Oct 27, 2017, 4:39 PM ET

PR gov. threatens 'hell to pay' as probes of Whitefish contract begin

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Puerto Rico Gov. Ricardo Rossello said there will be "hell to pay" if any wronging is uncovered in the awarding of multimillion-dollar contracts after Hurricane Maria devastated the island.

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With more than 75 percent of Puerto Rico still without electricity in Maria's wake, U.S. lawmakers are calling for an investigation into why the island turned to a small, for-profit company instead of the mutual-aid network of public utilities usually called upon to coordinate power restoration after disasters.

Rossello made the warning on Thursday amid mounting controversy. On Wednesday, he asked the DHS inspector general to complete a review of the Whitefish contract by next week to answer questions, though he noted in his letter that the contract appeared to comply with FEMA regulations.

A spokesperson for the DHS inspector general's office confirmed that they have started an inquiry into the contract and will look for any "inappropriate relationships."

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.

PHOTO: Workers from Montana-based Whitefish Energy Holdings help fix the islands power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico, Oct. 25, 2017.Alvin Baez/Reuters
Workers from Montana-based Whitefish Energy Holdings help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico, Oct. 25, 2017.

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

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.

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. In a statement Friday, Zinke said he had "absolutely nothing to do" with the company's receiving the contract and that claims to the contrary are "baseless."

"Only in elitist Washington, D.C., would being from a small town be considered a crime," the statement read. "Neither myself nor anyone in my office has advocated for this company in anyway. After the initial contract was awarded, I was contacted by the company on which I took no action."

The secretary further noted that he welcomes "any and all investigations" into the matter.

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.

A spokesman for Whitefish Energy and Colonnetta said Thursday that his donations had "no influence whatsoever to impact the contract."

Colonnetta and his wife also gave more than $60,000 to Energy Secretary Rick Perry's campaigns for Texas governor between 2008 and 2012. Perry appointed Colonnetta trustee of a $130 billion investment fund for Texas teachers in 2013. A spokesperson for Perry did not respond to ABC News' questions about the Whitefish contract.

PHOTO: Workers from Montana-based Whitefish Energy Holdings help fix the islands power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico, Oct. 25, 2017.Alvin Baez/Reuters
Workers from Montana-based Whitefish Energy Holdings help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico, Oct. 25, 2017.

Montana-based Whitefish Energy was awarded a $300 million Puerto Rico Electric Power Authority (PREPA) contract to repair downed transmission lines crisscrossing the mountains, the company confirmed to ABC News.

Founded in 2015, Whitefish -- which had just two full-time employees when the contract was signed -- says it has mobilized a team of nearly 300 subcontractors in Puerto Rico, with more on the way.

"Our rates are competitive and our work is top rate," spokesperson Chris Chiames told ABC News, adding that the company is uniquely qualified to tackle the situation in Puerto Rico due to the CEO's experience in "rugged and remote terrain."

But officials are questioning why PREPA chose to work with Whitefish instead of reaching out to the American Public Power Association (APPA), which normally matches states hit by disasters with nearby public power utilities who offer up crews and equipment to assist.

"To date, PREPA has not requested aid from the association," the association confirmed. "The entire electric utility industry is standing by to send help as requested."

PREPA Executive Director Ricardo Ramos said Tuesday he ruled out APPA assistance because it would have required the agency, which is currently bankrupt, to handle logistics for crew lodging and food.

Other power restoration companies were ruled out because they required a large upfront deposit, which PREPA cannot afford to pay, he said.

PHOTO: Whitefish Energy Holdings workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico, Oct. 15, 2017. Ramon Espinosa/AP
Whitefish Energy Holdings workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico, Oct. 15, 2017.

Under the Whitefish contract, the agency paid $3.7 million for initial "mobilization of personnel and equipment," with further advance payments not being required.

"Whitefish was the only company -- it was the first that could be mobilized to Puerto Rico. It did not ask us to be paid soon or a guarantee to pay," Ramos told reporters in Spanish. "For some reason, someone in the United States has to be upset, because they aren’t here, that I have hired Whitefish -- but that is their problem.”

The company says it called Puerto Rico before Maria hit to pitch its own services.

Whitefish "showed up at the right place at the right time and that's how they got the contract," Sen. Marco Rubio, R-Fla., told ABC News. "We want to see restoration pick up. Every day that they're without power is a day that economy isn't functioning and it's another day people are suffering."

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."

How Whitefish rates compare with competitors remains unclear.

The Federal Emergency Management Agency says it was not involved in the selection and the White House said Friday the decision to award the contract to Whitefish came from "local authorities."

"[The awarding of the contract was] not something that the federal government played a role in," White House press secretary Sarah Sanders said at Friday's press briefing. "But as we understand, there is an ongoing audit and we'll look forward to seeing the results of that later."

