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Va. Firm Grows Fast, But Katrina Aid Lags
Debra James and her son Eric sit in their gutted home in New Orleans. They sleep in a FEMA trailer in the back yard while they wait on a Road Home grant. ICF International has issued 40,000 grants but aims for 90,000 this year.
(By Mario Tama -- Getty Images)
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Nevertheless, Donald E. Powell, the presidential-appointed federal coordinator for Gulf Coast Rebuilding, wrote to ICF to express "serious concerns about the effectiveness and expediency of this program." The Louisiana House of Representatives and Senate called for ICF to be terminated.
Given the political volatility, ICF hired lobbyists to reach out to Louisiana and federal officials. It retained former Louisiana congressman Robert Livingston (R) and others, paying them $180,000 so far this year, according to the company. "You have to reach out to all stakeholders," Beck said.
Through it all, the company grew. In the last quarter of 2006, the company's overall revenues more than doubled, to $113.9 million. Profit from all its businesses rose to $9.2 million. Kesavan's bonus climbed to $1.7 million in 2006 from $282,000 the year before; Wasson's rose to $1 million from $205,000.
In 2007, ICF started to deliver grants at a greater speed. In February, it made its 2,300th award -- considered a milestone -- and it recently boosted its goal to make 10,000 awards a month.
But while the pace quickened, ICF's troubles did not let up.
The state auditor, for instance, found that up to 12 percent of applications, even at a late stage, contained errors. Controversy also centered on the company's $19.1 million travel budget. The New Orleans Times-Picayune reported that one subcontractor, an appraising company, was unable to pay its staff and appraisers quit.
ICF said it had addressed the problems. Further, the company argued that the rules for doling out grants, designed by the state and federal governments to avoid fraud, were time-consuming and in a constant flux. "I think it would be difficult for any company in the world to say it could do better," Beck said, adding that the pace of grants was ahead of schedule.
To date, more than 40,000 grants have been handed out. More than 140,000 people await word on their applications, far more than originally projected.
"The spotlight can't be any hotter," said Beck, who said he expects the company to complete about 90,000 closings this year.
This month, ICF reported that second-quarter revenue quadrupled to $190 million, $129 million of which came from Road Home. And ICF raised its future revenue forecasts based on the projected workload. The company's stock closed at $21.08 yesterday, up 70 percent since September and near a high.
The company still faces challenges. A few days before the earnings announcement, the governor's office warned ICF that it could face millions of dollars in penalties if it did not meet benchmarks.
The Louisiana Recovery Authority, which developed the program's broad goals, announced last Friday that it had hired an outside consultant to evaluate the effort.
"We're hopeful it'll get smoother because the road has been fairly rocky so far," said Walter Leger, chairman of the authority's housing task force.
