It’s an ill hurricane that blows nobody good

The Puerto Rico Electric Power Authority (PREPA) has canceled its outrageous no-bid $300 million contract with Whitefish Energy Holdings, which, among other things, forbid federal and Puerto Rican authorities to audit its labor costs and profit and had no penalties for failure to meet project deadlines.

But questions remain: Why was the contract granted in the first place?  And what is PREPA going to do next to restore power?

The whole thing reminds me of the contracts for reconstruction of Iraq.   After the invasion, American and other foreign companies were given lucrative, no-bid contracts to rebuild Iraq’s electrical systems, other public utilities and physical infrastructure.   Well-qualified Iraqi companies and workers were cut out of the process.

The result was that a lot of government contractors made a lot of money and very little reconstruction took place.   I can see the same thing happening with Puerto Rico—maybe a little less brazenly than in this case.

To review, the Washington Post revealed that a $300 million contract to restore Puerto Rico’s electrical grid was given to Whitefish Energy Holdings, a tiny, unknown company based in Interior Secretary Ryan Zinke’s home town of Whitefish, Montana.

Whitefish Energy was founded in 2015 by Andy Techmanski, an old friend of Zinke’s.  The company has never engaged in any projects of this size.  In 2016, it reportedly sold a 51 percent stake to Comtrafo S.A., a Brazilian electric transformer manufacturer as part of a plan to go into the transformer manufacturing business.

Whitefish Energy will not provide any services directly.   The contract is to find other companies that will do the work.   Whitefish will collect $300 an hour for a subcontracted lineman, $462 an hour for a subcontracted supervisor and $400 per worker per day for food and housing.

The contract shields Whitefish from legal liability and protects the company from audit.   When San Juan Mayor Carmen Yulin Cruz criticized the contract, Whitefish threatened to pull its workers out of Puerto Rico.

PREPA is a public authority that operates Puerto Rico’s electricity grid.   Its board of directors is appointed by the governor of Puerto Rico, with the consent of the Puerto Rican territorial Senate.  Since 2014, it has been under the supervision of the Puerto Rico Energy Commission, which also is appointed by the governor.

So why would a Puerto Rican government agency make such a  deal?  The most likely possibilities are that (1) someone was corrupt, (2) someone was naive or (3) someone thought this would be a good way to get into the good graces of the Trump administration.

Whatever the reason, the people who made the Whitefish deal are still in charge.   They are the ones on whom the Puerto Rican people, most of whom have been without electric power for more than a month, depend upon to restore power.

LINKS

That fishy contract to rebuild Puerto Rico’s electrical grid is now a bona fide scandal by Emily Atkin for The New Republic.

Whitefish Energy’s Puerto Rico Tweet is disgusting by Charles  P. Pierce for Esquire.

Bernie Sanders, in Puerto Rico, Calls for Nullification of Whitefish Contract by Aida Chavez for The Intercept.

Puerto Rico Electric Power Authority cancels Whitefish energy deal by Jennifer Bendery and Hayley Miller for The Intercept.

The Devastation of Puerto Rico by Vijay Prasad via Counterpunch.

 

 

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2 Responses to “It’s an ill hurricane that blows nobody good”

  1. 61chrissterry Says:

    Reblogged this on 61chrissterry and commented:
    What a tangled web they weave and those that suffer are the people of Puerto Rico.

    There is more than a hint of corruption, which appears to start with the Governor of Puerto Rico, Interior Secretary Ryan Zinke and others. The Trump administration should, if they were concerned for the residents of Puerto Rico, a state of the US, look into this as there appears to be a serious fishy smell or hint of corruption. Trump himself could gain some credibility by having this investigated, but will he.

    Like

  2. Mark Says:

    My comments are related to the contract found here:

    Click to access Whitefish-Contract-Signed-10-17-Copy_1508973720633_9100494_ver1.0.pdf


    It actually looks pretty reasonable for the most part but I have a few comments.

    I’ve read a lot of US government contracts over the years and the clause you refer to seems odd to me but may be rationalized by Article 29 which requires contractor compliance with a long list of Code of Federal Regulations.

    I believe rate auditing is part of the referenced CFR items. Note that the rates are audited by a group separate from the group issuing the contract (PREPA & FEMA in this case).

    I will also note that this contract seems to follow a pattern called “Indefinite Delivery / Indefinite Quantity” where you agree to the rates and general scope of work in the contract. Then you issue “contract releases” to specify what work to do, estimated costs, schedule, etc. to authorize the work to be performed. The contracting officer could let them finish the authorized work, stop issuing further releases, and the contract would naturally end at the end of the year (avoiding termination costs). The rush to terminate the contract appears to increase costs needlessly.

    Other items in the contract appear pretty typical to me with the following comments on rates. Rates for labor appear high – but there is the clause specifying 16 hour / 7 day a week labor. Time and a half & double time adds up quickly. The rates for equipment actually seem low to me, that may be a local situation.

    I would expect meal and accommodation rates in accordance with the government per diem rates – but that assumes you can actually get those rates in an area that has been devastated. They may have had to send in trailers / generators / etc. to house people as they fix the power system.

    Like

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