- The Washington Times - Monday, March 26, 2007

ICF International took on a huge contract last summer to administer a federal Hurricane Katrina recovery program in Louisiana that has been hounded by complaints about the time it takes to distribute grant money.

Nevertheless, the Fairfax consulting company’s stock value is up by more than 20 percent in the past six months.

Last June, ICF International won a contract valued at up to $756 million over three years to administer grants to homeowners in Louisiana to rebuild their homes after the 2005 hurricane.

The $7.5 billion program, called the Road Home, provides up to $150,000 to each homeowner in federally funded block grants, which are administered by the state.

ICF International beat out BearingPoint and Affiliated Computer Services in a bid for the contract to screen applicants and distribute the money.

By January, ICF International was being criticized by Louisiana Gov. Kathleen Babineaux Blanco and others for a slow response and unnecessary bureaucracy. The company reportedly received 103,000 applications but gave out fewer than 400 grants. State auditors also raised questions about what appeared to be excessive legal fees and travel expenses.

The company said it was dealing with software problems and disputes with applicants over property values, but denied being behind the state government’s schedule. ICF officials also said the size of the Hurricane Katrina recovery is unparalleled. The Road Home program required using more than 2,000 employees, about 700 directly employed by ICF International and the rest by 23 subcontractors.

“It was the largest contract we ever won,” said Doug Beck, ICF International’s senior vice president of corporate development.

The company normally operates with 2,100 employees internationally, about half in the Washington area.

For the Road Home program, they tried to hire as much local talent as possible.

“Given the amount of devastation, they’re very aware of how much money goes back into Louisiana to help the local economy,” Mr. Beck said. “We’ve tried very, very hard to have as much of a Louisiana footprint as possible. Ninety percent of the employees are from Louisiana and 70 percent are storm victims whose homes were damaged.”

ICF International officials announced Feb. 28 that they gave out 2,268 grants for the month, prompting Louisiana’s governor to tone down her earlier criticisms of the company. The company says it is on schedule to have given out a total of about 6,000 grants by the end of this month.

“I expect continued positive results and will not be satisfied until the application of every homeowner is complete,” Mrs. Blanco said. “We jump-started this program by removing roadblocks and holding ICF International accountable.”

ICF International has 38 years of experience handling government housing assistance programs. It helped in the recovery after the September 11, 2001, terrorist attacks and after Hurricane Andrew devastated central Florida in 1992.

However, until the Road Home, its contracts for the U.S. Department of Housing and Urban Development were valued at a total of just under $50 million since 2001.

The company has administered other government contracts for environmental work, defense, energy and human services. One of them was announced last week, when the Homeland Security Department awarded ICF International a $22.1 million, five-year contract for consulting services on how to protect U.S. infrastructure, such as power plants, railroads and telecommunications equipment.

The company said it would help the government deploy resources to “offer the most benefit for mitigating risk” from terrorist attacks.

Its stock hit a 52-week high last week after it announced its fourth-quarter revenue more than doubled. ICF International’s stock, ICFI on the Nasdaq Stock Market, rose to $18.90 per share yesterday, up 59 cents or 3 percent from Friday’s closing price.

The company reported net income of $9.2 million (65 cents per diluted share) on revenue of $113.9 million in the fourth quarter of 2006. One year earlier, it lost $1 million (11 cents) on revenue of $51.8 million, which it blamed largely on tax charges.

Financial analysts say Road Home was a watershed event for ICF International, but one that is unlikely to sustain its earnings for long at the same level as the fourth quarter of 2006.

Nevertheless, the company is making steady progress in winning other government contracts, said Joseph A. Vafi, a research analyst for the financial firm Jefferies & Co.

“Given a double-digit increase in backlog, we feel the base revenue will re-accelerate somewhat over the next several quarters,” Mr. Vafi said in a research note. “At the same time, a material slowdown post-Road Home anniversary could be a risk in 2008.”


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