Puerto Rico’s Gov. Rosselló orders audit of Whitefish contract to fix power grid – USA TODAY
A small company you’ve never heard of just landed the huge task of restoring power to Puerto Rico.
Puerto Rico Gov. Ricardo Rosselló wants the inspector general of the Department of Homeland Security to look into a contract awarded to a small Montana firm to rebuild portions of the island’s hurricane-ravaged electric grid.
Montana-based Whitefish Energy Holdings, which had been registered for two years and had two employees when Hurricane Maria hit the island Sept. 20, landed the $300 million contract with the Puerto Rico Electric Power Authority (PREPA) six days later. The company now has 300 people working on the island “providing important recovery services,” Rosselló said in a letter sent Wednesday to Inspector General John Roth. Whitefish employs mostly subcontractors.
Rosselló described a three-hour conference call Tuesday between representatives of the Federal Emergency Management Agency and law firm Greenberg Traurig, representing PREPA.
“The FEMA team concluded that they will want to follow up with additional questions and information requests on the procurement process, but that they had no comments on the the Whitefish contract at this point since it appeared to comply 100% with FEMA regulations,” Rosselló wrote.
Rosselló said that in addition to the inspector general’s review of the contract, the governor has asked his own Office of Management and Budget to audit the Whitefish contract to make sure it followed Puerto Rico and federal law.
The contract has raised eyebrows on the island and in Washington, where Republicans and Democrats on Capitol Hill have called for an investigation. The small company with a short track record is based in Interior Secretary Ryan Zinke’s hometown of Whitefish, Mont., fueling questions about how the lucrative deal was clinched.
Whitefish is backed by a private equity, HBC Investments, which is headed by Joe Colonnetta, a major donor to the President Trump’s election campaign, the Trump Victory PAC and other GOP candidates.
Whitefish Energy spokesman Ken Luce said only two capable companies answered PREPA’s call for bids, which Luce attributed to industry doubts about the bankrupt utility’s ability to pay a massive repair bill after its infrastructure was decimated by the twin storms.
“Everybody waited, including the U.S. government, to get involved,” Luce said. “Whitefish had good financial backing with private equity and was willing to take that risk.”
Whitefish CEO Andrew Techmanski spoke to PREPA officials about his company’s capabilities after Hurricane Irma hit the island and before Maria, Luce said. After Maria, PREPA issued a request for proposals and Techmanski called again. He flew to the island to make an initial agreement on Sept. 26. The first Whitefish workers arrived Oct. 2 though the contract wasn’t finalized until 18 days later, Luce said.
PREPA, which is owned by the Puerto Rican government, filed for bankruptcy in July, seeking to restructure its $9 billion debt. It was the fifth Puerto Rican agency to do so, as the commonwealth’s government tries to deal with $74 billion in debts.
Ricardo Ramos, executive director for PREPA, defended the contract with Whitefish and another private contractor, Cobra Acquisitions LLC earlier this week, instead of signing a mutual aid agreement with members of the American Public Power Association, as most other utilities do in damaging emergencies such as hurricanes.
If PREPA had activated the mutual aid agreement, it would have had “to do all the mobilization, provide transportation, fuel and accommodation,” Ramos said, according to El Nuevo Dia newspaper in Puerto Rico.
And these private companies are taking care of their own logistics requirements, including food, fuel delivery, accommodations, transporting their equipment and materials. “It is a relief in terms of logistics for PREPA,” he said.
Of the five companies that responded to PREPA’s call for bids after Hurricane Irma, Whitefish’s bid was lowest, Ramos said. And the Montana company only sought a $3 million downpayment, compared to a $25 million downpayment demanded by the only other company in the running, he said.
PREPA’s contract with Whitefish, signed Oct. 17, calls for the company’s employees to be paid $330 hourly for a site supervisor, $227 per hour for a journeyman lineman, and $204 for a heavy equipment operator. The company is also charging $80 a day to feed and $332 to house each worker. Flights are charged at $1,000 in each direction. Subcontractors are paid significantly more: $462/hour for a supervisor, $319/hour for a journeyman lineman, and $286/hour for a heavy equipment operator.
Under the contract, PREPA is required to pay Whitefish within 10 days of its weekly invoices for time, materials and equipment rentals, up to a maximum of $300 million.