Center for Investigative Journalism: Impossible to keep track of all Puerto Rico recovery contracts
Among top 20 companies known so far are 2 contracted by Trump for his border wall
Although the government published the subcontracts of the COR3 after the Centro de Periodismo Investigativo inquiries, the amendments to the contracts and the agreements made with recovery funds through the other agencies still cannot be identified. Among the top 20 companies known so far, there are two companies hired by Trump for the construction of the southern wall.
Keeping track of the federal funds for recovery projects that are being granted by the Government of Puerto Rico is an impossible mission. There is no centralized place for all those contracts and, although there are some scattered on the webpages of the Central Office of Recovery, Reconstruction and Resiliency, known as COR3, the Department of Housing and the Financial Oversight and Management Board for Puerto Rico (FOMB), there are others that are not registered or are not identified as recovery funds.
For example, the COR3 webpage shows only four contracts executed in 2018. The agency that is supposed to centralize the management of these funds, but there is no information about contracts that other government agencies or municipalities have executed using recovery funds. This specificity, about contracts related to recovery funds, neither can be found in the Contract Registry of the Office of the Comptroller, where amendments to the contracts are also missing.
Despite these limitations, with the information available, the Center for Investigative Journalism (CPI, in Spanish) was able to review 20 of the main contracts awarded by the Government of Puerto Rico using recovery funds.
Two companies commissioned to build the controversial wall that President Donald Trump authorized for the southern border of the United States are among those favoured by the government of Puerto Rico.
No background check for some companies
At the top of the list of the first 20 companies is ICF Incorporated, LLC. This corporation, based in Virginia, has an allocated amount of $363 million, for two contracts. The first, awarded by COR3 was of $188 million, although in May 2019 it was amended and increased to $338 million. The amendment was approved by the FOMB which, since 2016, controls Puerto Rico’s finances under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) approved during the Barack Obama administration.
A second ICF contract was approved on July 2019, after the Puerto Rico Department of Housing selected this company as one of four project managers to manage reconstruction, repair and relocation requests using Community Development Block Grant – Disaster Recovery (CDBG – DR) Program funds. The $25 million contract, added to the contract granted to ICF by COR3, pushes the total allocated to $338 million.
On July 2008, the Louisiana Recovery Authority fined ICF for more than $ 1 million, after the company failed to comply with the Road Home program requirements. To head the reconstruction and recovery processes after hurricanes Katrina and Rita, ICF obtained a contract for $756 million, which, as in Puerto Rico, was later amended to increase the amount. The final amount was $900 million.
In Louisiana, ICF was fined for its inability to close 116,000 cases related to Road Home claims. The company was also penalized for not complying with the agreed performance metrics. Press investigationsand state’s government claims pointed to ICF for dragging their feet in paying homeowners affected by hurricanes Katrina and Rita.
Some of ICF’s responsibilities in Road Home were similar to those the company will have as a program manager in Puerto Rico.
A CPI investigation revealed that the former Federal Coordinator for Disaster Recovery for Puerto Rico for the Federal Emergency Management Agency (FEMA), Michael F. Byrne, was senior vice president of ICF Incorporated between 2006 and 2010. On May, Byrne transferred from FEMA to Deloitte & Touche LLC, one of the companies favored with contracts by the Government of Puerto Rico.
In a written statement, Housing Secretary Fernando Gil-Enseñat told CPI that he did not know about ICF’s record in Louisiana with the Road Home program. He explained that in the selection of bidders two sources are used to validate the capacity of the entity or person to be hired.
“One of the sources is the Limited Denial Participation List, published by the U.S. Department of Housing and Urban Development (HUD). The other source is the System for Award Management (SAM), a federal government resource that is administered by the General Services Administration,” Gil-Enseñat explained, while making clear that state and federal laws were complied with in the ICF selection process.
Despite Gil-Enseñat’s defense of SAM as a validation source, a CPI investigation revealed that the good standing classification granted in this federal website does not always take into account the complaints or bad practices in which the company has incurred in the past.
The CPI found that of the 20 main companies favored by the government of Puerto Rico, two of them do not appear in the SAM website, so there is no way there was a background check done by the Housing Department. These two companies are 4 Contractors JV and Link Active, LLC.
Companies hired by Trump for the wall are at the top of the list
In the second position on the list of the top 20 companies favored by the Government of Puerto Rico with the most substantial contracts for recovery work, there is a triple tie between FR-BLDM, Yates-Bird and SLS Co, Ltd. Each was commissioned for $250 million for work connected to the Department of Housing’s questionable “Tu Hogar Renace” project. Of that trio , one is related to the work that the Trump administration has authorized for the construction of the wall on the border with Mexico. Another is a consortium in which one of the partner companies has also been contracted for construction work on the wall.
