After four months of negotiations, the East Baton Rouge Parish school system has struck a deal with Philadelphia-based Aramark to handle school maintenance and other support work for $5.3 million less per year than it did previously.
The new contract is actually $600,000 less than when the school system first hired the large private company 13 years ago to run its custodial, maintenance and grounds-keeping operations.
The new contract adds and expands Aramark’s duties in several areas, including subsurface plumbing, mowing several vacant lots, and keeping up athletic fields.
And the company has agreed to spend an additional $1.2 million annually to repaint schools, as well as upgrade fire alarms, intercoms and security systems. The company is also spending $360,000 over the next six months to determine what work in those areas it needs to do. Previously, the company spent $1 million annually on a special fund to upgrade schools.
Alternately, the contract calls for Aramark to enter into written contracts with its subcontractors, work harder to hire women and minority-owned businesses, and to no longer quit employing subcontractors over holiday breaks as it has in past to save money.
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The new five-year agreement, which expires in June 2022, was signed Sept. 21. That same day, Superintendent Warren Drake briefed the School Board on the freshly inked agreement.
“It’s been a long journey. We only had a few scrums, a couple of rhubarbs. Other than that I don’t think anyone was hurt in the process,” Drake told the board. “I think we’ve come up with an excellent contract for both sides.”
Terrance Ransfer, an associate vice president of operations with Aramark who has overseen the company’s work in Baton Rouge for years, also spoke.
“We’re really excited about this new contract, and we’re looking to be able to move forward and continue to elevate and contribute to the mission of the district,” he said.
As part of the agreement, Aramark is replacing its management team ,including Ransfer, but he said he will remain in Baton Rouge for awhile.
“I’m not going anywhere just yet,” he said. “We have a lot of work to do.”
The school system first began outsourcing facilities management in 1999, back when it spending about $37 million a year in its management department. In 2001, Aramark bought the school management division of ServiceMaster.
In 2004, the school system, in a controversial move, privatized all facilities management. As a result, more than 400 school employees lost their jobs, saving the district about $6.5 million at the time. Aramark and its subcontractors hired on about two-thirds of these folks, but the rest either retired, found other jobs in the school system, or went hunting for work elsewhere. Some retirees left earlier than they’d planned and received smaller pensions.
Aramark’s contract was renewed in 2009 and was extended in 2011. It’s changed little over that time, though the number of acres and square footage that Aramark oversees has declined a bit through the years.
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Drake looked ready to oust Aramark when he took over as superintendent in June 2015. Drake has often been critical of the company. He immediately found fault with the condition of many school buildings he inherited, and demanded more from Aramark.
Rather than just negotiate a renewal of Aramark’s contract as his predecessors have done, Drake in December decided to seek proposals from other companies. Eleven companies ended up applying.
An in-house review committee narrowed the field to three finalists, including Aramark. While Aramark agreed to cut its annual price from $27.2 million to $24.9 million, the other two finalists, Cleveland-based GCA Services Group and Houston-based Jacobs Field Services, bid even less. GCA’s bid of $19.6 million a year in particular stood out.
And using six criteria to judge applicants, including cost, the committee gave Aramark the lowest score of the three applicants.
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Even so, Drake decided to open negotiations with Aramark, surprising many observers. Drake told The Advocate at the time that Aramark has done everything he’s asked them to since he came aboard and he was sure that negotiations would produce a much better deal, that “Aramark will do what we need to have done.”
The two sides met on and off for months. The district’s six-member negotiating team included Drake and Rutledge, as well as School Board member Mike Gaudet, a retired executive with Albemarle.
The resulting contract is much closer to what GCA bid. Aramark has reduced its overall price from $27.2 million to $21.9 million, a savings of $5.3 million. And that’s $3 million less than the price Aramark submitted this spring, but still $2.3 million more than GCA’s price.
Domoine Rutledge, general counsel for the school system, said throughout the negotiations the school system made it clear the school system was willing to end talks and go with one of the other bidders.
“We were fully prepared to do that if we didn’t believe they were going to do what we needed them to do,” Rutledge said.
He said school officials learned a lot during the bid process in terms of seeing what other companies were willing to do.
Drake described Sept. 21 as a new beginning.
“Our kickoff is this day, and from this point forward we’re under a new system,” Drake told the board.
The school system has more leverage than it had in the past.
For instance, previously Aramark received annual automatic increases based on government price indexes, increases capped at no more than 3.25 percent per year. The new contract drops that provision and says Aramark has to ask for and negotiate any increases. Conversely, the school system can request and negotiate decreases if it desires.
And the school system can withdraw from the five-year contract for any reason after two years have elapsed, or in July 2019. Before the district had to have cause to exit the contract.
Here are some other new features of the agreement:
- Maintenance of lights and scoreboards at stadiums and outdoor sports fields up to $40,000 a year.
- Repairs for parking lot lighting up to $10,000 a year.
- Repairs to fences and gates.
- Once a week mowing, edging, trimming and leaf blowing at all schools between April 1 and Nov. 30.
- One point of contact for middle and high school principals to call when they need help.
- A new web-based work order system.
- Removal of a wide range of limiting language and exclusions. For instance, plumbing service will now occur as a matter of course. The old contract applied only to "plumbing fixtures" located in “responsible spaces.”
It’s unclear how exactly Aramark plans to cut its costs by millions while at the same time providing the additional services.
Ransfer told the board the company is spending $1 million on added technology to help it become more efficient in Baton Rouge. Also, he said Aramark is employing Atlanta-based Carter Brothers to help it save money, as well as to work with it local contractors for “consistent service delivery.
Board member Dawn Collins pressed Ransfer on whether Aramark will enter written contracts directly with local subcontractors, as opposed to having Carter Brothers enter into those contracts.
“I’m not prepared to say. We’re still working through the details,” Collins said. “There is a possibility that will not be the case.”