Puerto Rico Governor Seeks To Cancel $300 Million Whitefish Contract

SAN JUAN, Puerto Rico (CBSNewYork/AP) — Puerto Rico’s governor on Sunday demanded that the board of the island’s power company cancel the $300 million contract with Whitefish Energy Holdings amid increased scrutiny of the Montana company’s role in Hurricane Maria recovery efforts.

The announcement by Gov. Ricardo Rosselló comes as federal legislators seek to investigate the contract awarded to the small company from Interior Secretary Ryan Zinke’s hometown.

“There cannot be any kind of distraction that alters the commitment to restore electrical power as soon as possible in Puerto Rico,” Rosselló said, adding that nearly $8 million has been paid to Whitefish so far.

Rosselló said he has requested that crews from New York and Florida come help restore power in Puerto Rico as he criticized the U.S. Army Corps of Engineers for not meeting its goals. The agency could not be immediately reached for comment.

Audits of the Whitefish contract at a local and federal level are ongoing, and the governor also announced the appointment of an outside coordinator to oversee the power company’s purchase and contracting division.

“If something illegal was done, once again, the officials involved in that process will feel the full weight of the law, and I will take administrative actions,” Rosselló said.

In response to the Rosselló’s announcement, Whitefish officials said they were “very disappointed.”

“The decision will only delay what the people of Puerto Rico want and deserve – to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster,” the firm said.

Whitefish said it would remain to finish any work the Puerto Rico Electric Power Authority wants it to complete, and noted that the company had been on track to bring in more than 500 linemen this week if allowed to continue.

The company also said the Whitefish team worked on two major transmission lines that cross over mountains, and had completed some “critical” work on remote parts in southern Puerto Rico that are only accessible by helicopter and heavy equipment.

“We only wish the best for the great people of Puerto Rico,” Whitefish said. “We are very proud of our contributions to the island’s recovery and proud of the tremendous work that our team has done under very challenging conditions.”

But speaking on Long Island Sunday, Gov. Andrew Cuomo was also critical of the Whitefish deal.

“This Whitefish situation is obviously going to get complicated. (Rosselló) asked for an investigation, Congress asked for an investigation, and that will take time and will be a distraction. Second, I don’t believe that was the right way to go about it anyway. The federal government has the capacity to exercise something called mutual aid, quote-unquote, which it does all the time – whereby we ask states to send their crews; their line crews, bucket trucks, et cetera, to an area of the country that’s in need. “

The governor continued: “Today, we note the five-year anniversary of Hurricane Sandy in New York. We had 6,000 crews come in to Long Island and New York to help. They came all over the country. That’s what we need to do in Puerto Rico. That’s what the federal government should be doing.”

Roughly 70 percent of the island remained without power as of Sunday without power more than a month after Hurricane Maria struck the U.S. territory on Sept. 20 as a Category 4 storm with winds of up to 154 mph.

Power company Director Ricardo Ramos has said that Puerto Rico’s Electric Power Authority reached a deal with Whitefish just days before the hurricane struck, saying that he spoke with at least five other companies that demanded similar rates, in addition to a down payment the agency did not have. Ramos also said the Federal Emergency Management Agency had approved of the deal, something the agency has denied.

FEMA said it has not approved any reimbursement requests from the power company for money to cover repairs to the island’s electrical system. The contract said the utility would not pay costs unallowable under FEMA grants, but it also said, “The federal government is not a party to this contract.”

FEMA has raised concerns about how Whitefish got the deal and whether the contracted prices were reasonable. The 2-year-old company had just two full-time employees when the storm hit, but it has since hired more than 300 workers.

A Whitefish contract obtained by The Associated Press found that the deal included $20,277 an hour for a heavy lift Chinook helicopter, $650 an hour for a large crane truck, $322 an hour for a foreman of a power line crew, $319 an hour for a journeyman lineman and $286 an hour for a mechanic. Each worker also gets a daily allowance of $80 for food, $332 for a hotel room and $1,000 for each flight to or from the mainland.

Whitefish Energy Holdings is based in Whitefish, Montana. Zinke, a former Montana congressman, knows Whitefish CEO Andy Techmanski, and Zinke’s son also had a summer job at a Whitefish construction site.

“I had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico,” Zinke recently said in a statement linked to a tweet. “Any attempts by the dishonest media or political operatives to tie me to awarding or influencing any contract involving Whitefish are completely baseless.”

Democrats also have questioned the role of HBC Investments, a key financial backer of Whitefish Energy. The Dallas-based company’s founder and general partner, Joe Colonnetta, has contributed thousands of dollars to Trump and other Republicans. Chiames has said Colonnetta’s political donations were “irrelevant” and that the company would cooperate with any federal authorities.

This week, Rep. Rob Bishop, the Utah Republican who heads the House Natural Resources Committee, sent the power company director a letter demanding documents, including those related to the contract with Whitefish and others that show what authority the agency has to deviate from normal contracting processes. A Bishop spokesman did not immediately return a message for comment on Sunday.

A federal control board that oversees Puerto Rico’s finances announced this week that retired Air Force Col. Noel Zamot will be in charge of power reconstruction efforts. Rossello and other officials have rejected the appointment, saying the local government is in charge of a power company that is $9 billion in debt and that had struggled with ongoing outages before hurricanes Irma and Maria hit last month.

(© Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

More From CBS New York

CELEBRATING 50 YEARS
Get Our Morning Briefs
Bloomberg WCBS Tri-State Business Index

Watch & Listen LIVE