Feds probe Puerto Rico utility’s no-bid contract
WASHINGTON — The Federal Emergency Management Agency raised more questions Friday over a $300 million contract given to a small Montana energy company to help repair Puerto Rico’s hurricanebattered electrical grid, noting “significant concerns” over how the deal was awarded.
FEMA said it is looking into whether the contract between Whitefish Energy and the Puerto Rico Electric Power Authority “followed applicable regulations to ensure that federal money is properly spent.”
FEMA said an initial review raises “significant concerns over how PREPA procured this contract and ... whether the contract prices are reasonable.”
FEMA also noted that it did not give preliminary approval for the deal, which was reached without competitive bidding.
The White House, meanwhile, sought to distance itself from the issue. White House spokesman Raj Shah said the deal with Whitefish was “made exclusively” by PREPA.
“The White House is not aware of any federal involvement in the selection,” Shah said in a statement.
On Thursday, Reps. Rob Bishop, R-Utah, chairman of the House Committee on Natural Resources, and Bruce Westerman, R-Ark., chairman of the subcommittee on Oversight and Investigations, wrote a letter directing the head of Puerto Rico’s public utility system to retain all records surrounding the hiring of Whitefish Energy and to turn documents over to Congress.
The Office of the Inspector General for the Department of Homeland Security also has begun a review of the Whitefish contract, said Assistant Inspector General Erica Paulson.
The Washington Post reported on Monday that Whitefish, which received the largest contract yet awarded in the troubled relief effort, had only two full-time employees on the day Maria hit the island. The company had never taken on a job the size of Puerto Rico’s.
Whitefish has said that its expertise working in mountainous terrain qualifies it for the job and that its business model calls for rapidly expanding by using subcontractors. Under the contract, Whitefish is charging $330 an hour for a site supervisor and $227.88 an hour for a “journeyman lineman.” The cost for subcontractors, which make up the bulk of Whitefish’s workforce, is $462 per hour for a supervisor and $319.04 for a lineman.
In an interview Thursday, PREPA’s CEO, Ricardo Ramos, said the utility has been pleased with Whitefish’s work.