o' -. lit-4N Ll ?Jl. i_ - .: - ll iJ?ii-i l-H . H. illHlJill] I'l 'n 139-1 1-. HI i "ltt Ht?tt? th?COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS DC 20510 6250 November 2, 2017 The Honorable Brock Long Administrator Federal Emergency Management Agency 500 Street SW Washington, DC 20024 Dear Mr. Long: 1 write to request information about the role of the Federal Emergency Management Agency (FEMA) in providing oversight of taxpayer dollars used to fund the repair of Puerto Rico?s electrical grid. As of October 31, more than 40 days after Hurricane Maria made landfall, nearly 70% of Puerto Rico is still without power.' As efforts to restore power across the island continue, it is imperative that any taxpayer dollars used in this effort are spent effectively and are not subject to waste, fraud, or abuse. The Puerto Rico Electric Power Authority (PREPA) awarded a $300 million contract to Whitefish Energy Holdings, LLC (White?sh)?a small Montana company with little disaster response experience?~to coordinate the electrical grid restoration.2 Despite recent announcement that it would be cancelling the contract, several significant concerns remain.3 I am particularly troubled by two recent revelations: ?rst, PREPA may already have paid White?sh using federal disaster relief funding, possibly without knowledge,4 and second, PREPA has awarded another large contract that contains questiOnable terms and implicates hundreds of millions of federal taxpayer dollars.5 Government of Puerto Rico, Dashboard (accessed Oct. 31, 2017) 2 See Paerio Rico Turns to Unproven Montana Company for Massive Power Restoration Job, Bar No One Knows Why, Weather Channel (Oct. 16, 201'?) 3 See Puerto Rico: White?sh energy grid deal to be scrapped, BBC News (Oct. 29, 2017 bbc.oominewsfworld-us-can ada?4l 795 774). ?l FEMA, Brie?ng with Senate Committee on Homeland Security and Governmental Affairs Staff (Oct. 30, 2017). 5 See Echoes of Whitefish surface in Paert?o Rico grid deal, News (Oct. 31, 2017I The Honorable Brock Long November 2, 201? Page 2 I have recently learned additional details about this contract, including the possibility that PREPA may be using federal disaster relief funds to pay White?sh. Between October 10 and October 23, 2017, FEMA awarded more than $215 million in Public Assistance grant funding directly to PREPA for power restoration efforts.6 A FEMA of?cial informed Committee staff, ?It is possible that EMA funds will be used by The FEMA official also indicated that FEMA did not review and approve actual expenses prior to awarding the $215 million in Public Assistance funds.3 Although FEMA issued an official statement representing it ?has not provided any reimbursement to Puerto Rico for the PREPA contract with White?sh,? 9 it is possible that PREPA has already been using federal taxpayer dollars to pay the company. The costs specified in contract with White?sh appear to be significantly higher than what PREPA would have paid had it initially accepted assistance offered through the American Public Power Association (APPA) shortly after Hurricane Maria struck the island. The members of the APPA, approximately 1,400 public power utilities across the United States (including routinely provide on?the-ground assistance rebuilding energy infrastructure damaged by natural disasters through mutual aid agreements)? In fact, such APPA mutual aid agreements were activated following Hurricanes Harvey and Irma, allowing member utilities to rapidly deploy skilled personnel and equipment to repair damaged energy infrastructure in Texas and Florida.? Under its contract with White?sh, PREPA will pay individual subcontractors hourly rates of between $319 and $462, in addition to lodging fees of $332 per worker and a daily charge of $80 per worker for food. '2 However, at least two of these subcontractors, 6 FEMA Approves More than $500 Miti ion in Assistance to Pnerto Rico, EMA Press. Release (Oct. 23, 2017') 7i 1 Ui23X4339ifema-approves?more? i re. 8 FEMA, Briefing with Senate Committee on Homeland Security and Governmental Affairs Staff (Oct. 30, 2017'). 9 FEMA Statement on Pnerto Rico Electric Power Authority 15' Contract with White?sh (Oct. 2 7, 201 7) fema. govine ws-releasetZO 1 7i 1 BIZ '0 See Paerto Rico Turns to Unproven Montana Company for Massive Power Restoration Job, But No One Knows Why, Weather Channel (Oct. 16, 2017) See Fedora).r Government to Lead Power Restoration E?orts in Paerto Rico, American Public Power Association Press Release (Sept. 23, 201?) rico). '2 Smaii Montanafirtn fonds Pnerto Rico 19 biggest contract to get the power back on, Washington Post (Oct. 23. 