Jacobs Engineering Has to Go

Many Johns Creek residents may not be aware, but the City of Johns Creek outsources many functions to a private company, CH2M Hill (since acquired by Jacobs Engineering). This is a situation that began at the formation of Johns Creek when our unincorporated area in North Fulton County became a city in December 2006, and the quickest path to providing a full suite of city services was to outsource those services to a professional firm with the experience and resources to do so. Several other new North Fulton cities followed a similar pattern, but with one major difference: every other city that hired CH2M Hill eventually brought their outsourced services in-house, replacing a private contractor with direct city employees.

Johns Creek renewed its contract with Jacobs Engineering in 2017 to run the city’s Public Works, Recreation and Parks departments, and to manage the city’s parks bond and TSPLOST projects. Here we are, a full 13 years later, and still have city services outsourced to a private contractor. Is this an undesirable example of Johns Creek exercising our city motto of “Be the Exception”? The contract with the city was renewed for five years, with up to five one-year renewal options. Under the terms of the contract, Johns Creek paid $2.4 million for the first year for Public Works and Parks management. Subsequent years are negotiated annually, with increases capped at 4%. For TSPLOST project management, the city pays a minimum annual fee of $500,000, and for parks bond management, the city pays a minimum annual fee of $150,000. The contract provides for quarterly audits and adjustments.

There is a stunning conflict of interest involved in this relationship. Consider this description of CH2M Hill and Jacobs Engineering:

CH2M HILL Companies, Ltd., also known as CH2M, was an engineering company that provided consulting, design, construction, and operations services for corporations and governments. The company was organized in Delaware and headquartered at 9191 South Jamaica Street, Englewood, Colorado. In December 2017, the company was acquired by Jacobs Engineering Group.

Jacobs Engineering Group Inc. is an American international technical professional services firm. The company provides technical, professional and construction services, as well as scientific and specialty consulting for a broad range of clients globally including companies, organizations, and government agencies. Its worldwide annual revenue reached nearly $15 billion in the 2018 fiscal year. Jacobs is ranked No. 1 on both Engineering News-Record (ENR)'s 2018 Top 500 Design Firms and Trenchless Technology’s 2018 Top 50 Trenchless Engineering Firms.

This is a company that makes much of its revenue and profit from construction projects. Having its employees operating our Public Works, road projects, and parks bonds is the equivalent of the fox watching the hen house. How can we be sure that our outsourced roles are maintaining an independent perspective, operating in the best interests of Johns Creek and our residents? Our recent four part series, Connecting the Dots (Part 1, Part 2, Part 3, Part 4), would suggest that alignment with the interests of residents is lacking, and that our outsourced roles may actually take active steps that hinder transparent and accurate information. Management of city funds is also to be questioned as we know that $450,000 of the $800,000 allocated to project management for our Parks Bonds is spent with little to show for having burned 56% of the budget.

Another concern is the movement of people between Jacobs Engineering and development firms that are active in Johns Creek. Tom Black was the Director of Public Works from 2011 until his resignation in 2018. Mr. Black now works for The Providence Group, a local development firm with interests in building and construction projects in Johns Creek. While all would certainly hope not, was this an example of a quid pro quo?

The question of cost also needs to factor into consideration. As a private company, Jacobs Engineering has an objective of maximizing their profit. That means that their cost of resources and services to Johns Creek is less than what the city pays for those services - that is Jacobs Engineering’s profit. The implication is that the City of Johns Creek is paying more for these services than if we were to bring those roles in-house. What justifies the additional premium we’re paying for Jacobs Engineering to run these functions?

Yes, other cities have contracted with CH2M Hill/Jacobs Engineering at their start-up. Every other North Fulton city that chose that path has since replaced their outsourced services with direct city staff. After 13 years, we have multiple instances of projects pushed on city residents that they clearly opposed, support for development, examples of restricted communications, spread of false information to support unpopular proposals, and personnel moving from city roles onto developer payrolls.

For the good of the city, our residents, and our community, it’s time Johns Creek takes control of its city services, and send Jacobs Engineering packing.