In April 2019, the Pentagon announced that it granted $789 million to SLS for construction work of part of the wall in the area of Santa Teresa, New Mexico. That amount was added to two contracts for $432 million for the construction of another 35 miles of the wall. SLS is based in Texas. It was founded in 1995 by the Sullivan brothers. One of them told Forbes magazine that hiring them to build the wall had nothing to do with politics.
However, the conglomerate to which SLS belongs, Sullivan Interests, donated $8,000 to the campaign of the Republican congressman from Texas, Randy Weber, who openly supports the Trump wall proposal. SLS also has a section specialized in recovery work called DRC Emergency Services. This division has obtained million-dollar contracts with the federal government for recovery after Hurricanes Harvey in Houston and Sandy in New York. In addition, it obtained a $60 million contract with the Puerto Rico Department of Transportation and Public Works for the collection of debris and recycling after María.
One of the Yates-Bird consortium partner companies is also related to the wall promoted by Trump. Certified by the Puerto Rico State Department to do business in Puerto Rico in November 2017, Yates-Bird appears as a consortium between Puerto Rican construction company Bird Group LLC, formerly Bird Construction, and American company Yates Construction. Chet Nadolski, executive vice president of Yates Construction and Omar López, representing Bird Group LLC. appear as authorized representatives on the Yates-Bird Organization Certificate.
In September 2017, Yates was selected as one of the companies responsible for building a prototype of the wall promoted by Trump and his followers. Its contract was for $453,000, according to several US media.
Fifth on the list of the top 20 companies is Rising Phoenix Holdings Corporation conglomerate, which owns Adjusters International Inc. This was the company that landed the contract to manage the Housing Department’s “Tu Hogar Renace” program. After landing an initial contract of $132 million, an amendment approved by the FOMB increased the amount to $207 million.
Project managers to manage CDBG-DR funds
In July, the Housing Department announced the names of the four companies hired as managers of the Repair, Reconstruction or Relocation (R3) program financed with CDBG-DR funds. In addition to ICF with a $25 million contract, Innovative Emergency Management, AECOM Technical Services and Alliance for the Recovery of Puerto Rico were selected. All three received contracts totaling $22 million each. With the exception of ICF, which occupies the first position in the list of 20 because of its other contract with COR3, the other three companies are positioned between the 14th and the 16th place in the list of 20.
AECOM lobbyist is Elías Sánchez, former representative of the Government of Puerto Rico before the FOMB, and who is being investigated by the federal government for allegedly selling influences. After combining the federal government contracts and the $22 million as program manager from R3, AECOM and its subsidiaries and consortia have obtained contracts totaling more than $365 million, according to information from the Federal Procurement Data System.
Alliance for the Recovery of Puerto Rico was registered in the Puerto Rico State Department in July 2018, a few months before the publication of the Department of Housing’s Request for Proposals (RFPs), as part of a consortium between Atkins Caribe, LLP and Tidal Basin Caribe, LLP.
Both companies are known for recovery work in Puerto Rico. Tidal Basin is part of the Rising Phoenix Holdings Corporation conglomerate, the company that won the contract to manage “Tu Hogar Renace”. Atkins Caribe leads the work of updating the mitigation plans of the 78 municipalities for which it was hired by the Planning Board for $1.7 million.
Alliance and Atkins Caribe appeared with the same street address in the Puerto Rico State Department certificate authorizing Alliance to do business in the island.
When approached by the CPI, the director of Atkins Caribe, Ray Martínez, justify Alliance’s expertise to perform the recovery work as R3 program manager.
“JVs are allowed to utilize the combined experience of the partner firms to propose on and deliver projects. This is one of the fundamental reasons that JVs are formed, to bring the combined expertise of two or more companies to bear on a project. The combined experience from the companies that form the Alliance JV amounts to over 20 years of history on the island,” Martínez said in written statements.
Alliance does not have its own employees, but rather integrates people from the associated firms, as well as hefty subcontracting. Martínez praised Atkins’ work on previous recovery projects in Puerto Rico.
“One specific example of our experience working in Puerto Rico is our collaboration on the inspections and program management aspects of the Tu Hogar Renace program,” he said in reference to Atkins’ role in the program that was denounced in March 218 by the Puerto Rico Plumbers Association, for an alleged overbilling scheme on the prices of materials and services.