2017) pnel?to-ricos-bigge st-co 1 W1 0t23 The Honorable Brock Long November 2, 2017' Page 3 Jacksonville Electric Authority and Kissimmee Utility Authority, are APPA members,13 meaning that their assistance could have been obtained through mutual aid agreements. APPA documents suggest that PREPA may have been charged significantly less for the same assistanceunder a mutual aid agreementd'1 I am also concerned about Whitefish?s apparent attempt to circumvent federal oversight. According to publically released documents, on October 17, 2017, White?sh and PREPA executed an amendment to their original agreement. This amendment states: In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA Administrator, [or] the Comptroller General of the United States . . .. have the right to audit or review the cost and pro?t elements of the labor rates speci?ed herein." This clause is in direct conflict with both PREPA and obligations to ensure that any costs?including labor rates?associated with taxpayer?funded contracts are fair and reasonable. Additionally, recent reports detailing a similar $200 million contract awarded by PREPA to Cobra Acquisitions, LLC (Cobra), raise new questions about whether FEMA has appropriate oversight mechanisms in place to ensure that recipients of Public Assistance grant funds are Spending taxpayer dollars responsibly. Reportedly, PREPA and Cobra signed a $200 million contract on October 19, 2017, after consultation with FEMA and other federal agencies. The CEO of Cobra?s parent company is quoted as saying that FEMA was ?in the room every step of the way.? contract with Cobra contains the same language that appears in the White?sh contract purporting to bar government entities from auditing or reviewing cost and pro?t elements. is In light of these revelations, have significant concerns regarding the management and oversight of the federal funding used to support the Puerto Rico recovery effort. In order to assist this Committee with its oversight of federal spending and disaster response efforts, I request that you pmvide the following information as soon as possible, but no later than November 27, 2017'. 13' American Public Power Association, Public Power in Florida (accessed Oct. 24, 2017). 1" The standard Mutual Aid Agreement posted on the APPA website states that ?charges lior meals, lodging, and other expenses . . . shall be the reasonable and actual costs incurred.? APPA ?Mutual Aid Agreement? Agreementpdi) (accessed Oct. 24, 2017). '5 Echoes of ll?hite?sh surface in Paerfo Rico grid deal, E8513 News (Oct. 31, 2017 The Honorable Brock Long November 2, 201? Page 4 l. lx.) 10. ll. 12. What are the respective roles and responsibilities of FEMA, USAGE, the Puerto Rican government and the Puerto Rico Electric Power Authority (PREPA) in restoring power in Puerto Rico? Has FEMA determined whether any Public Assistance funding has been used by PREPA to pay White?sh? If FEMA has not yet made such a determination, please describe the steps FEMA is taking to do so. Please identify the dates and amounts of all Public Assistance funding awarded by FEMA to PREPA. Please describe the information that FEMA obtained from PREPA prior to approving each Public Assistance award listed above; Please describe any restrictions or conditions on use of any funding received from FEMA, including any reporting obligations. ls PREPA is able to spend Public Assistance grant funds without ?rst providing FEMA with documentation of speci?c costs and expenses? Is PREPA able to spend Public Assistancegrant funds prior to FEMA making a determination that planned expenditures are reasonable? Please provide a copy of all documents related to Public Assistance funding awarded by FEMA to PREPA, including all agreements, amendments, project worksheets, statements of work, grant applications, and expense reporting. Please identify all claims for reimbursement under Public Assistance program submitted to FEMA by PREPA, including the date, amount, and status of each such claim. Please describe efforts to ?verify that has, in fact, followed applicable regulations to ensure that federal money is properly spent,? including any ?ndings made to date}? Please describe the speci?c steps FEMA has taken or plans to take to determine whether the costs associated with contracts with Whitefish and Cobra are fair and reasonable. Has FEMA obtained or reviewed any information related to the cost and pro?t elements of the labor rates speci?ed in contracts with White?sh or Cobra? 