Thursday, November 23, 2017

Puerto Rico fiscal Board to review gov’t contracts of over $10 million

By on October 31, 2017

(Juan José Rodríguez/CB)

SAN JUAN – Puerto Rico’s fiscal control board unanimously approved Tuesday a motion to put in effect a government “contract review policy” in order to “promote market competition and be consistent with the approved fiscal plan.”

Specifically, the government must send all contracts of more than $10 million to the board for review. The panel would also have the power to carry out a “random sampling” of contracts of less than $10 million, which would give the entity the authority to look at some of the 1,600 contracts awarded by the government after Hurricane Maria.

The sum of these contracts was not given by the government’s representative to the board, Christian Sobrino, who said their combined amount was be being quantified. He also expressed reservations about the new powers of the panel created by the federal Promesa Law.

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Fiscal board Chairman José Carrión denied the measure was in response to the controversial contract,  of up to$300 million, awarded by the Electric Power Authority (Prepa) to Whitefish Energy Holdings, which is being canceled after widely questioned nationally and alleged to involve possible conflicts of interest.

“The contract [-reviewing] policy is not in reaction to Whitefish. It’s something we were going to implement anyway,” Carrión said at a press conference at the end of the board’s 10th public meeting, which was held at the Engineers & Land Surveyors Association in Hato Rey.

However, the insurance expert confirmed that the board asked the government for the Whitefish contract “about 10 days ago” and has received it for evaluation.

The board’s examination of the contract, which had questionable clauses such as one preventing audits, adds to investigations carried out by the Office of the Comptroller, the U.S. Office of the Inspector General, Congress, the Federal Agency for Emergency Management (FEMA) and the Federal Bureau of Investigation (FBI).

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The contract’s scandal reached fever pitch over its awarding and the Puerto Rican government even dissociated President Donald Trump from the awarding process after reports said Secretary of the Interior Ryan Zinke is a friend of Whitefish CEO Andy Techmanski, both of whom are from Montana, where the company is based. Another employee of the company reportedly is a donor of the Republican Party.

Government reservations

According to a board document, the contracting policy is implemented “in accordance with section 204 (b) (2) of Promesa” and provides that contracts awarded by the government be in line with the new fiscal plan requested and for which a draft must be submitted by Dec.22, to be certified in February.

The policy also seeks that spending conform with the emergency caused by hurricanes Irma and María, that there be a “competitive and transparent” process and that contracts are consistent with “federal regulations.”

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Although favoring a review process, the government representative to the board expressed reservations about the decision because it would intervene in responsibilities he considers exclusively governmental and would interfere with the commonwealth’s relationship with the federal and other state governments, “which doesn’t require intermediaries.”

Despite being a non-voting representative, during the meeting Sobrino presented a resolution to prevent the board members from directly reviewing contracts or having communicating with the parties involved.

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“His motion seems reasonable,” said Carrión, who asked the board’s legal counsel, Jaime El Koury, to evaluate the legal proposals of the resolution to, eventually, take it to a vote amongst themselves, which could take place at another meeting.

Subsequently, Sobrino, who insisted unsuccessfully that the vote be taken immediately Tuesday, explained in a press conference that his concern is that, “certainly, there are transactions carried out by the government that, although they are contracts, don’t affect market competition.”

“The Government of Puerto Rico generates over 100,000 transactions or contracts a year. That’s a large volume. We have to close that revision universe to make sure they have the capacity to carry them out,” said Sobrino, who insisted that the local government is the representative of the people of Puerto Rico before the federal government, not the board.

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