Engineering a move

Tampa Bay Business Journal
June 23, 2006
by Margie Manning
Senior staff writer

TAMPA -- PBS&J, one of the largest engineering firms in the United States, will announce later this year that its corporate headquarters has moved to Tampa.

The company, which had been based in Miami for many years, already is assembling its top executives here, said John Zumwalt III, chairman and CEO.

The move is welcomed by José Valiente, chair of the Greater Tampa Chamber of Commerce.

"It's a great source of pride for us to have this Florida-grown, employee-owned, multi-faceted firm headquartered in Tampa," Valiente said.

Once the corporate move is official, PBS&J would rank No. 8 on the Tampa Bay Business 200, the Tampa Bay Business Journal's list of largest privately held companies. The company had $520 million in revenue in the fiscal year ended Sept. 30, 2005, a 15 percent gain from the prior fiscal year.

Increasing demands for updated highways, water systems and housing have driven PBS&J's growth, Zumwalt said.

But the company also has been working to recover from a misappropriation of funds discovered a year ago that has resulted in overpayments by departments of transportation in at least four states, including Florida, to PBS&J. The company has said it expects to restate financial results for 2002, 2003 and 2004.

The misappropriation "may have an impact" on the firm, Zumwalt said, but it would not be significant. "I think we'll do just fine," he said.

PBS&J has long been in Tampa. Nearly 340 of the company's 4,000 employees, including Zumwalt, work at the Tampa location at 5300 W. Cypress St.

They've now been joined by Todd Kenner, PBS&J president, who moved to Tampa in mid-June from Las Vegas. Also in Tampa are Don Vrana, hired as CFO in November, and C. Lee Essrig, who joined PBS&J in February in the newly created job of chief ethics and compliance officer. Zumwalt expects to bring in additional corporate executives.

"Tampa is more centrally located to all our offices," Zumwalt said. "From Tampa you can be almost anyplace in Florida in four hours."

PBS&J's local work includes a contract with the Florida Department of Transportation for the design of roadways and bridges on a new interchange between Interstate 4 and the Lee Roy Selmon Crosstown Expressway. The firm also is the construction engineering and inspection firm representing FDOT on the rebuild of "malfunction junction," the Interstate 275/I-4 interchange.

In addition, it is serving as a consultant to Tampa Bay Water on a project to expand the regional water supply system and was responsible for architectural design and construction oversight of the new Aircraft Rescue and Firefighting Facility at Tampa International Airport.

Outside the area, PBS&J is heavily involved in repairing the destruction caused by Hurricane Katrina. It is among several private contractors teamed with the U.S. Army Corps of Engineers on a four-year, $6 billion project to improve hurricane protection in New Orleans. PBS&J is involved in senior project management, focused on mapping, project scheduling and cost estimates, said Corps spokesman Dana Cruikshank.

Fifty PBS&J employees are working with the Mississippi Emergency Management Agency to identify federal assistance to rebuild damaged infrastructure. PBS&J's Gavin Smith is heading Gov. Haley Barbour's Office of Recovery and Renewal, where his tasks include investigating non-federal funding sources for recovery.

PBS&J is wrapping up an internal investigation into accounting irregularities and misappropriation of assets found by auditors in March 2005, Zumwalt said.

The funds in question related to expenses for employee medical benefits, cash accounts and reserves for medical claims, according to a filing with the Securities and Exchange Commission. CFO W. Scott DeLoach resigned shortly after the irregularities were revealed.

The accounting improprieties had the effect of increasing the overhead rate, or indirect costs not directly billed to projects, which are factored into client billings.

PBS&J approached FDOT last year, when company officials told the state they had uncovered fraud, said Dick Kane, a spokesman for FDOT in Tallahassee.

In December, PBS&J gave the state $2 million in escrow, as the parties worked to determine the ultimate outcome of the overcharges. That was bolstered by a $2 million letter of credit this year, Kane said. PBS&J also voluntarily removed itself from submitting letters for new work, although it continues with already awarded contracts.

PBS&J is the largest consulting contractor for FDOT, with 56 contracts worth about $336 million in the last five years.

In Texas, where projects accounted for 8 percent of PBS&J's revenue in 2005, abut $43 million, the DOT said it would suspend PBS&J from contracting to perform new services, although the company could continue its current projects, according to a June 6 filing by PBS&J with the SEC.

State transportation departments in Georgia and Nevada also were overbilled, according to reports published this month in the Atlanta Journal-Constitution and the Las Vegas Review-Journal. The company was negotiating settlements, the reports said.

Zumwalt said PBS&J has not lost any clients in either state.

mmmanning@bizjournals.com | 813.342.2473