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CAIN’T TELL (PREPA) NUTHIN’: Puerto Rican Utility’s Own Lawyer Told Them Not To Take The No-Bid Whitefish Energy Deal

SAN JUAN — Puerto Rico’s government power company didn’t follow its lawyers’ advice when it agreed to a $300 million grid-construction contract with Whitefish Energy Holdings LLC, according to documents released a House committee probing the now-canceled deal.

Documents provided by the public power monopoly known as PREPA show at least seven types of contractual protections that were recommended by its lawyers at Greenberg Traurig LLP but omitted from an Oct. 17 agreement with Whitefish, according to documents released Monday by the House Committee on Natural Resources.

The panel is scheduled to hold a hearing today on financial transparency in repairing Hurricane Maria’s catastrophic damage to Puerto Rico’s power infrastructure.

The Senate Committee on Energy and Natural Resources is also holding a hearing at which Gov. Ricardo Rosselló and PREPA Executive Director Ricardo Ramos are scheduled to testify.

Ramos unexpectedly canceled a scheduled appearance in Congress last week. The PREPA board of directors said he was needed to help manage the arrival of thousands of electrical workers from utilities in Florida and New York through Nov. 21.

The federal oversight board supervising Puerto Rico’s finances is now vying with the governor for control of Prepa following the Whitefish controversy. Congress installed the board last year to manage the restructuring of Puerto Rico’s $73 billion in debt, reform its economy and reverse years of population loss.

But a federal judge on Monday barred the oversight board from wresting control of the utility, saying it had no such power under the terms of Puerto Rico’s federal rescue package.

Congress is debating the oversight board’s role in Puerto Rico’s recovery from Hurricane Maria while the majority of the 3.4 million residents there still lack electricity. Natalie Jaresko, the board’s executive director, has asked lawmakers to elevate its authority above the governor’s. In congressional testimony last week, she suggested that Congress condition Puerto Rico’s federal assistance dollars on an expansion of board powers.

PREPA selected Whitefish, a startup firm based in the remote Montana hometown of Interior Secretary Ryan Zinke, as general contractor for the reconstruction without holding a competitive bidding process. Rosselló canceled the deal last month under criticism from members of Congress and local politicians over the contract terms.

Congressional committees, the Department of Homeland Security and the Federal Bureau of Investigation (FBI) are now reviewing the circumstances around the contract award.

Records released by the Natural Resources Committee show the deal didn’t require a performance bond, didn’t justify billing for time and materials and didn’t specify PREPA’s damages in the event of a contract breach, despite recommendations from Greenberg Traurig to include those clauses. The committee received more than 2,000 documents in total and said it expects to receive more.

The committee said certain hourly rates on the contract jumped 50 percent between the time Whitefish arrived on the island and Oct. 17, when a contract amendment was signed.

Emails included in the trove also show Whitefish CEO Andy Techmanski asking an employee in PREPA’s procurement department if “you or your families need anything” including generators, water or food.

 

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The Author

John McCarthy

John McCarthy

John McCarthy has been reporting on the U.S. Virgin Islands since 1989. He is originally from Detroit, Michigan.

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