15 FEMA Congressional Advisory, Statement on PREPA/W?hire?sh Energy Contract (Oct. 26, 2017). The Honorable Brock Long November 2, 2017 Page 5 13. Is FEMA aware of any statute, regulation, or contractual provision, that would prevent PREPA from using Public Assistance funding it receives from FEMA to pay for expenses related to contracts with White?sh and Cobra? If so, please explain. 14. Please deseri be understanding of ability to obtain assistance from through mutual aid agreements facilitated by the APPA. Is EMA aware of any statue, regulation, or contractual provision that would prevent PREPA from using Public Assistance funding to pay for assistance provided by another public utility under a mutual aid agreement? If so, please explain. 15. When and how did FEMA first learn of the contract between PREPA and White?sh? 16. When and how did EMA first learn that PREPA was considering awarding a contract to Cobra? 17. Please describe role in the October 19, 2017, contract between PREPA and Cobra. 18. Did FEMA review and approve the contract between PREPA and Cobra? 19. Is it understanding that Public Assistance funding will be used by PREPA to pay for costs and expenses related to contract with Cobra? If you have any questions please contact Claudine Brenner of my staff at (202) 224-2627 or Please send any official correspondence related to this request to Lucy Balcezak at gov. Thank you for your prompt attention to this matter. Sincerely, NW Claire McCaskill Ranking Member cc: Ron Johnson Chairman -. mi! Mill-1H1 I'n J?s. ?Ji . i 1317: . . *v .- putts ptnatt on is?? stoual rv awn tar WASHINGTON, DC 20510 5250 November 2, 2017 Lieutenant General Todd T. Semonite Commanding General and Chief of Engineers US. Army Corps of Engineers 44] Street NW Washington, DC 20314 Dear Lt. Gen. Semonite: I write to request information about the role of the US. Army Corps of Engineers (USAC E) in providing oversight of taxpayer dollars used to fund contracts to repair Puerto Rico?s electrical grid. As you know, USACE, through a mission assignment from FEMA, is leading the federal effort to restore power throughout Puerto Rico, and is working closely with the Puerto Rico Electric Power Authority (PREPA) on this project.l As of October 23, 2017, USACE had awarded three major contracts a $3 5.1 million contract to Weston Solutions for new generators, a $240 million contract to Fluor Corporation for personnel and equipment,2 and a $40 million centract to PowerSecure Inc. to provide additional repair assistance.3 However, by the time these awards were made, PREPA had already entered into a $300 million contract with White?sh Energy a small Montana company with little disaster response experience to coordinate the power grid restoration.4 I See: US. Army Corps of Engineers awards first contract for power grid restoration, U.S. Army Press Release (Oct. 9, 2017) (wovarmymiliarticlei 1 grid_restoration). 2 Paerto Rico and Federal Partners Unite to Address Power Restoration Needs, FEMA Press Release (Oct. 17', 2017) (erma. govinews?releaset2017i 10f 17?i4339fpuerto-rico-and- 3 US. Army Corps of Engineers awards additionai contract for Puerto Rico, US. Army Press Release (Oct. 19, 2017) 1 uerto_rico). 4 See: Poerto Rico Turns to Unproven Montana Company for Massive Power Restoration Job, But No One Knows Why, Weather Channel (Oct. 16, 2017) Lt. Gen. Todd T. Semonite November 2, 2017 Page 2 I have since learned many troubling details about this contract, including the possibility that has used federal disaster relief funds to pay White?sh? Although PREPA recently announced it was initiating the process of cancelling its contract with White?sh, several significant concerns remain. I recently learned that USACE considered contracting with White?sh to assist with power restoration in Puerto Rico, but declined to do so both because contracting of?cers determined that White?sh was unwilling to agree to comply with federal procurement laws and that its rates were more than double what USACE considered appropriate.? In order to assist this Committee with its oversight of federal spending and disaster response efforts, I request that you provide the following information as soon as possible, but no later than November 27, 2017. 