Lawmakers open second inquiry into contract with similar provisions.
The Trump administration is not ruling out the possibility some federal funds will go toward the now-terminated Puerto Rico contract that caused a firestorm over both its content and award circumstances.
A Federal Emergency Management Agency official told a Senate committee in private testimony that “it is possible that FEMA funds will be used by Whitefish," according to Sen. Claire McCaskill, D-Mo., referring to the company that was set to receive up to $300 million to help the Puerto Rico Electric Power Authority restore the grid on the island. FEMA Administrator Brock Long told the Senate Homeland Security and Governmental Affairs Committee earlier this week that “not one dollar has gone toward that contract from FEMA.”
A FEMA spokesperson on Friday reiterated Long’s assertion, but would not comment on the statement made to lawmakers and their staff behind closed doors. Long went on to say that FEMA was in the process of ensuring that PREPA has not requested any reimbursement for the costs it incurred on the contract before it cancelled the agreement. The contract sparked controversy due to the company’s connections to Interior Department Secretary Ryan Zinke and provisions restricting federal oversight, permitting work delays and setting unusually high reimbursement rates.
The spokesperson said the public assistance reimbursement process begins with PREPA paying a contractor.
“The applicant then submits a request for reimbursement based on the project’s documentation, such as contract terms and payment details,” the FEMA spokesperson said. “FEMA then reviews the documentation to determine eligibility for reimbursement directly to the applicant.”
President Trump on Thursday increased the federal government’s reimbursement rate for Puerto Rico’s public assistance costs to 90 percent as the island recovers from the devastation wrought by Hurricane Maria. He previously authorized 100 percent reimbursement for debris removal and “emergency protection measures.”
McCaskill raised concerns regarding the FEMA official’s comments in letters she sent to Long, Whitefish and the Army Corps of Engineers. The senator said some of the $215 million already sent to PREPA in grant funding may have gone toward paying the Whitefish contract. She also said she had learned that ACE had considered contracting with the Montana company as well.
The FEMA spokesperson said the $215 million was “specifically for the purchase of fuel and for covering overtime for PREPA staff,” adding there will a “mandatory audit process.” The spokesperson added: “FEMA staff will ensure expedited funds provided were used as originally requested.”
Still, McCaskill is seeking more assurances from FEMA that no federal dollars have gone or will go toward paying Whitefish. She asked a series of questions about the contracting and grant award process and for documents regarding its agreements with PREPA. She also raised concerns with a contract between PREPA and Oklahoma-based Cobra Acquisitions LLC that contained similar provisions as those that caused many—including FEMA and the Puerto Rican governor—to question the Whitefish agreement. According to Mammoth Energy Services Inc., Cobra’s parent company, FEMA was heavily involved in establishing its contract with PREPA. E&E News first reported on Cobra’s $200 million contract.
During his Senate testimony, which occurred before the revelations of the Cobra contract, Long said FEMA would never go along with provisions found in the Whitefish agreement.
“There’s not a lawyer inside FEMA that would ever allow that,” Long said.
McCaskill also asked a series of questions about the role FEMA played in approving the Cobra contract. The House Energy and Commerce Committee has joined McCaskill in questioning Long on the Cobra contract.
“Similar to the Whitefish contract,” committee leadership wrote in a letter to the FEMA administrator, “this contract also indicates FEMA review and approval and contains language which would appear to have the effect of preventing government oversight of the agreement, raising additional questions about the contracting review process for recovery efforts in Puerto Rico.”
The FEMA spokesperson said the agency will respond to McCaskill’s letter “as appropriate.”