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Audit questions state's contract with real estate firm tied to governor

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NASHVILLE, TN (WSMV) -

The state comptroller's office had strong words Wednesday about an issue first uncovered by the Channel 4 I-Team.

A Department of General Services audit says a private firm with ties to Gov. Bill Haslam had an unfair advantage when it landed a multi-million dollar contract to handle the state's real estate.

The Channel 4 I-Team first reported earlier this year about the state's plan to outsource all its maintenance and management work on state buildings to global real estate firm Jones Lang LaSalle. That move cost dozens of state employees their jobs.

Haslam did list JLL as one of his more than 200 investments in his 2010 financial disclosure statement, but the governor's office has adamantly said that had nothing to do with the firm getting the contract.

When the state first awarded that contract, it was for $1 million, but the contract now stands at $38 million. The governor's office had said they had always known it would cost more to do the work of managing the state's real estate.

According to the state audit, the Department of General Services did not violate state law when it gave JLL the contract, but it did intentionally enter into a contract that was too broad in scope.

The audit says the contract allows JLL to make recommendations about how the state manages its real estate assets when the corporation can benefit from the very moves it recommends.

The audit says that's a conflict of interest, but the Department of General Services says it's not.

"Prior to this, we had some very serious issues with real estate at the state as far as life and safety. We literally had chunks of buildings falling on people. We had deferred maintenance, which isn't fair to future generations. And we were spending a lot more money than we should have on leases. All of those have been addressed, and I think the state is in a much better position than it was," Haslam said.

The governor's investments are now in a blind trust, so there is now way to know whether or not he still holds investments with JLL.

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