1. Please provide any reason that USACE is aware of why PREPA initially should not have accepted offer of assistance. 2. When and how did USACE first learn of the contract between PREPA and White?sh? 3. How did the White?sh contract relate to other power restoration contracts including with Weston Solutions, luor, and PowerSecure? How do these contracted services differ or overlap? 4. Please provide copies of all contracts that USACE has awarded related to disaster recovery efforts in Puerto Rico, including any associated amendments,laddenda and documentation of applicable labor rates. 5. Please identify the dates and amounts of all funding awarded by USACE to PREPA (either directly or indirectly), including current estimates for future funding. 6. Is USACE aware of any federal disaster relief funding being used by PREPA to pay for expenses related to its contract with White?sh? If so, please explain. 7. Is USACE aware of any statute, regulation, or contractual provision that would prevent PREPA from using federal funding it receives from FEMA or USACE to pay for expenses related to contract with White?sh? if so, please explain. 5 Faerie Rico: Whitefish energy grid deal to be scrapped, BBC News (Oct. 29, 2017 FEMA, Brie?ng with Senate Committee on Homeland Security and Governmental Affairs Staff (Oct. 30, 2017). ?5 Faerie Rico: Whitefish energy grid deal to be scrapped, BBC News (Oct. 29, 201?) U.S. Army Corps of Engineers, Briefing with Senate Committee on Homeland Security and Government Affairs Staff (Oct. 27', 2017). Lt. Gen. Todd T. Semonite November 2, 2017 Page 3 3. Please provide a copy of all agreements between USACE and PREPA related to funding awarded by USACE. If you have any questions please contact Claudine Brenner of my staff at (202) 224-2627 or Please send any of?cial correspondence related to this request to Lucy Balcezak at Thank you for your prompt attention to this matter. Sincerely, memo Claire McCaskill Ranking Member cc: Ron Johnson Chairman . - -- fu- lettrl mans btnatt COMMITTEE ON ii HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS WASHINGTON, Dc 20510?6250 November 2, 2017 Andrew Techmanski Chief Executive Of?cer White?sh Energy Holdings, LLC 144 ASpen Ridge Way White?sh, MT 59937 Dear Mr. Techmanski: I write to request information about the $300 million contract that the Puerto Rico Electric Power Authority (PREPA) awarded to White?sh Energy Holdings, LLC (White?sh) for the restoration of Puerto Rico?s electrical grid in the wake of Hurricane Maria. I have recently learned additional details about this contract, including the possibility that PREPA may be using federal disaster relief funds to pay White?sh. Between October 10 and October 23, 2017', FEMA awarded more than $215 million in Public Assistance grant funding directly to PREPA for power restoration efforts.' A FEMA of?cial informed Committee staff, ?It is possible that FEMA funds will be used by White?sh.?2 The FEMA of?cial also indicated that FEMA did not review and approve actual expenses prior to awarding the $215 million in Public Assistance funds.3 Although FEMA issued an of?cial statement representing it ?has not provided any reimbursement to Puerto Rico for the PREPA contract with White?sh,?4 it is possible that PREPA has already been using federal taxpayer dollars to pay your company. Although PREPA recently announced it was initiating the process of cancelling its contract with White?sh, several signi?cant concerns remain regarding the terms of this contract and the circumstances surrounding its award.5 Recent reports suggest that this contract was awarded in the absence of meaningful competition and without transparency during the I FEW Approves More than $500 Million in Assistance to Puerto Rico, FEMA Press Release (Oct. 23, 21d. 3 FEMA, Brie?ng with Senate Committee on Homeland Security and Governmental Affairs Staff (Oct. 30, 20] 7). 