Puerto Rico has now endured the longest power failure in U.S. history, after Category 4 Hurricane Maria tore a path of destruction across the island on Sept. 20. One of the contracts the island's beleaguered government signed in order to get the lights turned back on is with a tiny Montana-based company named Whitefish Energy.
The contract, worth $300 million, calls for Whitefish -- which employed just 2 employees as of late last month -- to repair power lines to connect critical infrastructure. The no-bid contract with a tiny, inexperienced company that happens to be based in the hometown of Interior Secretary Ryan Zinke has raised eyebrows in Congress and Puerto Rico, where multiple investigations are now underway to determine how the contract was awarded.
SEE ALSO:A company with just 2 employees is now in charge of restoring electricity in Puerto RicoLate Thursday, the signed contract was leaked and posted online. It shows that what at first appeared to be a shady deal is actually an unbelievably shady deal.
The signed contract, which has not yet been independently authenticated by Mashable, was uploaded to Document Cloud and shared, but removed for unknown reasons around 11 a.m. ET on Friday. We reported this story using the contract as uploaded, prior to it being taken down.
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The contract itself matched details reported in other news accounts, and Congress is already taking action based on these provisions, which are unusual.
First, there is language that prohibits the Puerto Rican Electric Power Authority, known as PREPA, as well as the Puerto Rican government, the head of FEMA, and even the Comptroller General of the U.S. to audit or review the prices that Whitefish is charging under the contract, or the profits it is earning.
Specifically, the contract states:
In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives have the right to audit or review the cost and profit elements of the labor rates specified herein.
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This is especially noteworthy considering the prices the company is charging Puerto Rico, which is a U.S. territory that was forced to declare a form of bankruptcy in May, and whose economy was further decimated by the storm.
The wages and equipment charges in this contract are extremely high. According to the contract, site supervisors are earning $330 an hour for their work, while project accountants are earning $440 per hour. The lowest-paid workers, according to the contract, are making $140.26 an hour.
By comparison, minimum wage in Puerto Rico is $7.25 an hour. According to Indeed.com, the average salary for a journeyman electrical lineman is $39.03 per hour in the continental U.S. However, a journeyman lineman on Whitefish Energy's Puerto Rico project will earn $277.88 per hour.
Because some of the power lines are only accessible via helicopter or require equipment to be airlifted by such aircraft, the bid schedule also includes information on those costs. While there is less to compare it to, these prices also seem quite steep. For example, Whitefish Energy is charging Puerto Rico nearly $4,000 per hour for a small helicopter known as the MD-500. A heavy lift Chinook helicopter will cost PREPA far more, on the order of $20,000 per hour of flight time.
The contract requires that PREPA pay Whitefish Energy within 10 days of receiving an invoice, which may be a tall order, considering the state of infrastructure on the island and the power authority's dwindling financial reserves. Such payments have to be made even if Whitefish is late in completing its work.
The contract states (emphasis added):
Contractor will use commercially reasonable efforts to perform the work in such a manner to meet scheduling expectations, but PREPA waives any claim against Contractor related to delayed completion of the work.
While at least two congressional committees are already moving forward with investigations of how this contract was awarded, it's unclear what Congress can do to change it. As the contract states, this is a deal between PREPA and Whitefish Energy, with the federal government playing no role.
As the contract states:
The Federal Government is not a party to this Contract and is not subject to any obligations or liabilities to PREPA, Contractor, or any other party pertaining to any matter resulting from the Contract.
FEMA, for its part, says that even though it had nothing to do with the contract in the first place, it is examining it since payments would likely come out of disaster relief payments to PREPA.
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"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," the agency said in a statement.
According to FEMA, no public assistance reimbursements have yet been made to PREPA that would then go to Whitefish Energy.
As of Oct. 27, more than five weeks after Hurricane Maria struck Puerto Rico, 72 percent of the island still lacks electricity.
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