Puerto Rico’s $300 million energy contract stirs controversy – FEMA has “significant concerns”, Governor requests audit – 72 percent of Puerto Rico still without power

Desdemona Despair

By Timothy Cama and Devin Henry
28 October 2017

(The Hill) – A massive rebuilding contract between Puerto Rico and a small Montana energy company has sparked controversy and raised questions about relief efforts after Hurricane Maria.

The $300 million contract between the stricken island’s power utility and two-year-old firm Whitefish Energy Holdings is looking more and more unusual each day.

On Friday, the Trump administration distanced itself from the contract, which the White House, the Federal Emergency Management Agency (FEMA) and Interior Secretary Ryan Zinke all said Puerto Rican officials were responsible for having signed.

“The federal government has nothing to do with this contract or the process. This was something solely determined by the Puerto Rican government,” White House press secretary Sarah Huckabee Sanders told reporters.

“As we understand, there is an ongoing audit, and we’ll look forward to seeing the results of that later.”

Zinke, who comes from the same Montana town as Whitefish Energy, said he had “absolutely nothing” to do with the company receiving the contract. Zinke had come under scrutiny because of the coincidence of his hometown company getting the contract.

“Any attempts by the dishonest media or political operatives to tie me to awarding or influencing any contract involving Whitefish are completely baseless,” he said in a statement. […]

Republicans on the House Energy and Commerce and Natural Resources committees sent a string of questions to officials on Thursday, asking Whitefish for documents related to its Puerto Rico operations and PREPA for information on its contact with repair firms like Whitefish.

“The size and terms of the contract, as well as the circumstances surrounding the contract’s formation, raise questions regarding PREPA’s standard contract awarding procedures,” Rep. Rob Bishop (R-Utah), the panel’s chairman, wrote along with Rep. Bruce Westerman (R-Ark.).

Hilary Cairnie, a government contracts attorney at Pepper Hamilton, said the Whitefish contract set off some red flags, but some of the unusual aspects might be explainable.

“It was a bit unorthodox in terms of how it came about,” he said of the no-bid contract. “But the FEMA disaster rules and contracting requirements afford that FEMA will recognize exceptions to competition rules.”

The contract also has a provision that appears to limit the ability of government agencies to audit Whitefish.

“In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives have the right to audit or review the cost and profit elements,” it states.

Cairnie said that’s highly unusual and likely not enforceable. Laws like the Inspector General Act give officials wide-ranging investigative authority, and the federal government wasn’t even a party to the deal.

“From a public sector perspective, that is supremely unorthodox,” he said. “While I can understand why a company like Whitefish would want to be able to be immune from audits, if the underlying contract was awarded consistent with FEMA rules and regulations, most assuredly, there would be multiple layers of audit requirements,” he said.  [more]

Whitefish Puerto Rico contract stirs controversy

By Timothy Cama
27 October 2017

(The Hill) – The Federal Emergency Management Agency (FEMA) is sounding an alarm over Puerto Rico’s $300 million contract with a small Montana company to restore power infrastructure, amid concerns over the firm’s tiny staff and lack of competitive bidding.

FEMA will be responsible for paying for the work by Whitefish Energy Holdings, but the Puerto Rico Electric Power Authority (PREPA), the island’s utility, entered into the contract.

“Based on initial review and information from PREPA, FEMA has significant concerns with how PREPA procured this contract and has not confirmed whether the contract prices are reasonable,” FEMA said in its statement.

“FEMA is presently engaged with PREPA and its legal counsel to obtain information about the contract and contracting process, including how the contract was procured and how PREPA determined the contract prices were reasonable.”

The agency also said that the contract is between Whitefish and PREPA, and FEMA had no role in its signing.

The Whitefish deal has raised alarm among Puerto Rico’s leadership, Congress and others, and two congressional committees are investigating it.

The contract was reached with no bidding. The company had two employees and little experience in utility work prior to Hurricane Maria hitting the island and is paying workers hundreds of dollars per hour.

The most recent version of the contract between PREPA and Whitefish states that FEMA had “reviewed and approved” it for compliance with its disaster recovery regulations. And Puerto Rico Gov. Ricardo Rosselló saidin a Wednesday letter to the Department of Homeland Security that the contract “appeared to comply 100% with FEMA regulations.”

As of Friday, 72.4 percent of electric customers in Puerto Rico had no power, more than a month after Hurricane Maria made landfall. [more]

FEMA has ‘significant concerns’ with Puerto Rico’s $300m power deal

By Jacqueline Thomsen
25 October 2017

(The Hill) – The governor of Puerto Rico is requesting an audit into how a small energy company from Interior Secretary Ryan Zinke’s Montana hometown won a multimillion-dollar contract to restore power to Puerto Rico.

Gov. Ricardo Rosselló sent a letter Wednesday to the Department of Homeland Security’s inspector general’s office requesting that the office audit how the Whitefish Energy company earned the contract.

“I request that your office complete its review of the Whitefish Contract so that a final determination can be made as to the Whitefish Contract and address any other issues regarding the same by Monday, October 30, 2017,” Rosselló wrote in the letter.

Rosselló said in the letter that Federal Emergency Management Agency (FEMA) representatives had also questioned how the Puerto Rico Electric Power Authority had granted the contract to Whitefish.

He said the FEMA representatives said they had additional questions about the contract but that they initially believed it complied with FEMA regulations.

San Juan Mayor Carmen Yulín Cruz earlier called for the contract with Whitefish Energy be “voided,” calling it “alarming.”

The tiny company reportedly only had two full-time employees when Hurricane Maria made landfall on Puerto Rico more than a month ago.

Whitefish later threatened to stop its work restoring power to the island over Cruz’s criticism. [more]

Puerto Rico gov requests audit into contract awarded to tiny energy company