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FEMA: We Might Not Pay $300 Million Whitefish Contract

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FEMA has expressed misgivings about a contract given to a small Montana-based company to repair Puerto Rico's power grid, warning that it may not reimburse the cost of the contract.

The company charged with restoring power to the U.S. territory after two devastating hurricanes is situated in the same hometown of U.S. Interior Secretary Ryan Zinke.

On Oct. 19, the Puerto Rico Electric Power Authority awarded a $300 million contract to repair the island's electrical grid to Whitefish Energy Services. The majority of Puerto Rico's grid had been disabled by the Category 4 Hurricane Maria that hit the island on Sept. 20; roughly 76 percent of the island's electricity users were still without power as of Oct. 26, according to Vox.

Whitefish, a two-year-old company based in Montana, had never taken on a federal contract before and only had two full-time employees when Hurricane Maria struck.

PREPA chair Ricardo Ramos disclosed to reporters that the agency did not follow the normal bidding process and awarded the contract to Whitefish because "It was the first one that could mobilize to Puerto Rico and that didn't demand payment right away."

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The contract between PREPA and Whitefish reportedly indicated that the Puerto Rican power officials planned to rely on FEMA funding to help pay for the $300 million repair efforts.

On Oct. 27, FEMA released a statement voicing alarm over the Whitefish contract, asserting that the company's faculties were not worth $300 million, The Hill reports.

"Based on initial review and information from PREPA, FEMA has significant concerns with how PREPA procured this contract and has not confirmed whether the contract prices are reasonable," FEMA said.

"Applicants who fail to abide by these requirements risk not being reimbursed by FEMA for their disaster costs," the agency added.

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If FEMA officials decide not to reimburse the cost of the contract, then PREPA would still be legally bound to pay $300 million to Whitefish, regardless of how efficiently the company works to repair Puerto Rico's power infrastructure.

Several Democratic lawmakers and Puerto Rican officials have questioned why Whitefish was awarded the impactful contract. On Oct. 25, eight Democrats signed a letter calling for the Interior Department inspector general to investigate Whitefish's connections to Zinke and the broader Trump administration, The Washington Post reports.

"Whitefish is primarily financed by a private equity firm that is run by a contributor to the presidential campaign of Donald Trump," the Democrats wrote, according to ABC News. "We're concerned that Whitefish might have overstated its connections with the Trump administration to obtain the contract."

A spokesperson for Zinke has denied that the Interior secretary had any influence on the contract, but did confirm that Zinke is a personal acquaintance of Whitefish CEO Andy Techmanski "because they both live in a small town where everyone knows everyone."

Puerto Rico Gov. Ricardo Rossello has pledged that if any investigations indicate wrongdoing in the Whitefish contract, then there would be "hell to pay."

Sources: The Hill, VoxThe Washington Post, ABC News / Feature Image: Pixabay / Embedded Images: FEMA, Gage Skidmore/Flickr

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