The Transylvania Times -

Corruption And Contracts

 

October 30, 2017



The contract signed by the Puerto Rico Electric Power Authority (PREPA) with Whitefish Energy in Montana to rebuild the power grid in Puerto Rico had nearly every component of corruption.

Whitefish Energy is a two-person business that has been in existence for just two years. Prior to the $300 million contract it was awarded to rebuild Puerto Rico’s devastated power grid, its largest government contract was to fix 4.8 miles of one power line for $1.3 million. It’s only other government contract, according to Kevin Williamson of the National Review “was replacing a pole.” Any reasonable person would think that with nearly all of Puerto Rico devastated by Hurricane Maria and 70 percent of the island without power, the government would hire someone with a proven track record of massive reconstruction in a timely and cost efficient manner. Whitefish does not come even close to fulfilling those qualifications.

As Sen. Lisa Murkowski (R.-Alaska) asked, “This appears to be a pretty small company. Are they capable of doing the job that they’re being asked?’”

The contract itself was a no-bid contract, which raises the question as to why a $300 million contract did not go through a formal bidding process. Contracts of this size are ripe for corruption because they are not that large, at least in terms of government spending, that people would normally notice them but large enough for the beneficiaries of such a contract to take the risk.

The prices for labor in the contract were exorbitant – $319 an hour for a lineman and $462 an hour for a supervisor. Those figures are by the hour, not the day. Figure a lineman would work 10 hours a day, a reasonable if not conservative estimate in this scenario, and add on $400 daily to cover food and housing costs for each individual and Whitefish would have been charging the government $3,400 per day per for each lineman. Someone would have been getting rich and it would not have been the lineman.

The contract also contained a clause that states “In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA administrator, the Comptroller General of the United States, or any of their authorized representatives have the right to audit or review the cost and profit elements and labor rates specified herein.” It also prohibits the government from making “any claim against contractor related to delayed completion of work.” No reasonable and honest government official would sign a contract that does not hold the contractor responsible for meeting a deadline and relinquishes the government’s rights to “audit and review” the costs.

FEMA, which would have been responsible for paying the bill to Whitefish, has stated, “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.”

And FEMA and PREPA had different stories as to FEMA’s role and understanding of the contract. FEMA said it had no role in the signing of the contract, but PREPA claimed that FEMA “reviewed and approved” relevant parts of the contract and Puerto Rico Gov. Ricardo Rosselló wrote that the contract “appeared to comply 100 percent with FEMA regulations.”

Corrupt business contracts also rely on personal connections. In this case, Secretary of Interior Ryan Zinke’s hometown is Whitefish. Zinke knows the company’s owner and CEO Andy Techmanski and Zinke’s son worked for the company at one time. Whitefish received financial backing from HBC Investments, whose founder and general partner is Joe Colonnetta, who contributed $33,000 to the campaign of then Texas Gov. Ricky Perry, who is now the Secretary of Energy, and $28,200 to President Trump.

All of the classical characteristics of corruption were apparent. An incredibly small company with little to no experience was given a huge job. The contract was made without asking for bids. The prices quoted in the contract were exorbitant. The contract shielded the beneficiary from any audit or review. Political donors would benefit financially from the contract.

Despite the fact that Roselló and PREPA decided to cancel the contract Sunday, there are still questions as to how much Whitefish will be paid and the contractual process itself. The U.S. Congress should investigate why this was a no-bid contract and find out just how such an awful contract came to be.

 
 

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