What the Hell Is Going on With Whitefish Energy's Contract With Puerto Rico?

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The ongoing saga over Whitefish Energy’s $300 million contract to restore power to Puerto Rico after Hurricane Maria destroyed the island’s grid took a new twist on Thursday night.

Journalist Ken Klippenstein published the contract on Twitter on Thursday (though it appears to have been available through Puerto Rico’s utility last week). Among its dozens of pages of standard contract, one article stood out because it seems sketchy as hell.


The contract stipulates that neither PREPA, Puerto Rico’s utility that inked the deal, nor the territory or federal government can audit how money is being spent. That sure seems like a setup ripe for corruption, and one that drew criticism from legal experts and government watchdogs.

“I don’t think you need to be a contract lawyer to know that a provision that doesn’t allow the contracting party to look at how the money is spent is a one-sided giveaway,” Michael Burger, the executive director of the Sabin Center for Climate Change Law at Columbia, told Earther.

Jordan Libowitz, the communications director for Citizens for Responsibility and Ethics in Washington, told Earther the watchdog group had never to the best of his memory seen a federal contract with that type of stipulation (though this contract itself isn’t federal).


Puerto Rico has already suffered through the worst blackout in U.S. history. And it had to deal with a debt-ridden legacy of colonialism for years before that. The Whitefish contract seems like the worst of those two issues combined into one shit sandwich.

At least some members of Congress want to make sure we’re not all forced to eat a piece of it. Representative Raja Krishnamoorthi (D-Illinois), a member of the Congressional Oversight Committee, has called on its leaders to investigate the contract and use of any federal funds.


“The federal government has a sacred promise to the American taxpayers to not misuse or waste federal funds,” Krishnamoorthi wrote. “This contract breaks that promise, and Congress needs to investigate both the deal with Whitefish and the full use of any anti-auditing clauses in the federal contracting process.”

If the committee takes it up, that would add to the three other ongoing investigations into the contract. Two other House committees are separately looking into details around the circumstances of the contract while the Department of Homeland Security (which is home to the Federal Emergency Management Agency) is looking “for the presence of any inappropriate relationships.”


Meanwhile FEMA, which is overseeing parts of Puerto Rico’s recovery, announced on Friday that the contract was negotiated between PREPA and Whitefish. Press Secretary Sarah Huckabee Sanders later reinforced that in Friday’s press briefing, saying “the federal government has nothing to do with this contract or the process.”


While distancing itself from the actual negotiations, FEMA also said that wasn’t happy with the wording in the contract.

“FEMA has significant concerns with how PREPA procured this contract and has not confirmed whether the contract prices are reasonable,” the agency wrote in a statement.


Among the prices that raised some eyebrows are the per diem rates for workers that includes $332.41 for lodging. By comparison, the normal government per diem rate for lodging varies across the territory, but the highest according to the State Department is $195.


The clause and prices add to an increasingly egregious list of issues with Whitefish Energy’s involvement in restoring the grid in Puerto Rico ranging from their potential relationship with Interior Secretary Zinke, to how qualified they are for the task, to how they’ve acted so far.

The two-person company is based in Whitefish, Montana, home to Zinke and a small town where “everybody knows everyone” including the firm’s CEO and Zinke. Both Zinke and Whitefish Energy have denied the relationship had anything to do with the contract.


Their previous experience includes a $1.3 million federal contract to upgrade 4.8 miles of transmission line in Arizona. That’s a far cry from the 30,000 miles of lines in Puerto Rico, an island where nearly three-quarters of the population still doesn’t have power.

The company has also responded to criticism by San Juan’s mayor by threatening to stop doing work there. The list goes on, but none of it makes Whitefish Energy look any better. And it has government watchdogs keeping an eye out on future contracts as federal money finally starts flowing to help Puerto Rico recover.


“There’s going to be more and more contracts,” Libowitz said. “It will be interesting to see if they’re going to major corporations or if it seems to be more mom and pop shops with ties to agency officials. If there are more like that, then that would be of concern.”

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