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What Exactly Is Puerto Rico’s “Whitefish” Contract?

This Sunday, Puerto Rico Gov. Ricardo Rosello ordered a government board to cancel a $300 million contract with the Whitefish Energy company, native to Montana Puerto Rico Gov. Ricardo Rosello ordered a government board to cancel a $300 million contract with the Whitefish Energy company, native to Montana. The contract would allow the Whitefish company to rebuild much of Puerto Rico’s power grid damaged from Hurricane Maria- supposedly. However, the “Whitefish Contract” has come under scrutiny from both members of Congress and FEMA.

The contract would allow the Whitefish company to rebuild much of Puerto Rico’s power grid damaged from Hurricane Maria- supposedly. However, the “Whitefish Contract” has come under scrutiny from both members of Congress and FEMA. According to the NY Times, FEMA announced on Friday their “significant concerns” about Whitefish Energy and how the company won the contract in the first place. Specifically, FEMA “warned that it might refuse to cover any costs if the contract between Whitefish Energy and the Puerto Rico Electric Power Authority, known as Prepa, was found to be improper”(NY Times). In short, the federal agency claimed that the Whitefish contract’s prices might be unreasonable: Per hour of work, anywhere from $188.07 to $440 is required, as well as $3,969.84 for use of a passenger helicopter.

One segment of the contract is especially mysterious: Government agencies do not “have the right to audit or review the cost and profit elements of the labor rates specified herein.” This means that all government agencies-federal government excluded-cannot inspect or review the costs which the contract mandates under any circumstance.

Another main concern regarding the contract revolves around Whitefish Energy’s suspicious success with landing the contract with Puerto Rico. The Washington Post reports, “Whitefish Energy, which had just two employees the day Hurricane Maria hit Puerto Rico, now has about 325 people working on restringing transmission lines, clearing debris and erecting fallen poles.” Essentially, Whitefish Energy is a relatively small, young company, whereas Puerto Rico’s recovery from Maria is a huge project.

After major power outages, it is normal for electric companies to arrange mutual aid agreements with utilities elsewhere to bring in workers to restore power. However, this typically requires payment assurances, and “PREPA has been bankrupt since July,” reports NPR. Thus, Ricardo Rosello’s deal with Whitefish was made out of urgency, considering Whitefish would get to work immediately without any guarantee of payment.

Regardless of Rosello’s good intentions, the “Whitefish Contract” has attracted attention not only from the US government and related agencies but also from media sources throughout the country. Just a simple Google search of “Whitefish contract” brings up thousands of articles related to Whitefish and Puerto Rico.

Due to the unrelenting attention and scrutiny of the contract, Rosello decided it would be best to cancel the contract so as to avoid slowing down the process of repairing Puerto Rico’s power grid. In a statement, Rosello explained:

“Following the information that has emerged, and with the goal of protecting public interest, as governor I am asking government and energy authorities to immediately activate the clause to cancel the contract to Whitefish Energy.” (REUTERS)

Of course, canceling the contract may be viewed as a breach of contract, which is grounds for suing by Whitefish. According to Reuters, “The government already paid Whitefish $8 million and does not expect the U.S Federal Emergency Management Agency to reimburse that sum…”

[Featured Image: Wikimedia Commons]

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