Saturday, March 15, 2008

Blanco defends Road Home firm's raise

Former Gov. Kathleen Blanco on Friday defended her decision in December to increase the Road Home contractor's maximum pay by 25 percent, even as Louisiana officials threaten the stiffest fines yet against the company for failure to prove it met a key performance standard.

The Office of Community Development has put the contractor, ICF International, on notice that it will be fined $800,000 if it can't provide more convincing proof by May 8 that it resolved homeowner disputes as it claimed to have done in July, August and December of 2007.

The pending fine, if assessed, would bring total fines against the company to $925,000. The fines would have reduced the amount ICF could earn from its promised maximum pay of $756 million, but just before the year ended, its pay limit, set by contract, was increased to $912 million. Its possible income from running the homeowner portion of the Road Home went up 25 percent, from $633 million to $789 million.

Key legislators and the Louisiana Recovery Authority's housing chairman, Walter Leger, said they didn't know about the raise until The Times-Picayune inquired about it Wednesday.

But on Friday, Blanco and her former commissioner of administration defended the pay raise, saying other state offices were involved in negotiations with ICF.

Repeated review

"It was my understanding and belief that any contract change would be publicly noticed," Blanco said in an e-mail message sent from France, where she's giving a speech to a flood-response conference. "I encourage Steve Theriot, the legislative auditor, whose office was consulted during negotiations, to continue to audit ICF and to hold them accountable for every dollar of their contract."

Theriot said he would begin dissecting the amendment costs immediately.

Jerry Luke LeBlanc, who acted as Blanco's representative in signing the contract amendment, said former LRA Executive Director Andy Kopplin and key legislative staff also were involved in calculating the amount of the increase and gave their approval.

"When I was brought the final contract (amendment) everyone was in agreement that this is the final amount," said LeBlanc, who left state government when Blanco left office in January. "LRA, OCD (Office of Community Development) and auditor folks, who took a look at a component of it -- they all analyzed the data. Before I would sign it, I wanted multiple elements to look at it."

Kopplin, who recently completed an unsuccessful campaign to fill an open congressional seat, was on vacation and couldn't be reached for comment Friday.

A quest for offsets

Kopplin's successor, Paul Rainwater, said the LRA's staff was notified at the time, but had no oversight of the contract and "urged the (the administration) to offset contract increases to the extent possible with reductions in other portions of ICF's contract, to aggressively manage ICF's labor costs to achieve savings or to increase the contract amount incrementally."

That wasn't done and now Rainwater, an appointee of Gov. Bobby Jindal who wasn't with the LRA at the time, is left to find ways to keep the costs from reaching the new $912 million cap.

"It is outrageous that ICF couldn't do the job for more than $750 million and that they were given a pay raise after their history of disappointing service," Jindal said.

Even Leger, still an LRA member and a self-described Blanco "fan," is baffled by the increase, given that many political observers believe difficulties managing the Road Home, Blanco's signature recovery program, played a lead role in ending her political career.

"It's just kind of surprising that this company that's partially responsible for her not seeking re-election gets treated this way," said Leger, whom Blanco picked to handle LRA housing issues.

Figures don't agree

In the amendment itself, the parties justify more money for ICF by saying it will pay out far more Road Home grants than originally expected. The document says the number increased from 100,000 to about 160,000. However, the program launched expecting to pay more than 114,000 grants and estimates for total grants have now dropped to as low as 128,000.

LeBlanc said the state had to pay the Road Home contractor more money "because ICF was going to have to either stop processing cases or it would trickle down to a snail's pace" because they "would run out of money to pay their subcontractors."

But when the amendment was signed in December, ICF, a publicly traded company, was wrapping up a profitable quarter in which revenue shot up 64 percent over that of the same period in 2006, mainly because of payments for running the Road Home program.

LeBlanc said staff for a key legislative audit committee asked OCD and LRA to come to a hearing a week after the amendment was signed to answer questions about the pay increase, but then never raised the matter at the meeting. He said Blanco administration officials didn't bring it up in that forum because they can only respond to committee questions.

While all that was happening, state officials were publicly expressing concern about homeowners' myriad complaints that Road Home staffers provided poor customer service, often failing to return phone calls, explain grant delays or resolve disputes. Rainwater says he remains worried about those issues.

He said that was the reason a new contract to handle FEMA elevation payments was not given to ICF and why he's asked Louisiana State University to conduct a customer service review.

"We are sending a letter to each employee of ICF concerning some of the ways they've talked to some of our people and treated some citizens," Rainwater said. "I expect people who have already gone through a lot to be treated with dignity."