Here is an update on Whitefish Energy, the “Two men with Connections” energy company from Montana, that won a $300M contract to repair power lines in Puerto Rico’s.
The contract papers were leaked yesterday and are available for all to read at www.documentcloud.org/...
Here is what we know so far about the contract —
Shockingly high labor and material rates -
No cost review or audit allowed, even though most of the contract is based on time and material -
No penalties for delays. Effectively, no penalties for non-completion of work -
FEMA Misrepresentation
FEMA says it did not review or approve the contract. Someone is being untruthful.
Payment Terms
Although, there have been statement from PREPA that the financial terms of Whitefish were attractive since it required no up front costs, they paid $3.7 million to Whitefish Energy up-front for mobilization of personnel and equipment.
Also, Whitefish is required to deliver weekly invoices and get paid within 10 calendar (not business) days. Late payment interest = 1% per month.
That does not sound like some attractive deferred payment plan.
Creatures of the Dark.
PREPA CEO Ramos says PREPA received bids from a few companies in the lull between Hurricane Irma and Hurricane Maria. The utility, which filed for bankruptcy in July, shortlisted two, including Whitefish. www.npr.org/...
Ramos has said that “Just before Hurricane Maria came, one of those two requested a payment guarantee that we thought was a bit onerous, so we decided to mobilize Whitefish".
PREPA never asked for mutual aid from the American Public Power Association, and instead it hired Whitefish to handle the job. www.npr.org/...
Ramos told E&E News that his bankrupt utility did not reach out to munis on the continental U.S. because he was unsure it could pay them back for assistance. www.utilitydive.com/…
"Just a matter of the timing," says Ramos. "Hurricane came, all communications went down, our servers were down."
PREPA has a bad reputation in PR -
Hiring a company like Whitefish, which relies on subcontractors rather than a staff of trained personnel "didn't make a lot of sense," Sergio Marxuach, policy director at the nonpartisan Center for a New Economy, told ABC News. "This is one of the reasons people down here really hate PREPA -- they do business behind closed doors and it ends up costing a lot of money." abcnews.go.com/...
Connections in High Places
According to mtpr.org/…,
Texas-based HBC Investments invested in Whitefish Energy this past August, ..
Joe Colonnetta is a founding and general partner of HBC Investments, and he donated more than $40,000 to Rick Perry’s campaigns for governor, according to the Texas Ethics Commission. As governor, Perry appointed Colonnetta as a trustee to the Teacher’s Retirement System of Texas.
From abcnews.go.com/…
Eight congressional Democrats wrote to the Interior Dept. inspector general asking for a separate investigation, specifically mentioning concerns about any possible Whitefish connection to Interior Secretary Ryan Zinke -- who is from Whitefish, Mont., the same town where the company is based -- or any other ties to the Trump administration.
Complicating matters are concerns over the relationship between Whitefish founder Andy Techmanski and Interior Secretary Zinke.
Zinke and Whitefish have confirmed the families know one another -- in their small hometown, "everyone knows everyone," the Interior Department said.
Both parties also insist that Zinke did not advocate on Whitefish's behalf.
Whitefish Energy lists Dallas-based HBC Investments as one of its investors on its website. One partner in that company, Joe Colonnetta, along with his wife, has donated to the Republican party and Republican campaigns over the years, according to FEC filings. In 2016 Colonnetta donated at least $25,000 to committees supporting Donald Trump's presidential campaign.
Timing
The contract was signed on Oct 17, not before Hurricane Maria hit PR. Surely, PREPA had plenty of time to reach out to other utility companies and bidders.
Although, Ricardo Ramos, the chief executive officer for the Puerto Rican utility, has said that the utility agreed to contract with Whitefish Energy before Hurricane Maria hit.
Price and Schedule
The contract is for $300M over one year with options to extend it. Sweet deal.
Investigations and Audits
Puerto Rico Gov. Ricardo Rossello said there will be "hell to pay" if any wronging is uncovered in the awarding of multi-million dollar contracts after Hurricane Maria devastated the island. abcnews.go.com/...
Republican and Democratic leaders on the House Energy and Commerce Committee sent a letter Thursday to Techmanski asking for various documents regarding its activities in Puerto Rico and for a staff briefing by Nov. 9.
Leaders of the House Natural Resources Committee, meanwhile, directed their probe at PREPA President Ricardo Ramos, asking for documents related to how the agency contracts with companies like Whitefish. thehill.com/…
PR and Optics
Earlier this week, Whitefish threatened to pull out from PR after Mayor Cruz demanded more transparency, after which the mayor called for the contract to be voided. thehill.com/. The governor of Puerto Rico requested an audit. thehill.com/… Finally, Whitefish went into damage control mode and issued an apology.
Remarks
The contract stinks from head to tail. No word from the WH — what did we expect?
I am sure this is not the first government contract with such clauses. Makes you wonder how many contracts with such clauses, especially at the state and local level in red states, slip under the radar.
But, hopefully the people of PR will get to the bottom of this and Americans will learn to recognize Republicans and Trump for what they are.
Further Reading
- Puerto Rico Infrastructure Rebuilding - with Solar Power and Balloons! — www.dailykos.com/…
- A New Green Power Grid For Puerto Rico? — www.dailykos.com/…
- That $300 million no-bid contract for Puerto Rico forbids any government audit or review — www.dailykos.com/...
- FEMA Had a Plan for Responding to a Hurricane in Puerto Rico — But It Doesn’t Want You to See It — www.dailykos.com/…
- Whitefish Energy threatens Puerto Rican mayor with taking their toys and going home — www.dailykos.com/…
- PREPA forgoes mutual aid, opting for little-known contractor — www.utilitydive.com/…
- Copy of contract — assets.documentcloud.org/…. Hold your nose while you read it.