The contract between Puerto Rico and Whitefish Energy prevents government agencies from auditing certain elements of a $300 million deal, according to a report Friday from CBS.
Puerto Rico’s deal rebuilding the island’s infrastructure with a small, inexperienced utility company does not allow the Federal Emergency Management Agency (FEMA) or any other agency to peek into the specifics of the $300 million deal.
“In no event shall [the Puerto Rico Electric Power Authority], the Commonwealth of Puerto Rico, the FEMA Administrator, the Comptroller General 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,” the contract notes, according to a tweet from CBS reporter David Begnaud.
Whitefish contract leaked to @juliannagoldman: govt agencies “in no event shall … have right to audit or review…cost & profit elements” pic.twitter.com/NX9qx7C9yl
— David Begnaud (@DavidBegnaud) October 27, 2017
Representatives at FEMA, which is responsible for overseeing disaster rebuilds, questioned how the Puerto Rico Electric Power Authority (PREPA) granted the contract. They have more questions about the contract, but they initially believed it complied with regulations.
The contract was awarded during the chaos that ensued after Hurricane Maria slammed into Puerto Rico. An employee with PREPA, who had a satellite phone and phone number called Whitefish following the hurricane, according to a report from E&E News earlier this month.
PREPA apparently had access to the phone number because the company issued a request for proposals when Hurricane Irma caused minor damage to the island two weeks earlier. Whitefish was one of the few companies to respond to the request.
FEMA has not been able to verify the validity of the contract, nor has the agency responded to The Daily Caller News Foundation’s questions about whether such a policy is legal. PREPA has not responded to TheDCNF’s questions about the contract.
Puerto Rico has a history of dolling out shady government contracts and questionable deals with various private entities.
The island’s officials filed for bankruptcy in May and recently closed nearly 200 schools to save $7 million, while simultaneously issuing 107 consulting contracts since January to questionable recipients, according to a report in September from The Daily Caller News Foundation’s Ethan Barton.
Puerto Rico spent $256 billion in federal funds from 1990 through 2009, but only collected $74 billion in tax revenue. The U.S. territory is required to prioritize payments to creditors unless the funds go to essential services.
About $4.7 million in consulting contracts went to companies with ties to government officials, more than $800,000 of which were public relations groups. Consulting contracts totaling nearly $389,000 were awarded to the marketing firm KOI Americas, which is owned by Edwin Miranda, a friend of former Puerto Rico Gov. Luis Fortuño.
Puerto Rico Gov. Ricardo Rosselló called for an audit of the deal earlier this month, telling reporters Thursday night that there will be “hell to pay” if any wronging is uncovered in the awarding of multi-million dollar contract.
More than 75 percent of Puerto Rico is still without electricity in Maria’s wake. U.S. lawmakers are calling for a probe into why the island turned to Whitefish instead of the mutual-aid network of public utilities usually called upon to coordinate power restoration after disasters.
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