In 2011, Chattanooga City Council members were subjected to strenuous sales pressure by the lighting company Green Global Lighting (GGL) and the city of Chattanooga’s Director of the Office of Sustainability. They worked in tandem to convince the City Council to approve a purchase for replacement of all city street lights with “smart” lights. Doing so would require replacement of over 26,000 lights at a total cost of over $23 million. The Green Global Lights were touted as an energy-efficient major crime fighting tool, an innovation better than any street light on the market.
The CEO of Green Global Lighting made a multi-faceted sales proposal to Chattanooga. He offered new jobs and new lights. Summer of 2011, he announced the relocation of his light manufacturing company from China to Chattanooga. At the same time, in a news article about the city of Soddy Daisy, the same CEO announced he would expand his existing Soddy Daisy business from 15 employees to 100 jobs. The city of Soddy Daisy petitioned the state for a $550,000 federal Community Development Block Grant to facilitate purchase of machinery for his business which was also located in Soddy Daisy. In anticipation of the grant, the GGL CEO announced to the press he expected $20 million in sales in 2011 increasing to $90 million by 2012. Meanwhile, the CEO told the city of Chattanooga 250 jobs were coming to Chattanooga. This idea was reinforced when Council members were given tours of his new Chattanooga manufacturing facility located in Chattanooga at 1301 Riverfront Parkway. It was a large building containing a few light samples and no manufacturing equipment. When I toured the facility 3-4 employees were present. According to a later news report, Soddy Daisy officials visited the Soddy Daisy Industrial Park and learned the business they tried to help had vacated the premises.
Several companies have LED light products. GGL offered “smart” LED lights. Unlike standard street lights, GGL said their lights had a special controller brain to direct light activity, or the absence of activity. To take full advantage of energy savings from “smart” lights, someone must read and react to the smart light data system’s messages and error reports. Trained people are needed to troubleshoot the lights, technology malfunctions, signal alerts, and to remotely control the lights. Almost any LED light can offer more light lumens than incandescent lights with less energy, but “smart light” controllers are equipped to allow the light to dim, brighten or strobe the lights “off” and “on” remotely. These features were the selling points GGL offered over their competitors. Some thought the decision to purchase these lights was a “no brainer.” Still, other council members had doubts.
Since “smart” lights require use of a computer system to facilitate remote monitoring and control, use of the remote monitoring hardware and software leads to an additional expense which occurs annually (based on a per/light fee). Use of the software that controlled the system was to be provided by a relatively new sole source service supplier. For this and other reasons, it was difficult to understand what it would cost to run the system after the warranty period expired.
The manual labor to replace the existing lights with the new lights was an additional city expense, estimated at $3 million. It was determined the Electric Power Board (who maintains the existing street lights) would be paid to replace the lights. Prior to Council’s vote to purchase the lights, Harold Depriest, CEO of the Electric Power Board, reminded council members that many of the city’s existing street lights were new or nearly new. The EPB has maintained a traditional repair and replacement program for Chattanooga’s street lights for many years. For that reason, a stock pile of new replacement lights, matching the current lights, were already warehoused. EPB maintained city street lights under a cost pass through maintenance agreement with the city of Chattanooga. Under the proposed GGL contract, ownership of all the existing street lights would become the property of GGL as they were replaced with the new lights. Lastly, Depriest cautioned council members to remember GGL’s new lights had no performance track record.
Since there was no “smart” light track record, GGL offered to discount its fees through the initial warranty period. However, it warned that if the city failed to purchase future lights the discounts on the Phase One purchase would be voided and revert to full price for service. The long-term fee structure was unknown.
While some City Council decisions required brief study, I spent hours researching and questioning the pros and cons of establishing a city lifelong relationship with GGL. Twenty-three million dollars is a significant financial commitment for any city to make, especially when $20 million of that is to a new company. Not only did Global Green Lighting have no significant longevity in the U.S. lighting business, but Chattanooga was its first street light customer. It was a new product, still in the design and development stage, using software written by another new company. It was impossible to validate long-term cost or typical maintenance issues because there was no evidence on which to base a conclusion. When the project was proposed, the only previous use was the pilot project of a few lights placed on Chattanooga’s North Shore and Coolidge Park. At that time, the GGL’s street light design was still evolving and the North Shore lights were in use less than nine months.
