FEMA not on board with Puerto Rico’s $300M power deal

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Nearly three-quarters of the electricity customers in Puerto Rico are still without power, more than a month after Hurricane Maria made landfall.

In an effort to restore its power infrastructure, island officials signed a $300 million contract with a small, for-profit Montana company instead of going through the process with a FEMA-approved mutual-aid network of public utilities.

The Montana firm’s tiny staff and lack of competitive bidding potential have FEMA officials and Democrats concerned.

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 company, 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.”

On Thursday, Puerto Rico Gov. Ricardo Rossello said there will be “hell to pay” if any wronging is uncovered in the deal after eight congressional Democrats wrote to the Interior Department inspector general asking for a separate investigation. They are most concerned with any connection the small energy company may have with Interior Secretary Ryan Zinke — who is from Whitefish, Montana, the same town where the company is based — or any other ties to the Trump administration.

Rossello asked the DHS inspector general to complete a review of the Whitefish Contract by next week to answer questions, though he noted in his letter that the contract “appeared to comply 100% with FEMA regulations.”

The contract was reached with no bidding. Critics say the Whitefish 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.

If FEMA does not pay PREPA for the work, the Whitefish contract still stipulates that the financially-struggling utility has to pay.

PREPA Executive Director Ricardo Ramos said Tuesday that other power restoration companies were ruled out because they required a large upfront deposit, which PREPA cannot afford to pay.

“Whitefish was the only company — it was the first that could be mobilized to Puerto Rico. It did not ask us to be paid soon or a guarantee to pay,” Ramos said. “For some reason, someone in the United States has to be upset, because they aren’t here, that I have hired Whitefish — but that is their problem.”

“It is important for all applicants for FEMA Public Assistance to understand and abide by federal requirements for grantee procurement,” FEMA said in its statement. “Applicants who fail to abide by these requirements risk not being reimbursed by FEMA for their disaster costs.”

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