175 managers or support staff in departments like residential housekeeping, maintenance or Physical Plant. Trammell Crow -- which already manages University City Associates, the Penn-owned commercial real estate firm -- will form a new division, Trammel Crow Higher Education Services, for the new deal. It will also move its regional headquarters to University City, creating 30 jobs for Philadelphia residents. The University will pay Trammell Crow at least $5.25 million each year, but the company will also give Penn $26 million up front and another $6 million later for helping it start its higher education venture, Executive Vice President John Fry said. The deal is expected to save the University a large -- but as yet unspecified --Eamount of money, Fry said. Trammell Crow will manage building operations, maintenance, utilities, planning, design and groundskeeping across campus, but only the management functions will be outsourced. Penn will still employ the non-management workers in all these areas. Every affected employee will have to apply for a similar job within Trammell Crow's new division. Fry said he expects "a large majority" of these staffers will get job offers from Trammell Crow, but would not estimate a number. The University will help employees prepare for the shift and will try to minimize the deal's impact on the affected staffers. Below the very highest levels of management, each one of the 175 employees, from administrative assistants to executive directors, could find themselves in this situation. "We're still looking at what's in and what's out of the arrangement," Fry said. "All hard-core maintenance operations are in, but we're still not sure about functions -- for example, housing assignments may or may not be included." Trammell Crow Executive Vice President John Maher predicted that his firm would employ between 110-150 people to manage Penn's facilities, and the vast majority would be former Penn employees. The University struck the deal in an effort to simultaneously cut management costs and improve services, and the best way to do that was hiring one outside firm, administrators said. "We need the kind of expertise that Trammell Crow brings to bring the level of service to the Penn community that it deserves," University President Judith Rodin said. She added that administrators intended the restructuring as "an effort to develop better services and not as a way to get more resources." But the money saved will be invested in renovation and facilities projects, including dorm improvements called for in the overhaul of the residential system that administrators also announced yesterday. Some officials estimate a price tag of $100 million in dorm projects over the next 10 years, and the $32 million from Trammell Crow will make that goal much more feasible. The deal shocked and surprised many long-time University employees, who learned the news in a morning just before it was publicly announced. Project Manager William Wilkinson, who works on College and Logan halls, expressed "disappointment" in the administration's failure to alert its employees of the impending decision. He said many workers knew something was coming -- but not what. "The news fell like a lead ball," he said. "There was no warning at all," said Athletic Grounds and Hard Surfaces Supervisor Michael Ferraiolo, a Penn employee for 22 years. Trying to ease the sting, Fry said every employee Trammell Crow hires will receive at least their current salary. Trammel Crow will provide employees with a "full range of benefits" that are comparable to the University's benefits package, Maher said. The University will increase base salaries, if needed, to ensure that new medical and dental benefit plans don't shortchange employees. Penn tuition benefits for both staffers and their children will continue until at least 2001 for Trammell Crow hires, Fry said. The company will interview employees in November, sending out offers December 5. This month, the University will offer professional resume and interview preparation for employees, Fry said. Any current employee who is not hired by Trammell Crow will be eligible for inplacement and a severance package, he said. Administrators will offer employees more information tomorrow during meetings at the Sheraton Hotel at 36th and Chestnut streets.