Extrapolating function and maintenance issues on lights still in a research and development phase seemed a risky proposition. In my mind, the potential risk was multiplied by 26,000 lights and equaling a $23 million taxpayer investment. The City Council choice was an up or down vote on the contract with GGL. Instead the discussion and decision should have reflected a decision on whether Chattanooga should commit to a new company promising new “smart” lights or “vanilla” LED lights supplied by an established light company with a track record.
Let me digress for a moment from talking about this GGL purchase to explain government purchasing in general. Citizens should understand what can happen in a Tennessee city purchasing process. A City Council or County Commission may not be given the opportunity to choose between one vendor and another. State law has very specific rules about city government service and product acquisitions. The state prefers government decision making go forward based on a “low” and “best” bid or a formal “Request for Proposal” process. If a city determines it needs a product or special service, the city is expected to issue a public “Request for Proposals.” It will state the desired specifications for the desired product/services. Then, the companies who are interested in providing the business should be able to vie in an open marketplace to supply the work or product. Unfortunately, this process can be steered to a specific vendor if someone in city administration communicates early on with one vendor and uses that vendor's narrow specifications to draft the publicly advertised “Request for Proposal.” When no other company can come close to delivering what the already “inside” company promises, then it becomes easy for a city’s administration to claim the preferred vendor presented the “best overall” proposal. Please note: this proposal occurred under a mayor prior to the current Mayor Berke.
Now, let me go back to the GGL purchase. March 20, 2012, six of nine Council members committed to spend $6 million on Phase One to purchase 6,000 street lights from Global Green Lighting. There were two “no” votes and one abstention. I voted no. Council was told the “Phase One” installation would be complete by June 2013. Though the Phase One $6 million installment was unbudgeted in 2012, the money needed to pay for the purchase was quickly made available. To do this, the money was borrowed (via a bond issue) to be available for prospective payments pending delivery of the first 6,000 lights.
May 10, 2012, Bloomberg BusinessWeek posted an interesting article written about the new company - Green Global Lighting. In it the CEO of GGL explains he was growing the business to 250 assembly jobs and 1,000 people to install and maintain the equipment. He said GGL’s ongoing service fees were 25 percent of existing maintenance fees. A planned 4:1 employment ratio of maintenance to assembly workers is intriguing in light of a claim to deliver a 75 percent reduction in future maintenance costs.
Apparently the research and development phase on Chattanooga’s GGL lights continued to occur through early 2013. March 2013, a Chattanoogan.com article reported, the GGL CEO admitted “there was a design delay involving the light control switch, but he said crews at the former Chattanooga Group plant in Hixson have that out of the way and are getting to work on the big order. He said about 500 LED lights have been delivered to the city and he expects all 6,000 to be in the city's hands by the end of May. He said it may take until the end of June until they are all installed.”
All the Council discussions and the approval for this purchase occurred 18-24 months ago. The completion dates for the Phase One installation have come and gone twice. Global Green Lighting staged its Chattanooga grand opening last week with Governor Haslam and Chattanooga’s Mayor Berke in attendance. It was not at the Riverfront Parkway location, but in Hixson. Again, the CEO made another announcement about more jobs just over the horizon. Forty people are reported working at the facility. A print media news article mid-August 2013 reported only 2,000 of the total 6,000 Green Global Lights are installed in Chattanooga and GGL’s CEO expects to complete sales of all phases of the remaining 26,000 street lights.
Questions remain. The original purchase was approved over 18 months ago. It’s been a long wait for the first installment of 6,000 street lights. Chattanooga’s expectations have not been met. Why isn’t Phase One of the contract complete? Delays in light deliveries certainly cannot be the fault of a city who borrowed the money to pay for the lights. Going forward, I would ask the present City Council and mayor to ponder this question. Does Chattanooga really need all 26,000 street lights to twinkle, dim and strobe? Perhaps all we ever needed was a few strategically placed LED lights (perhaps 6,000?) that do fancy tricks and the remainder could be LED lights that simply come on at night and turn off in the morning.
Deborah Scott
wscott@epbfi.com
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Deborah Scott never failed to do her homework, find the facts, make her argument, and vote her intelligence as well as her conscience.
I clearly recall her efforts to protect the taxpayers' money by preventing the GGL proposal from passing before all facts and other alternatives were considered. Perhaps Stan Sewell should hire her to audit everything the mayor proposes and the council approves before the contract is awarded or the check is drawn.
I miss you, Deborah.
Charlotte Parton