Whitefish Controversy Threatens to Derail Efforts to Restore Power to Puerto Rico

Public anger is rising in the U.S. territory of Puerto Rico as details emerge about a no-bid contract awarded to a little-known U.S. company to restore the island’s power grid, which was destroyed by Hurricane Maria.

Among the details of the contract attracting attention are pay rates about five times higher than what is normal in Puerto Rico, and a clause prohibiting island or federal authorities from auditing those labor rates.

U.S. politicians in Washington have begun demanding closer scrutiny of the $300 million contract, awarded less than a week after the hurricane to a company based in the U.S. state of Montana that had only two full-time employees at the time of the storm.

​Cause for concern

For many residents of the island, however, the greater concern is that the controversy could further delay the restoration of power. More than 75 percent of the island is still without power more than a month after Maria, and full restoration is estimated to be many months away.

Even in places where power has been restored, such as the island’s primary trauma hospital, Centro Médico, the system is so volatile that managers have abandoned the grid altogether in favor of a powerful network of generators installed by the U.S. Army Corps of Engineers.

At the eye of the political storm over the power contract is a company called Whitefish Energy Holdings, based in the same small Montana community that is the hometown of U.S. Interior Secretary Ryan Zinke. Zinke has denied any role in the issuance of the contract, which was awarded Sept. 26 by the publicly owned Puerto Rico Electric Power Authority, or PREPA.

With only two full-time employees of record on the day of the storm and two previous projects under its belt, the company relies mainly on subcontractors to perform its work. It currently has 325 of a proposed 1,000 workers on the job in Puerto Rico.

A spokesman for Whitefish, Ken Luce, explained that the company is holding off on bringing in more workers because of backlogs at the island’s seaports that have slowed the import of equipment necessary for the rebuilding work.

“We don’t have the equipment. The equipment is backed up, so until the ports get back up, you don’t want to pay the men when they have nothing to do,” Luce said.

​Questions over contract

However, as details of the contract have leaked out in recent days, other questions have frayed nerves and set company and island officials bickering with one another.

In one heated Twitter exchange this week with San Juan’s controversial mayor, Carmen Yulín Cruz, the company threatened to stop working altogether and send its employees back to the mainland.

While other island officials demand explanations, the executive director of PREPA, Ricardo Ramos, has been steadfast in defending the work Whitefish has done up to this point.

“Concerning Whitefish, all I can say is that they are doing an excellent job,” he told reporters at a press conference Tuesday. “It’s the best decision we could have made.”

The secretary of public affairs for the governor of Puerto Rico, Ramon Rosario, on the other hand, lashed out during one of the local government’s daily press updates, “if any wrongdoing has been done, those responsible should fry in jail.”

Among the questions that remain unanswered is why PREPA awarded the contract to a little-known company so quickly after the hurricane without submitting it to competitive bids. However the power company may have had few choices, given that it and the Puerto Rico territorial government were facing bankruptcy when the storm struck.

Payment for the work is expected to come from a $215 million award from the U.S. government’s Federal Emergency Management Agency, which was announced this week.

Scale and scope of project

Most controversial locally, aside from the company’s lack of experience in projects of this scale and scope, are the billing rates being paid to the firm.

Under the contract’s provisions, a “site supervisor” is to receive $330 per hour and a “journeyman lineman” will be paid $227.88 per hour. Subcontractors hired by Whitefish will receive even more, with supervisors being paid $462 per hour, while linemen will receive $319 per hour.

Lodging, meals and airfare to Puerto Rico are extra, according to a copy of the contract published this week by a website called Caribbean Business.

The contract also states, “In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA administrator, the Comptroller of the United States, or any of their authorized representatives have the right to audit or review the cost and profit elements of the labor rates specified herein.”

In a telephone conversation with VOA, Whitefish spokesman Luce described the provision as “a very standard agreement in cost plus in time contracts. It’s nothing new, but we will answer any questions that come up during the audit.”

Several legal experts, however, have charged the audit provision is unconstitutional, making the contract null and void.

As the public outcry grows, both locally and on the U.S. mainland, local and federal legislators including Senator Lisa Murkowski, a Republican from Alaska, and Congresswoman Nydia Velazquez, a Democrat from New York, have called for investigations into the procurement process.

In a letter addressed to local comptroller Yesmin Valdivieso, Puerto Rico Senate President Thomas Rivera Schatz demanded an investigation be conducted by her office.

However, Luce expressed little concern about the complaints being made by Puerto Rico’s politicians.

“Most of them are not calling for investigations, they are asking for more information, and we’re more than happy to provide it,” he said.

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