FEMA has "significant concerns" how PREPA procured the Whitefish contract and it "has not confirmed whether the contract prices are reasonable," the agency said in a statement.

FEMA said it has not reimbursed PREPA for any money spent on the Whitefish contract, and that it will verify that PREPA followed regulations "to ensure that federal money is well spent" before handing over any payment.

Directly contradicting a clause in the Whitefish contract that reads, "PREPA hereby represents and warrants that FEMA has reviewed and approved of this Contract, and confirms that this Contract is an acceptable form to qualify for funding from FEMA," FEMA insists the agency was not involved in PREPA's decision and that the clause is inaccurate.

FEMA issued the following statement:

The decision to award a contract to Whitefish Energy was made exclusively by the Puerto Rico Electric Power Authority (PREPA). FEMA was not involved in the selection. Questions regarding the awarding of the contract should be directed to PREPA.

Any language in any contract between PREPA and Whitefish that states FEMA approved that contract is inaccurate.

FEMA has not provided any reimbursement to Puerto Rico to date for the PREPA contract with Whitefish Energy. Regardless, FEMA will verify that the applicant (in this case PREPA) has, in fact, followed applicable regulations to ensure that federal money is properly spent.

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 is presently engaged with PREPA and its legal counsel to obtain information about the contract and contracting process, including how the contract was procured and how PREPA determined the contract prices were reasonable.

It is important for all applicants for FEMA Public Assistance to understand and abide by Federal requirements for grantee procurement. Applicants who fail to abide by these requirements risk not being reimbursed by FEMA for their disaster costs.

FEMA continues to focus on the expedited restoration of essential services in support of the Governor’s recovery goals.

ABC's Jennifer Metz and Joshua Hoyos contributed to this report.

News - PR gov. threatens 'hell to pay' as probes of Whitefish contract begin

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CComments

  • Anony

    Quality journey level lineman are scarce! Where exactly did Whitefish find and import all these workers from?

  • Pavel Gromnic

    I think that the odds are a little long that it's just a coincidence that Ryan Zincke and this fly-by-night bunch just happen to be involved in this. It's another example of fat cats rewarding their donors and probably benefitting themselves, directly or indirectly. If this had happened under a real president, Barack Obama, the red states would be rioting in their dens and an impeachment investigation called for. Trump and his band of thugs are the crookedest bunch since the Teapot Dome.

  • Educated

    ....But wait, I thought your boy, Trump, was doing such a wonder job?.....Maybe a little less smiling for the cameras next time until you actually get something.

  • Moderate Party

    Govt. contracts always go to the "low qualified bidder". Whitefish may be low bidder, but I doubt that as there didn't seem to be a bid process at all. They are definitely not qualified, they have two employees.

  • Captn Blynd

    "Whitefish was the only company -- it was the first that could be mobilized to Puerto Rico. It did not ask us to be paid soon or a guarantee to pay," Gee, I wonder how they got this contract from a broke agency...
    BLAME TRUMP!! MUST BE TRUMP CORRUPTION! The fact that they were the only company willing to do the job for the pay offered has nothing to do with who our President is. BUT THIS GUY GREW UP IN THE SAME TOWN AS THAT GUY! And there is not one shred of evidence that he had any involvement in this deal at all. TRUMP DID IT! I'm getting to the point that I will vote to re-elect just to annoy you people.

  • Lurker111

    Going for a SEVENTH try ...

    Seriously? Some trumpkin was so upset by my post,

    BUT HER E-MAILS!!!!11!1!!11eleventy-one!!!!!

    that they flagged it and got it removed?

    Do you know how weak and pathetic that makes you look?

    You can forget it. I will not hesitate to remind those of you who voted Trump in the last election just how monstrously stupid your act of impudence was, and how it has hurt the country, and continues to hurt the country and its people. Shame on you.

    And if this, too, gets "Removed," I shall continue to re-post it until I am finally stopped by the heat death of the universe. Truly.

  • liberallover

    PR has a track record of horrible financial decision and now they say there is hell to pay for another bad decision they made. Sounds like a lib

  • Cavalls

    If Ramos hired Whitefish, as he says he did and as FEMA says he did, why is it assumed he's not telling the truth and his decision is the result of corruption or incompetence? Is it because Ramos is Puerto Rican and therefore cannot be trusted?

  • kritikosman

    No way this contract is above board.

  • Ron Coffman

    When I had a position where I had to contract with outside vendors for services and/or supplies, I never considered just the bottom line. I looked into the resources held by the companies as well as their reputations. If they were local, I would try to contact some of their customers to get their opinions first. Even so, I've encountered a couple of contractors that looked good in the beginning, but failed to deliver a good product or service, or failed to deliver it on time. While we were eventually reimbursed, we lost time. In one instance, we had to pay a penalty for late delivery. It sounds as if PREPA has only looked at the bottom line on this one, as the history of this company does not indicate that they have anywhere near the resources to do this job.

