Blanco gave controversial Road Home contractor a secret raise
While former Louisiana Gov. Kathleen Blanco is making the most of her time out of office delivering speeches and writing a book, there's more trouble brewing for her back in the capital. From today's New Orleans Times-Picayune:
In the final weeks of Gov. Kathleen Blanco's administration, state officials quietly increased the size of the Road Home management contract from $756 million to $912 million, rewarding a contractor the Legislature wanted to fire, auditors questioned and thousands of homeowner applicants cursed.
The Blanco administration never told the public about the 25 percent compensation increase for ICF International that was added to the three-year Road Home contract Dec. 7. The Times-Picayune discovered the change this week during a review of the program's latest budget estimates, in which the Louisiana Recovery Authority shows it's setting aside enough to pay the full $156 million increase.
The story goes on to note that Blanco's administration approved the raise without notifying the legislature, which is supposed to review large recovery contracts. State officials presented a Road Home budget update to a legislative budget committee a week after the decision but did not mention the raise.
New Louisiana Recovery Authority Director Paul Rainwater, who was appointed by Gov. Bobby Jindal and given greater control over Road Home, said a raise was needed but questioned the amount and the process. He said he has contacted the legislative auditor to investigate and promised to make the findings public.
Earlier this week, ICF International released its fourth-quarter earnings, reporting revenues of $186.4 million -- "substantially above the $113.9 million reported for last year's fourth quarter." The Road Home contract accounted for the bulk of that revenue, totaling $108.8 million in the 2007 fourth quarter compared to $60.5 million in the fourth quarter of 2006. In the earnings release, company officials said the Road Home raise was needed to cover increased program management costs resulting from the receipt of about 50 percent more applications than originally estimated.
The ICF's dealings in Louisiana have raised ethical questions before. The company first got involved in the post-hurricane rebuilding effort when its Emergency Management Services subsidiary won a $900,000 contract to help the state decided how to spend federal grant money, helping develop what would eventually become the Road Home program. At the same time it was carrying out that work, ICF decided to seek the lucrative administration contract.
While it was pursing that deal, the formerly private company filed paperwork for an initial public offering of stock. It went ahead with that offering in October 2006 -- shortly after winning the contract from Louisiana. That same year, ICF paid its executives bonuses about five times higher than the previous year.
Clearly, the Road Home has been very good for ICF. But with more than 50,000 grant applicants still waiting for payments more than two and a half years after the storm, there are some Louisianans who don't think ICF has been very good for the Road Home -- and who rightly question whether it deserves such generous backroom rewards.
Sue is the editorial director of Facing South and the Institute for Southern Studies.