The Department of Homeland Security’s Inspector General and the FBI office in San Juan also announced independent inquiries into the contract, and the Whitefish deal was also the subject of several lines of questioning in a Senate Committee on Homeland Security and Governmental Affairs hearing on Tuesday. “Despite the contract cancellation with Whitefish, we continue to evaluate the circumstances surrounding the decision to award that contract,” a DHS OIG spokeswoman told me. She also confirmed that the impetus for the inquiry—which is not yet a full investigation—was media and congressional attention to the deal.
While federal entities have yet to come to conclusions in their inquiries into Whitefish’s involvement in rebuilding Puerto Rico’s grid, the probe has already begun to broaden. A November 1 letter from the House energy committee indicates scrutiny over PREPA’s $200 million contract with Mammoth Energy Services’ Cobra Acquisitions LLC, which was awarded on October 19 for repairing power poles and power lines coming in and out of San Juan. The letter states that that contract, “which would appear to have the effect of preventing government oversight of the agreement, [raises] additional questions about the contracting review process,” including the exact involvement of FEMA in contracts paid out with its funds.
According to a congressional committee staff member in communication with the office, the Department of Homeland Security’s Inspector General may also be probing the Cobra contract. The spokesperson with the DHS OIG said of that claim that she was unaware of a formal inquiry into the Cobra contract, but that the office was involved in “a full fact-finding review” of PREPA’s contract-making process, one that could escalate to a full-fledged audit.
The Cobra contract does not contain some of the more eyebrow-raising language of the Whitefish document, but Mammoth Energy officials, who have not responded to requests for comment for this story, said in a conference call announcing the deal that FEMA had been there “every step of the way” in the process (FEMA declined to comment when asked for confirmation). Of their deal, which also lacks a downpayment and relies on FEMA to backstop any potential inability of PREPA to pay, a Mammoth Energy official stated that “we wouldn’t have entered this contract if we didn’t think we’d get paid.” Unlike the controversial provisions for lodging and expenses for Whitefish contractors, the Cobra deal houses line-workers in a barge that will float off the coast of San Juan.
It’s still unclear how the contract-making process with Cobra was initiated, and as The Intercept reports, Mammoth Energy is a firm with little experience in disaster cleanup and little clear reason to be chosen as a partner firm, beyond the payment structure. But together with the Whitefish deal, the Cobra contract reflects ongoing concerns with the PREPA decision-making process after Maria. Just how did it come to terms with those companies? What exactly was its bidding process? Why did it choose to enter into expensive contracts with private companies instead of entering into the mutual-aid agreements usually favored by utility companies, which allows them to contract with other utility companies in other states for rebuilding services? And with Whitefish requesting that $10 million of its contract be paid from FEMA funds, who is liable for voided contracts, and for how much?