WASHINGTON — The Federal Emergency Management Agency said Friday it had no involvement in the decision to award a $300 million contract to help restore Puerto Rico’s power grid to a tiny Montana company in Interior Secretary Ryan Zinke’s hometown.
FEMA said in a statement that any language in the controversial contract saying the agency approved of the deal with Whitefish Energy Holdings is inaccurate. The contract, which was awarded by the Puerto Rico Electric Power Authority, 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 said it has not approved any reimbursement requests from the utility for money to cover ongoing repairs to the island’s power grid following Hurricane Maria.
The agency said its initial review raised significant 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 Sept. 20. It has since hired more than 300 workers.
The Interior Department has denied that Zinke, a former Montana congressman, played any role in the contract award. Zinke knows Whitefish CEO Andy Techmanski “because they both live in a small town where everyone knows everyone,” a spokeswoman said. Zinke’s son had a summer job at a Whitefish construction site.
Multiple congressional committees have launched investigations into the deal, the terms of which have triggered questions from both Republicans and Democrats.
Sen. Claire McCaskill of Missouri, senior Democrat on the Senate Homeland Security and Governmental Affairs Committee, said the Whitefish contract “raises every red flag in the book.”
The homeland security panel will hold a hearing on the issue next week and said officials should be ready to answer tough questions, the senator said. She said she also wants the inspector general of the Department of Homeland Security, which includes FEMA, to investigate, adding to the list of possible investigations.
“We need answers from Whitefish, the Puerto Rico Electric Power Authority and the federal government_and we need them soon,” McCaskill said.
Puerto Rico Electric Power Authority director Ricardo Ramos has praised the work performed by Whitefish so far, saying the company’s was the only offer the utility received that did not require a down payment. The power company is $9 billion in debt and was already struggling to provide service amid ongoing power outages before hurricanes Irma and Maria hit last month.
“There is nothing illegal going on here,” Ramos said Thursday.
A federal control board that oversees Puerto Rico’s finances said this week it had appointed a former military officer to oversee the work. Retired Air Force Col. Noel Zamot will be responsible for speeding up reconstruction efforts and overseeing coordination with the board, Puerto Rico’s government and the federal government.
It was not immediately clear whether Zamot would have the authority to void Whitefish’s contract, although under the contract the utility can suspend or terminate the contract “for any or no reason” after providing written notice to Whitefish and compensating the company for actual expenses.
Board spokesman Jose Luis Cedeno did not return calls or messages Friday from The Associated Press seeking comment. Power company spokesman Carlos Monroig also did not respond to requests for comment.
About 75 percent of the U.S. territory remains without power more than a month after the Category 4 storm made landfall.
Zamot told Puerto Rico radio station WKAQ 580 on Friday that once a judge confirms him as chief transformation officer of Puerto Rico’s Electric Power Authority, he will review all of the agency’s contracts.
“We’re going to be incredibly transparent,” he said, declining further comment on any issues related to Whitefish.
Puerto Rico Public Affairs Secretary Ramon Rosario told reporters on Friday that he wasn’t familiar with the contract’s details when asked why it includes a clause that prohibits an audit or review of “the cost and profit elements of the labor rates.”
Rosario said only that Puerto Rico’s governor already has requested an audit and that the government will turn over all pertinent documents.
“There are some legitimate claims,” Rosario said. “if anyone did anything illegal, let them fry in jail.”
Associated Press writer Danica Coto in San Juan, Puerto Rico, contributed to this report.