Puerto Rico Must Cancel $133 Million Contract For Impropriety

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Tim Pearce Energy Reporter
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Puerto Rico must cancel a $133 million contract to a disaster-response company after investigators found the company misled government officials to get the deal, Bloomberg reports.

Adjusters International Inc., a New York-based company, won a bid to repair as many as 75,000 homes. An independent review board examined the case and found the company was not properly certified and had violated several other requirements to receive the contract.

“It is an incontrovertible fact that Adjusters did not submit this required certification with its RFP, and this is acknowledged in its written statement,” the review board’s resolution said, according to Bloomberg. “It tried to justify it by indicating that it had federal GSA certification.”

Adjusters claimed to have a “teaming agreement” with a local Puerto Rican business to earn points that decide how each contract is awarded. The partner company managed call centers, however, and had nothing to do with construction.

A housing crisis is enveloping Puerto Rico where about half of homes were built “informally,” or without permits, inspections, insurance or under the guidance of a licensed architect. That fact could help explain why damage from Hurricane Maria, which hit the island five months ago, was so severe. Repairing the illegally built structures will be difficult, if not impossible, The Miami Herald reports.

Canceling the contract is the latest delay in the already drawn-out process of repairing the island. The Puerto Rico Electric Power Authority (PREPA), the island’s state-run utility, has had several major mishaps while handling the emergency.

PREPA signed a $300 million contract with Whitefish Energy, a Montana-based company that had only been in operation for about two years at the time the contract was signed. Whitefish also only had two full-time employees.

As pressure from public officials and the media mounted against the utility, PREPA eventually canceled the Whitefish contract. PREPA Executive Director Ricardo Ramos stepped down as head of the agency weeks later.

Puerto Rico officials have had trouble coordinating an efficient strategy for bringing power back to the island’s residents. Early predictions said full power would be restored to the island by the end of 2018, but that deadline was later pushed back months.

The effort has been setback in part by the condition of Puerto Rico’s energy infrastructure, which is three times older than the industry average. The government’s massive debt, $70 million, has also been a constant drag on the recovery effort.

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