Puerto Rico Housing Department suspends contract with Adjusters International
SAN JUAN – The contract with Adjusters International / Rising Phoenix to manage the federally funded “Tu Hogar Renace” home-repair project of the Puerto Rico Department of Housing will be suspended, Secretary Fernando A. Gil Enseñat announced Wednesday afternoon, after his agency’s Bid Review Board revoked it Tuesday.
“The bid review board issued its resolution; we respect it, for such purposes we will take the administrative actions to comply with what was determined. Therefore, the contract is suspended to comply with the due process of law until and as long as there is a determination of the appellative forum,” Gil Enseñat said in a written statement.
On Wednesday morning, the secretary had indicated that his department was evaluating the available options to avoid affecting the repair work of homes damaged by Hurricane Maria. “Tu Hogar Renace” was designed to make minor repairs and is funded by the Federal Emergency Management Agency (FEMA).
The official’s statement leaves the door open for Adjusters International / Rising Phoenix to use the appellate forums to rebut the government’s decision.
A Housing spokeswoman told Caribbean Business that Adjusters International / Rising Phoenix has not submitted any invoices or been paid any amount.
It is still unclear whether bid competitor AECOM / CPM JV will be hired. It contested the award and is the only company that passed the request for proposals (RFP) process. CB confirmed that the company, represented by the law firm McConnell Valdés, has Elías Sánchez as a consultant. He was the former representative of the Government of Puerto Rico to the island’s fiscal oversight board and former campaign director for Gov. Ricardo Rosselló.
The Hosuing secretary said that “in the Department of Housing, all administrative processes are carried out in accordance with applicable law and regulations, ensuring the best use of public funds and the successful implementation of our programs. Additionally, ensuring transparency in contract awards is of paramount importance to our Administration.”
A Housing spokesperson told CB that after competing bidder AECOM / CPM JV challenged the awarding of the contract to Adjusters / Rising Phoenix, “to ensure transparency, although it is not required,” the department made a request to Justice Secretary Wanda Vázquez that her department designate the members of the bid review board to decide the results of the request for proposals (RFP) process.
That board, chaired by Godohaldo Pérez Torres, concluded Tuesday that its Evaluating Committee “erred in its evaluation of Adjusters’ proposal, to the point of arbitrarily applying evaluation criteria.”
The secretary had defended the contract, arguing that the winning company had submitted a proposal that was $20 million less than its competitor’s. The contract, which was signed Jan. 5, was for up to $132 million.
On Tuesday, Housing’s Bid Review Board recommended the cancellation of the contract with Adjusters for not having complied with the core requirements of the department’s RFP.
CB first reported that the contract to manage the “Tu Hogar Renace” project was challenged by AECOM / CPM JV, which argued that the adjudication process was plagued by irregularities.
Adjusters / Rising Phoenix’s second-in-command, Daniel Craig, reportedly withdrew from consideration as President Trump’s nominee for a top position at the Federal emergency Management Agency [FEMA] after media reports were published of a federal investigation into mismanagement of federal funds while working on Hurricane Katrina recovery efforts.
The matter has been called reminiscent of the contract awarded to Whitefish Energy Holdings to repair Puerto Rico’s electricity grid after Hurricane Maria, which ended up being canceled by order of Gov. Ricardo Rosselló.
However, the reasons for contesting the contract have nothing to do with the relationship between Craig and the Trump administration, but rather because the company did not comply with the financial liquidity requirements or certifications to do business with the Government of Puerto Rico.
“Section 4.2 mandatorily required all bidders to submit with their offer that they had a certification from the General Services Administration of Puerto Rico. It is an incontrovertible fact that Adjusters did not present the required certification,” the bid review board’s resolution reads.
In addition, it maintained that the requirements defined in the RFP for a “joint venture” were not met, thus Adjusters should not have received the 10 points that allowed it to participate in the second round of selection. “Certainly, the agreement with [Puerto Rico-based telemarketing company] LinkActiv Inc. does not meet the criteria for granting the 10 bonus points,” the document says.
The provisions of section 5.7.1 of the RFP on the financial capacity of bidding companies were also not complied with because “there is no evidence that the requirement of having $35 million in a financial entity insured by the FDIC [Federal Deposit Insurance Corp.] has been met,” the board wrote.
“Certainly, there is no information in the file about Adjusters having $35 million confirmed by a third party” because it could not be considered funds belonging to Adjusters. Therefore, the company’s practice, validated by Housing and by its secretary, Fernando Gil Enseñat, of “using funds from subsidiaries and joint ventures to try to comply with the requirement was contrary to the provisions of the RFP.”