Housing repair contract awarded for FEMA-funded program challenged
SAN JUAN – The contract to manage reconstruction of homes affected by Hurricane María under the Tu Hogar Renace (Your Reborn Home) program is being halted after one of the bidding companies contested that the accord was being awarded to another company that allegedly did not meet requirements of the request for proposals (RFPs).
The motion for reconsideration will be heard Thursday by the Puerto Rico Housing Department bidding review board.
The contract was awarded Dec. 15 to Adjusters International and signed by its vice president, Daniel Craig. The executive was nominated last year by President Donald Trump to serve as second in command at the Federal Emergency Management Agency (FEMA), but candidate withdrew his availability for the post in September after press reports raised doubts about his confirmation.
According to NBC News, an inquiry by the Federal Bureau of Investigation (FBI) and the Department of Homeland Security Office of Inspector General concluded that although there was insufficient evidence that Craig was involved in a conflict of interest in violation of the awarding of large FEMA contracts after Hurricane Katrina, according to a 2011 report, he had falsified official government documents related to travel and assistance records. However, Craig was never charged with a crime for his actions and maintains he did nothing wrong.
However, the RFP for the contract established that bidding companies must certify that none of its principals, directors or associates has been convicted or found guilty in state, federal or any other U.S. jurisdiction of fraud or embezzlement or illegal appropriation of public funds, as provided in Act 458 of December 2000.
Tu Hogar Renace is a pilot program that replicates similar projects established in other U.S. jurisdictions after natural disasters such as Hurricane María in Puerto Rico.
Although the Puerto Rico Housing Department establishes proposal requirements and oversees the evaluation of candidates, the project is financed in its entirety with FEMA funds. The program is intended to help some 75,000 families make minor repairs to their homes that were damaged by María.
Basis for challenge
Four companies were competing for the contract, but only Adjusters and AECom passed the first evaluation stage.
AECom, a multinational based in Los Angeles and operating in Puerto Rico for 54 years through its subsidiary URS Caribe LLP, is the company challenging the Housing Department decision, arguing that the agency did not comply with its own RFP requirements.
According to the motion for reconsideration presented by AECom, Adjusters did not meet the requirement to have a $35 million credit line. However, documents reviewed by Caribbean Business include a letter from NBT Bank, dated Nov. 15, which establishes that Adjusters is its client and has a credit line of $35 million, with $9 million available.
AECom further argues that Adjusters could not prove it complies with the General Services Administration (GSA) certification, which the RFP requires.
The motion also argues that when submitting its proposals, Adjusters was neither incorporated nor authorized to do business in Puerto Rico, which is another RFP requirement. CB verified State Department records, where it is evident that on Nov. 28, 2017, Adjusters International Puerto Rico was incorporated in Delaware and Virginia as a limited liability company authorized to do business in Puerto Rico.
Adjusters’ proposal was submitted Nov. 21, which means that at the time of its filing of its RFP, it did not meet the Puerto Rico registration requirement. According to the incorporation documents, Adjusters International Puerto Rico aims to provide risk- and project-management services for FEMA-financed developments.
According to documents reviewed by CB, the main reason for discarding AECom was the cost of its proposal. The project’s estimated cost for Housing, according to the grant award document accessed, was $152 million, although available federal funds amount to $180 million.
In the first round of bidding, AECom quoted a $206 million figure, while Adjusters quoted $181 million.
On Dec. 6, Housing requested the two finalists, AECom and Adjusters International, to adjust their costs by considering a previous analysis. The final proposals were $154 million from AECom versus $134 million from Adjusters. However, in terms of overall score, and accounting for all technical and economic aspects, AECom obtained 99.04 points while Adjusters accumulated 95.06 points.
“We played with the rules that Housing established; this was not an auction. AECom got the highest score, fulfilled all the requirements; what proceeded should have been [for] the other proposal [to] be discarded and they sat down with AECom to negotiate the price, if it was understood it should be lower,” AECom attorney Antonio Arias told CB.
“The RFP…states that if you are the one who complied with the rules and have the best score, the agency should sit down with that company and negotiate the price. That never happened,” Arias insisted.
However, the RFP establishes that the decision to negotiate with bidders is at the discretion of the Housing Department.
The contract recommendation establishes that both companies complied with the technical and financial specifications to complete the project.
Arias also claimed that Adjusters does not have agreements with local companies to do its work. In its proposal, Adjusters establishes that its collaborating companies are Atkins, call service company LinkActiv Inc., Servium Group and Buffalo Computer Graphics. Except LinkActiv, all companies are U.S.; however, Adjusters received the bonus of 10 points for this category.
The program receives funds based on Stafford Act Section 403, which spells out emergency sheltering assistance and the Sheltering & Temporary Essential Power Program.
Adjusters did not immediately respond to phone or email messages requesting comment. Puerto Rico Housing Secretary Fernando Gil rejected commenting on the matter, because it is under consideration by the Bidding Review Board.