As promised, we are bringing you an update to our October 30th posting concerning the contract awarded to Whitefish Energy by the Puerto Rico Electric Power Authority (PREPA) to help restore electricity on the island (see Whitefish Energy). This $300 million contract at rates exceeding $240 per hour for electrical linemen awarded to a company with two full-time employees raised a lot of concern by both Democrats and Republicans in Congress as well as several oversight agencies including Offices of Inspector Generals. One Congressman termed it a "sweetheart deal to a fly-by-night company".
The offending contract has now been terminated although the full cost through termination will not be known for some time. So far, Whitefish has racked up $60 million in charges and that doesn't include the cost of demobilization and other allowable termination costs.
PREPA defended the Whitefish contract by noting that the unknown, tiny company was the only bidder that didn't require a down payment, and would handle its own logistics. PREPA is bankrupt and $9 billion in debt, and other better-established companies required significant down payments in order to offset the risk that PREPA might not be able to pay off contract work. Whitefish didn't enhance its own reputation by threatening to pull its linemen out of the Mayor's hometown when it was called on to be more transparent.
Meanwhile, the investigations expand. Another Whitefish type contract has emerged - this time, a $200 million contract award to a firm named Mammoth Energy Services' Cobra Acquisitions LLC with similar contractual language.
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