  • JimBo

    I doubt that company will see a dime of it. This is exactly why no reputable company took this contract without a down payment.

  • Jonathan Jackson

    no one proof reads, anymore?

  • Mack Lack

    Bidding out a job like that would have taken months on both sides. You have to put a request for proposal (RFP) together and the companies then bidding on the proposal will have to study, analyze and evaluate before even thinking about giving a number. Does not seem that PREPA is in any position to put the RFP together.

  • Will Postthetruth

    Using subcontractors only means that Whitefish is basically functioning as a middleman and it's "competitive" rates are only competitive because P.R. can't guarantee immediate payments so "payday loan" like overcharges are feasible.
    It would have cost MUCH less to hire someone to construct quick, emergency housing for the association workers.

  • McDo

    PREPA corruption and ineptness continues to make news. FEMA has been working hard on a very difficult job and they should not be blamed for mistakes of others citing them. FEMA has pointed out errors in PREPA Whitefish contract and their money will probably not end up going to Whitefish.
    PR needs to become a US state if it wants more political power; PR will enlist Democrats like NY Gov. Cuomo and back Democrats like the mayor for PR gov.

  • sunshine

    This...SO smells. Such dysfunction; it's embarrassing. "Civil" society?

  • John Hurley

    US Congress should admit to its own rank incompetence, political corruption, and avarice.

  • Tom S

    What a joke. Some 300 contractors is lame especially at this stage of the game. I expect there were thousands of linemen and such involved in both Texas and Florida and many were deployed asap. Three hundred, pfffft.

  • Erwin Schrodinger

    You think those political donations are for altruistic reasons? Nope... investments with expected huge ROI.

  • concernedvoter

    GOP backed Storm Chasers on a Global Scale taking advantage of the suffering Americans in Puerto Rico. Everyone Knows Blackwater and Whitefish are GOP supported Companies. The Son of the WI Senator is one of the Owners of Whitefish for Gods sake. How more blatant can it get.

  • Glen

    Ryan Zinke and Richard Spencer both claim ties to Whitefish, MT....coincidence???? I don't think so!

  • SpeakingForThoseWithBrains

    Yep.....just a "drainin that swamp"...aint he?...

  • Kyleen Easy

    PR and Whitefish signed a contract that is not valid. PR said it was approved by FEMA, FEMA says it wasn't. Both PR and Whitefish know the contract is not a valid contract. Did Whitefish contract FEMA to verify that FEMA had approved the loan? No, they only had two people working for them so it's not something they've ever had to do before. Since FEMA must approve the contract for the contract to be valid Whitefish will have a hard time collecting the money.

    FEMA should have been on top of this issue from day one. It didn't help PR set up the proper contracts etc. The fact that FEMA didn't help the governor set up contracts is very disturbing. The fact that the governor lied in a contract is even more disturbing. Regardless FEMA needs to fix this and the governor needs to think seriously about resigning.

  • TexasVulcan

    Sounds like the power company in Puerto Rico holds most of the responsibility for hiring these people. And I doubt they care about any ties to Trump.

  • Robin Love

    Am I just paranoid or does anyone else wonder why comments are removed from ABC New's threads?

  • pfon71361

    The Tesla solar project just begun in Puerto Rico is a striking contrast to the 300-million dollar contract awarded to a firm originally consisting of only two employees, with alleged Trump connections, for electricity restoration services. Although not yet cost-effective compared to fossil fuel generated electricity, applying solar technology to Puerto Rico, where the sun shines brightly year round, could demonstrate that solar energy can be a feasible alternative. Having Installed the first system at a children's hospital will surely generate, no pun intended, a lot of good press worldwide and goodwill locally among Puerto Rico's citizens. Tesla versus Trump? Hmm.

  • JDC

    I don't understand why this is such a big deal. I know the article presents it as a no bid contract, but that's just not true. Whitefish got the contract because they were the only contractor that didn't require a downpayment. The article even says it. If the only connection is that the Secretary of the Interior is from the same small town as the owner of Whitefish, then there's a lot of contractors that wouldn't be able to get government contracts. There's also the mention of the owner donating to republicans. Again, if that's an issue then a lot of companies wouldn't be able to get government contracts. How is this corruption, yet when Obama gave George Kaiser half a billion dollars, a $75 million golden parachute, and made sure he got the grant money first, people just wrote it off as coincidence.

  • jschm

    The Puerto Rico Electric Power Authority (PREPA)—Spanish: Autoridad de Energía Eléctrica (AEE)—is an electric power company and the government-owned corporation of Puerto Rico responsible for electricity generation, power transmission, and power distribution in Puerto Rico.[353] PREPA is the only entity authorized to conduct such business in Puerto Rico, effectively making it a government monopoly. The Authority is ruled by a Governing Board appointed by the Governor with the advice and consent of the Senate of Puerto Rico, and is run by an Executive Director.