Two-person energy firm's $300 million Puerto Rico contract raises eyebrows

William Cummings | USA TODAY

Show Caption Hide Caption Whitefish reels in $300M Puerto Rico power contract A small company you've never heard is tasked with restoring power to Puerto Rico.

A $300 million contract to help rebuild Puerto Rico's electrical infrastructure, which was awarded to a small, two-year-old Montana company that had only two employees when Hurricane Maria struck the U.S. territory, has sparked calls for an investigation from both Republicans and Democrats on Capitol Hill.

In addition to its size and relative inexperience, the fact that Whitefish Energy Holdings is based in Interior Secretary Ryan Zinke's hometown of Whitefish, Mont., is fueling questions about how Whitefish Energy Holdings secured the lucrative contract. The former Montana congressman's son also had a summer job at a Whitefish construction site.

A spokesman for House Natural Resources Committee Chairman Rob Bishop, R-Utah, agreed that congressional review was needed. The committee has jurisdiction over Puerto Rico and other U.S. territories.

More: Five weeks after Maria most of Puerto Rico remains an island in the dark

“The size and unknown details of this contract raise numerous questions. This is one of many things the committee is taking a close look at as it continues to work with the resident commissioner, governor’s office and oversight board to ensure Puerto Rico’s recovery is robust, effective and sustained,” said Parish Braden, a spokesman for Bishop.

"Congress needs to understand why the Whitefish contract was awarded and whether other, more cost-effective options were available," Rep. Raúl M. Grijalva, D-Ariz., the senior Democrat on the Natural Resources Committee, said in a statement.

Sen. Maria Cantwell, D-Wash., said she has asked the Government Accountability Office to investigate the contract award to Whitefish Energy, which she called a “brand-new company with two employees.”

Whitefish Energy announced the contract last week but Whitefish spokesman Ken Luce said the company has been on the ground in Puerto Rico since Oct. 2.

In that time, Whitefish Energy said it has put 300 people to work, mostly subcontractors, repairing the critical power lines that run through the Island's mountains. Twenty more workers are arriving each day, Luce said, and overall, the company plans to add 700 more.

"Anybody in Washington who is critical of Whitefish Energy getting this contract should be asking why is nobody else getting any work done," Luce said. "We're getting work done every day."

Whitefish Energy is "a two-person firm with a business model to ramp up," Luce explained. "The majority of the industry operates the same way. You have a core group of people with expertise" who find the workers and subcontractors needed to get a given job done.

"If you want to question the business model look at 300 people working there from October 2 to today," Luce said.

Luce also said Zinke's friendship with CEO Andy Techmanski "had nothing whatsoever to do with the contract" and that Zinke didn't even know about it until the deal was already done.

The Interior Department denied that Zinke played any role in the contract award.

“Neither the secretary nor anyone in his office have taken any meetings or action on behalf of this company,” the department said in a statement.

Zinke and Techmanskis know each other “because they both live in a small town where everyone knows everyone,” the statement said.

Maria hit the island on Sept. 20 as a Category 4 storm, killing more than 50 people and knocking out electricity to the whole island. More than a month later, only 30% of customers have power.

Luce said Whitefish had a team in Puerto Rico on Sept. 26 to meet with representatives of the beleaguered Puerto Rico Electric Power Authority. With the power still out, they poured over maps by smartphone light as the Whitefish Energy made its pitch.

Ricardo Ramos, PREPA's director, said Whitefish was one of two companies on the government’s shortlist. The other company wanted a $25 million down payment due to the risk of working with PREPA, which filed for bankruptcy in July.

Luce agreed that PREPA's financial troubles drove many competitors away. He said Whitefish Energy's willingness to take the risk of dealing with the Island's troubled power authority, coupled with the Whitefish Energy's proficiency in rugged, mountain work landed them the deal.

Luce acknowledged that a relatively unestablished company landing this contract "would be highly unusual" were it not for those two deciding factors. He was confident that any congressional concerns about Whitefish Energy will be answered by the results on the ground.

"We respect the governor's call for the island to be at 95% (power restored) by Christmas," Luce said. "We are doing everything we can to meet that goal for the island."

Contributing: The Associated Press