White House: No involvement in Puerto Rico’s Whitefish contract

by Timothy Cama - 10/27/17 1:11 PM ET

The Trump administration is making it clear that it had no involvement in Puerto Rico’s decision to sign a $300 million electric utility repair contract with Montana’s Whitefish Energy Holdings.

“Our understanding is the decision to give a contract to Whitefish Energy was made exclusively by Puerto Rico Electric Power Authority [PREPA],” White House spokesman Raj Shah said in a Friday statement, referring to the island’s government-owned utility.

“The White House is not aware of any federal involvement in the selection,” he said.

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The White House’s statement is the second time Friday that a federal office has sought to distance itself from the ongoing controversy over the company, which had only two employees and little experience before Hurricane Maria hit Puerto Rico, decimating its electrical infrastructure.

Earlier, the Federal Emergency Management Agency (FEMA) pushed back against accusations that it was involved in Puerto Rico awarding the no-bid contract to Whitefish.

“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 said in its statement.

“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.”

FEMA said the contract was between the utility and Whitefish, and FEMA was not a party to it.

Nonetheless, Puerto Rico is expecting FEMA reimbursement for the costs and would therefore have to abide by the agency’s regulations governing such agreements.

The denials from the White House and FEMA contrast with the contract itself, in which PREPA swore that FEMA “has reviewed and approved of” the agreement. Puerto Rico Gov. Ricardo Rosselló wrote in a Wednesday letter that the deal “appeared to comply 100% with FEMA regulations.”

Among other potential issues, the contract appears to restrict the ability of the federal government — including FEMA, any inspector general’s office and the Government Accountability Office — from auditing the labor rates set out in the contract.

“In no event shall [government agencies] have the right to audit or review the cost and profit elements,” the contract states.

The rates include $330 per hour for site supervisors, $230 an hour for line foremen and nearly $80 per day for employee meals.

Whitefish Energy is headquartered in Whitefish, Mont., where Interior Secretary Ryan Zinke was raised. The Interior Department and Whitefish Energy have denied that Zinke played any role in the company getting the Puerto Rico deal.

During an Oval Office meeting Friday morning, President Trump asked Zinke “for clarification purposes” if he had any involvement in the Whitefish contract, according to White House press secretary Sarah Huckabee Sanders.

Sanders said Zinke told the president “he had no role in that contract.”

The meeting was scheduled several weeks ago to discuss national monument designations, the spokeswoman said.

Democrats have pounced on the contract, asking Interior’s Office of Inspector General to investigate whether the secretary was involved in the agreement.

“If Donald Trump truly wants to drain the swamp, he should start with asking hard questions of Ryan Zinke, about what role he played in helping his friends land yet another embarrassing and dangerous sweetheart contract,” Ramon Cruz, a member of the Sierra Club’s board, said in a statement.

– Jordan Fabian contributed

Updated: 3:09 p.m.

Tags Donald Trump Puerto Rico Ryan Zinke Whitefish Energy