4 FEMA Statement on Puerto Rico Electric Power Authority ?3 ontroct with Whitefish (Oct. 27, 201 (W.femagoytnews-releaseQOl 7t 1 5 Puerto Rico: White?sh energy grid deal to be scrapped, BBC News (Oct. 29, 2017 Andrew Techmanski November 2, 2017 Page 2 solicitation process.? Additionally, the contract?s speci?c .price terms appear to be signi?cantly higher than those contained in other federally funded contracts for similar work. I also have concerns about White?sh?s apparent attempt to circumvent federal oversight. According to publicly released documents, on October 2017, White?sh and PREPA executed an amendment to their original agreement. This amendment states: In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA Administrator, [or] the Comptroller General of the United States . . . have the right to audit or review the cost and pro?t elements of the labor rates speci?ed herein.? This clause is in direct conflict with both PREPA and obligations to ensure that any costs?including labor rates?Massociated with taxpayer-funded contracts are fair and reasonable. In order to assist this Committee with its oversight of federal spending and disaster response efforts, 1 request that you provide the following information as seen as possible, but no later than November 27. 20l 7. 1. Please describe the contracting process, including bid submission and negotiations, between PREPA and 1Klihite?sh. Please explain the understanding of corporate of?cials regarding terms and sources of payment from PREPA under the contract. Please describe any representations made by PREPA to Whitefish regarding ability to obtain FEMA Public Assistance funding and utilize such funding to pay for costs associated with contract with White?sh. Please explain the purpose 59: Access to Records,? included in the October 2017 amendment to the original contract between PREPA and White?sh. What is the legal basis for the stated prohibition on the ability to ?audit or review the cost and pro?t elements of the labor rates speci?ed [in the contract]?? Please provide a cepy of the following documents: a. The ?Emergency Master Service Agreement for Electrical Grid Reconstruction? executed by PREPA and White?sh on September 26, 201'? (?original agreement?); b. Any amendments or addenda to the ?original agreement; ?5 See. ag, Tiny Monrnao?rm 's Prrerro Rico power deal draws scrutiny, Reuters (Oct. 27, 201 Andrew Techmanski November 2, 2017r Page 3 f. g. Any other agreements between PREPA and White?sh related to the restoration of power in Puerto Rico; The request for proposals, or similar notice of opportunity, released by Ail formal proposals or other responses provided by White?sh to PRBPA prior to the award of the contract; All subcontracts awarded by White?sh related to its contract with and All invoices submitted by White?sh to PREPA. 6. Please identify all payments White?sh has received from PREPA. For each payment, please state the tbilowing: a. b. The date White?sh received the payment; The amount of the payment; The date that any invoice corresponding to the payment was submitted to and . A description of the work performed by White?sh for which the payment was made. Please identify all invoices or other requests for payment that White?sh has submitted to PREPA for which payment has not been received by White?sh. For each invoice or payment request, please state the following: a. C. d. The date the invoice or request for payment was submitted to PREPA hy White?sh; The amount requested; A description of the. work performed for which payment was requested; and The dates on which the work for which payment was requested was performed. 8. Please describe ail werk that has not been completed, but which White?sh plans to complete under its contract with PREPA. 9. Please provide the actual or estimated cost (under the'terms of White?sh?s contract with PREPA) of the work described above. Andrew chhmanski November 2, 2017 Page 4 10. Please describe all costs associated with the cancellation of the contract, including the actual or estimated amounts and which party is reSponsible for payment. I I. Please provide all communications White?sh has received from PREPA related to the cancellation of the contract. 12. Please identify any contractors or ?rms that White?sh has hired to perform any responsibilities related to media and public relations. If you have any questions please contact Jackson Eaton and Claudine Brenner of my staff at (202) 224-2627. Please send any of?cial correspondence related to this request to Lucy Balcezak at gov. Thank you for your prompt attention to this matter. Sincerely, NWO Claire McCaskill Ranking Member cc: Ron Johnson Chairman