Records From House Panel: Puerto Rico Ignored Lawyers' Advice On Repair Contract

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Representative Garret Graves, Republican of Louisiana, asked why Congress should pay so much for Puerto Rico, when Puerto Ricans are exempt from most federal income taxes.

Legislators also wanted answers about Whitefish Energy Holdings, the firm that got a contract with steep markups that several members of Congress described as “price gouging.” The Federal Emergency Management Agency distanced itself from the contract and the government was forced to cancel it after a public outcry.

Ricardo L. Ramos, the chief executive of the Puerto Rico Electric Power Authority, known as Prepa, told the Senate Energy and Natural Resources Committee that he had hired Whitefish instead of enlisting the help of other utilities under mutual aid agreements because he did not have enough supplies for even his own crews.

“We had no fuel, no phone, no internet. No nothing,” Mr. Ramos said. “How could I bring more people into that situation?”

Whitefish was a contained unit with its own satellite phones and tents, he said.

However, in emails released Monday between Prepa and Whitefish, it was clear that the Montana company had also struggled with housing and logistics, and that Prepa was able to accommodate them.

In an email exchange between the chief executive of Whitefish, Andy Techmanski, and Prepa, Whitefish requested hotel rooms for his workers, and the utility provided 60 rooms for them. Whitefish had trouble bringing in materials, and needed help from both the Jacksonville Electric Authority and Prepa with logistical problems that were preventing the company from getting the work done.

Photo
Whitefish workers in Manatí, P.R., this month. Credit Erika P. Rodriguez for The New York Times

“We have 60 rooms at Verdanza hotel reserved to accommodate your first wave,” wrote Ramón Caldas Pagán, a senior manager at Prepa, in an email response to Mr. Techmanski. “We need to know what are your needs to transport your equipment as soon as possible.”

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At the hearings, Mr. Ramos suggested that the procurement office and legal department at Prepa were to blame, and insisted that there had been no corruption. “I don’t know of anyone being offered a kickback,” he said.

The records were released by the House committee, which is seeking to strengthen the authority of the fiscal oversight board that manages Puerto Rico’s finances.

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The documents showed that Puerto Rico’s electric company disregarded its own lawyers’ advice when it signed the contract. The agreement offered so few protections that it allowed some workers to bill for “nearly every waking hour” they were on the island, according to the House panel investigating the deal.

A review by The New York Times showed the company was paying some subcontractors about one-seventh what it billed Prepa. The contract called for linemen to work 16-hour days and seven-day weeks at $319 an hour — 17 times the average wage of the Puerto Rican workers. But Mr. Ramos said that five other bidders had offered similar rates.

Prepa’s lawyers had recommendations on everything from how the contract could be terminated to how the rates should be set. But the guidance was not followed — and the final provisions agreed to were tilted in the Whitefish’s favor, the records show. Even Prepa’s own risk management officer had balked, because he was never offered the opportunity to evaluate the terms, nor did the office receive proof of insurance.

“We are conscious of the urgency of the work to be done,” Sammy Rodríguez Ortega, a Prepa executive, wrote in an Oct. 19 email to Prepa’s finance director and staff lawyer. “However, there are high risks associated with the scope of this work.”

The emails show that a lawyer for FEMA in Puerto Rico had also expressed concerns.

A spokesman for Whitefish, Ken Luce, said the company would cooperate with Congress.

“Whitefish Energy continues to make progress on our assigned work to restore electrical transmission infrastructure on Puerto Rico and our team of more than 500 workers remains fully committed to this mission,” Mr. Luce said in a statement.

The Army Corps of Engineers is overseeing power restoration efforts in Puerto Rico, but Mr. Rosselló said the agency was slow to ramp up its work. Nearly eight weeks after Hurricane Maria trampled the island and tore up everything from transmissions towers to power poles and miles of lines, the grid is generating just 49 percent of its capacity.

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Kenneth Mapp, the governor of the United States Virgin Islands, also testified and offered a bleak view of conditions there, urging Congress to change the way it allocates medical and storm relief funds to the territories.

Only 30 percent of residents have electricity after Hurricanes Irma and Maria pounded the islands, where nine schools and two hospitals were destroyed. Families are living in their cars and getting soaked in homes with no rooftops or walls, he said.

“With each rainfall, families are being harmed,” Mr. Mapp said.

Deborah Acosta contributed reporting from New York.

A version of this article appears in print on November 15, 2017, on Page A11 of the New York edition with the headline: After Utility Deal Scandal, Puerto Rico Asks for $94 Billion. Order Reprints| Today's Paper|Subscribe

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Source : https://www.nytimes.com/2017/11/14/us/puerto-rico-prepa-whitefish-contract.html

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