The federal emergency agency raised more questions Friday over a $300 million contract given to a small Montana energy firm to help repair Puerto Rico’s hurricane-battered electrical grid, noting “significant concerns” on how the deal was awarded.
The Federal Emergency Management Agency said in a statement that it is looking into whether the contract between Whitefish Energy and the Puerto Rico Electric Power Authority, or PREPA, “followed applicable regulations to ensure that federal money is properly spent.”
After an initial review, FEMA “has significant concerns over how PREPA procured this contract and has not confirmed whether the contract prices are reasonable,” according to the statement.
FEMA also noted it did not give any 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, bipartisan concern in Congress escalated for a second day over the slow pace of power restoration in Puerto Rico,
Rep. Rob Bishop (R-Utah), chairman of the House Committee on Natural Resources, and Rep. Bruce Westerman (R-Ark.), chair 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 turn over documents to Congress.
Meanwhile, 35 Senate Democrats signed a letter to the heads of FEMA and the U.S. Army Corps of Engineers calling on the Trump administration to establish a clear chain of command for who is responsible for coordinating work to restore power to the island.
“We are particularly concerned with the lack of a unified command for electric grid restoration to ensure that resources are properly and quickly utilized, that specific tasks are appropriately prioritized, and that efforts are not duplicative,” the letter stated.
The Office of Inspector General for the Department of Homeland Security also has begun a review of the Whitefish contract, said Assistant Inspector General Erica Paulson.
The governor of Puerto Rico on Wednesday requested such a review to clear up questions about the deal. But according to sources familiar with the probe, it began earlier in the week, based on inquiries from members of Congress and media reports.
The Washington Post reported Monday that Whitefish, which received the largest contract yet awarded in the troubled relief effort, had only two full-time employees on the day Hurricane Maria hit the island. The company had never taken on repairs on the scale of the destruction suffered in Puerto Rico.
Whitefish has said that its expertise working in mountainous terrain qualifies it for the job and that its business model calls for rapidly expanding through the use of 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.
Senate Democratic leader Charles E. Schumer (N.Y.) said in a statement Thursday that the Trump administration needs to stop congratulating itself on the recovery effort.
“With most of Puerto Rico still without power, and far too many lacking drinking water and proper sewage treatment, the administration patting itself on the back couldn’t be more premature or inappropriate,” Schumer said. “This administration needs to stop dragging its feet, establish coherent command and control . . . and take the lead when it comes to restoring power.”
Whitefish and PREPA struck an agreement Sept. 26, six days after Maria swept through, without a formal bidding process. About 80 percent of customers still have no electricity.
In an interview Thursday, the utility’s chief executive, Ricardo Ramos, said the utility has been pleased with the work so far by Whitefish. Ramos said given that the utility is already bankrupt and under court supervision, it is the “most regulated company in the world.”
Ramos said he is “very comfortable with any investigation” by Congress.
Separately, a bipartisan group of House lawmakers, including Majority Leader Kevin McCarthy (R-Calif.) and Democratic Whip Steny H. Hoyer (Md.), said they would travel to the island Saturday to observe recovery efforts.