Company challenged for Puerto Rico Housing contract changes name
SAN JUAN – Amid doubts about its financial capacity, Adjusters International has changed the corporate name under which it contracted with the Puerto Rico Housing Department to manage a program to reconstruct homes damaged by Hurricane Maria.
The contract to manage the Tu Hogar Renace program was signed Jan. 5 by Andre LeBlanc–project manager & director of Adjusters International’s division for FEMA’s Sheltering and Temporary Essential Power, or STEP, program services–on behalf of Rising Phoenix Holdings Corp., which will be in charge of the project.
In a Dec. 6 email, Daniel Craig, vice president of Adjusters International and president of Tidal Basin, informed the associate administrator of Housing’s procurement & contracting division, Rafael Vázquez, that the people authorized to discuss the company’s proposal to manage the Tu Hogar Renace project with the department bid’s board were LeBlanc and Craig himself, on behalf of Adjusters; Ray Martínez for Atkins North America; and Dennisse Díaz for LinkActiv–with the latter two being companies that would form part of the team.
The reason for the name change is not mentioned in the contract. According to the State Department registry, on Jan. 4 Rising Phoenix Holdings registered as a foreign corporation authorized to do business in Puerto Rico. The company was incorporated in Delaware in 1985, but there is no trace of it online. The company’s certificate of good standing–required in Housing’s request for proposal (RFP) to compete for the contract–was issued Jan. 10, five days after the contract with Housing was signed.
The contract to administer the Tu Hogar Renace project stirred controversy after one of the competing companies challenged the decision to grant the contract to Adjusters, mainly because the competitor believed Adjusters did not comply with the liquidity requirement established in Housing’s RFP.
Housing Secretary Fernando Gil has defended the decision to grant Adjusters/Rising Phoenix the contract because its proposal was $21 million lower than its main competitor, AECOM/ CPM JV.
Caribbean Business had access to documents included in the RFP that reveal the CPA hired by Housing to review the financial capacity of the competing companies had doubts about Adjusters’ information regarding its liquidity.
In an email dated Dec. 5, two weeks after the application process closed, CPA Aníbal Jover told the Housing associate administrator that there were doubts over whether the company had the required liquidity.
The program’s RFP required companies to have a clean $35 million line of credit or bank accounts that, combined, guaranteed that amount was available.
The documents presented by Adjusters on Nov. 15 indicate the company had a $35 million credit line, but it was almost entirely committed. Then, on Dec. 5, the company presented a breakdown of the balance sheets of several of its associated companies, which purportedly added up to $40 million in liquid assets.
The information details an Adjusters’ account with NBT Bank for $2.1 million; another account through Tidal Basin Government Consulting with Access National Bank for $2 million; another from Tidal Basin Holdings Inc. with NBT Bank for $569,521; and another through Vanguard Emergency Management from JP Morgan Chase for $6.1 million–for a combined $10.8 million.
In addition, between Tidal Basin and Adjusters there was an additional $9 million in accounts receivable ($4 million of which had yet to be invoiced); and Vanguard Joint Venture had available one-third of the accounts receivable not invoiced, which would total $21 million.
In his message, Adjusters President John Mariani said its $35 million credit line with NBT Bank allows the company to take out a loan for $17 million, with the remaining $18 million being available based on 80% of the projects’ invoices as collateral.
The Dec. 5 email discussion about Adjusters’ financial capacity indicates, at the time the proposals were submitted Nov. 21, that the company was not in compliance with this requirement, despite it being made more flexible on Nov. 16, in response to a request from the company, and as acknowledged by its representative in Puerto Rico, Luis Esteves, during a Radio Isla 1320 interview last week.
However, Secretary Gil told told CB that the amendment to make the liquidity requirements more flexible was made after general contractors, summoned in a parallel RFP, requested the change so they could comply.
Gil has reiterated there was nothing irregular in the selection process and the determination in favor of Adjusters was based mainly on the fact that it was the company, after complying with the technical and financial requirements and experience, provided the best value for the government.
The contract with Adjusters is capped at $132 million. Housing has up to $1.5 billion in available federal disaster funds under the Tu Hogar Renace program to repair the homes of nearly 75,000 families affected by Hurricane Maria in Puerto Rico.
Requests for an interview with the company’s representative have been unsuccessful.