[FoCHAT] CHAT News: CHAT meeting this week; next installment of "Squandered"

Mon Apr 27 00:09:42 CDT 2009

April 26, 2009

Dear CHAT Members,

1. Important CHAT Meeting This Week
Discussion of new upcoming CHAT business, including upcoming hearing in court in Baton Rouge about public records requests by Melanie Ehrlich, Founder, CHAT, which have not been filled or only partially filled by LRA after official filing for the requests last July, Oct. and Dec.
·         Time: Wed. at 6:30 PM at UNO 
·         Place: Room 179, UNO Milneburg Hall, on Milneburg Rd. (the road where the brand new dorms are, past the stop sign and the University Center and opposite the Fitness Center.
Building #24: Directions to the Business Bldg are given on the Campus Map for UNO 
·         Wed., Apr. 29. Newcomers are welcome.* 

2. The Rebuilding Information Station (RIS) is partnering with several community organizations to offer FREE workshops at several locations in the Greater New Orleans area.  Please plan to join us for one or more of these popular events and bring a friend!  Feel free to pass this calendar of upcoming events along to your distribution lists.
 Tuesday, May 5
5:30 PM - 6:30 PM
Community Center of St. Bernard 
1107 LeBeau St.
Arabi, LA

Keep the Water Out:  Flashing for Windows
Presenter:  Bill Robinson, LSU AgCenter Associate

Contractors as well as do-it-yourself homeowners are invited to this hands-on demonstration of the proper installation of house wrap, flashing, sealants and water barriers that control moisture, increase comfort and reduce water damage in Louisiana homes.  Learn the “tricks of the trade” of keeping houses dry with
modern flashing materials by watching construction demonstrations using a real windows in this homeowner-friendly seminar.
 Event website:  http://ccstb.org/commevents/index.html

3. Next installment from the recently published article “Stranded and Squandered: Lost on the Road Home,” by Davida Finger, Staff Attorney for the Loyola Law Clinic. 
>From the Seattle Journal for Social Justice Vol. 7, (2009)
B. Louisiana’s Privatization of Road Home: ICF International 

The State’s delegation to a private contractor—that was not the right thing to do. 
—Paul Rainwater, executive director of the LRA 

With statutory authority to contract with private parties,36 the State contracted with an ICF International37 subsidiary, ICF EMS, to manage the Road Home program in June 2006.38 The contract, initially valued at $756 million, had a stated term of three years.39 

Louisiana’s selection of ICF to administer Road Home was controversial. Because ICF had an existing contract with OCD that included drafting the Road Home implementation plans, the Louisiana Board of Ethics stated that ICF should be disqualified from bidding on the Road Home contract.40 However, the Board of Ethics ultimately accepted ICF’s position that ICF had sufficiently removed itself from discussion about solicitations for offers and concluded that ICF was eligible for the Road Home contract as long as it terminated its previous contract with OCD.41 
Prior to receiving the Road Home contract, ICF recognized the intricacies of the program, the importance of customer service, and the negative publicity it might face from failing. ICF identified many “performance and management risks” of the Road Home contract: “difficult deadlines”; “intense public scrutiny”; and “ensuring that the applications . . . are processed and funds are disbursed in a timely fashion.”42 But the risk ICF was most concerned about was “the adverse publicity associated with complaints from homeowners” because these complaints were likely to harm its reputation.43 

Even with this apparent understanding, ICF has experienced adverse publicity and complaints about its performance. In fact, ICF’s own concerns proved to be accurate predictors of its large-scale failures. An Associated Press article about Road Home explained these broad failures: “ICF now stands accused of inflating its closing figures by deliberately using red tape, confusion and delays to get applicants to settle for low grant amounts.”44 

One possible explanation for this systemic failure might be that the Road Home contract was of a much larger scope than any project ICF had ever undertaken, and it simply could not effectively handle the contract.45 Road Home accounted for 35 percent of ICF’s 2006 revenue46 and 63 percent of its 2007 revenue.47 In 2005 and 2006, before Road Home’s inception, no single contract accounted for more than 2 percent of ICF’s total revenue.48 In 2007, no other single contract accounted for more than 1 percent.49 

Still, ICF increased profits after the Road Home contract award. Three months after winning the Road Home contract, ICF announced that it would sell its stock publicly, its first public offering in its thirty-seven years of existence.50 ICF’s annual revenue increased fourfold between 2005 and 2007, and gross profit nearly tripled.51 For 2007, ICF’s chief executive was awarded a $1.5 million “performance bonus.”52 Indeed, the Road Home contract reportedly “sweetened [ICF’s] initial public stock offering and helped it buy four other companies” with ICF now reaching into government contracting sectors such as national defense and the environment.53 

ICF’s unsatisfactory implementation of Road Home has generated ample negative publicity. In December 2006, the Louisiana legislature called for an investigation of ICF’s failures and unanimously expressed dissatisfaction with ICF, pointing to errors in “pre-storm property values, damage estimates, deductions for insurance proceeds, deductions for FEMA payments, and other numbers and calculations.”54 In strongly worded resolutions, both the Louisiana House of Representatives and Senate called for ICF to be fired.55 Overall, ICF’s dismal performance in implementing Road Home has been acknowledged by community organizations,56 mass media,57 think tanks, and government accountability organizations.58 

In December 2007, just prior to leaving office and despite continuing problems with ICF’s performance, Governor Blanco increased the size of ICF’s contract from $756 million to $912 million.59 This increase was made without disclosure to the legislature or the public.60 Thus, the State actually rewarded ICF when only one year prior the Legislature had wanted to fire ICF for broad programmatic failures.61 Just days before this turn of events, Governor Blanco’s administration reported that it would not continue funding legal services intended to assist low-income homeowners move through Road Home application hurdles in order to receive their grants.62 

The LRA, under the new administration of Governor Bobby Jindal, called for an investigation.63 With ICF “widely questioned over bureaucratic delays and failures,”64 Senator Mary Landrieu would later comment, “I remain concerned about the slow pace of grant awards and closings and question the contract award amount granted to ICF, especially in light of possible funding shortfalls in the Road Home. It is particularly disturbing that at the same time, ICF’s executives were being rewarded with outrageous bonuses.”65 

Months later, in July 2008, the State fined ICF $1 million for its failure to meet performance targets.66 This fine represents less than 1 percent of the $156 million increase that ICF received, an amount which even ICF’s chief financial officer, Alan Stewart, referred to as “fairly nominal.”67 Indeed, the “penalties in ICF’s contract are too mild to be a real incentive for continued improvement.”68 Most importantly for homeowners, the penalties imposed on ICF do not seem to have incentivized improvements. Problems with Road Home have persisted. A 2008 Times-Picayune opinion column noted that Road Home’s failures have become so prevalent that only a “particularly egregious error [will] attract attention.”69

Best wishes,
Melanie Ehrlich
Co-Chairman, Citizens’ Road Home Action Team (CHAT)
http://chatushome.com

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