Gil-Enseñat also stood by the contract stating that experience or time in the business is not a requirement when selecting the bidders.
“The requirement was that they be duly registered or organized on the date they were to submit their Statement of Qualifications (SOQ). In this case, the Alliance for the Recovery of Puerto Rico joint venture was created on July 12, 2018, and presented its SOQ on August 9, 2018,” Gil-Enseñat told the CPI.
Like Martinez, Gil-Enseñat defended the contract by citing the joint experience that Tidal Basin and Atkins Caribe have. He also said that both companies have worked on “similar projects” to those that Alliance for the Recovery of Puerto Rico will carry out, although he did not specify which.
Revolving doors among contracted companies
Deloitte & Touche LLC holds the 13th position on the list of 20. It is a legal and financial advisory firm that has a $31 million contract with COR3. The current Treasury Secretary Francisco Parés worked there as well as the former head of Treasury, Raúl Maldonado. Furthermore, former FEMA coordinator for the recovery of Puerto Rico, Michael Byrne, began working for Deloitte last May, a month after leaving his post in the federal government.
In the 18th position is Link Active, LLC, a call center belonging to the Ferré Rangel Group, parent company of GFR Media, a media conglomerate which includes El Nuevo Día, Primera Hora newspapers, as well as several digital marketing and communication platforms. Its contract with the Department of Housing amounts $20 million. It is in charge of call centers related to the management of CDBG-DR funds.
COR3 Transparency Portal is a fiasco
Several of the companies hired for “Tu Hogar Renace” received increases in their contracts approved most of them in June 2018, by the FOMB, but none of these amendments are shown in the Comptroller’s database.
COR3 contracts are registered under the Public-Private Partnerships Authority (AAPP in Spanish), the umbrella agency for COR3. This classification makes it impossible to distinguish which contracts correspond to recovery money, under the AAPP and which are under COR3.
The Comptroller’s press officer, Lisandra Rivera, said it is each agency’s responsibility to inform the contracts or their amendments. The Office of the Comptroller’s Contract Registry Act establishes that government and municipal entities have 15 days to provide copies of the contracts or their amendments.
Meanwhile, COR3 press officer Karixia Ortiz said the contracts related to the recovery work will be made available on the office’s transparency website but did not say when.
The COR3 Transparency Portal is managed by CGI Technologies and Solutions, which occupies the 11th position among the top 20 companies most favoured by the Government of Puerto Rico with contracts financed with federal recovery funds. The contract is for $88 million and extends from June 2018 to June 2021.
In February 2019, the Open Spaces (EA in Spanish) organization reported that the website did not meet the requirements of accessibility and updating of information, in addition to lacking a clear transparency policy. During a second look at the website in August 2019, EA found that six months later the deficiencies remained the same and that there was a long way to go before the portal met the transparency criteria of similar pages in other U.S. jurisdictions that have experienced hurricanes such as Louisiana, Texas, New Jersey and New York.
Among the findings of the last EA evaluation is the absence of formats that allow people with disabilities to access the data. Also, as the CPI found, there is only information and contracts related to COR3, but nothing for other Puerto Rico’s government agencies or municipalities. There is also no information on the funds that have been allocated and disbursed, nor a breakdown by municipality or region of that data.
“One would expect more from a company that is getting $88 million,” said EA public policy analyst María M. Rodríguez-Rivera, in an interview with the CPI.
According to the organization that advocates for transparency and access to information, the government must disclose how CGI entered the bidding process and it´s experience in other jurisdictions. They also question why the addendums to the $88 million CGI contract are not published on the COR3 Transparency Portal.
To address citizen complaints regarding the management of the recovery work, the portal provides the Ethics Global telephone number. However, when choosing the Spanish option, the system refers users to a call center in Mexico.
“It’s not very easy to know what type of information to provide at the beginning (of the call) since it is a company that receives data from many other organizations that have this service,” Rodríguez-Rivera explained via a document shared with the CPI.
The EA officer also explained that when she called the number, the person who took her call did not understand what she meant when she mentioned COR3. They only helped her when she said “Puerto Rico transparency.”
Likewise, the portal does not have information on the status of complaints made by citizens, the CPI confirmed. The section called “Report Information” is empty.
In addition to the absence in the COR3 Transparency Portal, the contracts for recovery work granted by the Government of Puerto Rico do not appear in the Office of the Comptroller’s Contract Registry. For example, the Department of Housing contract to Foundation for Puerto Rico in early 2019 for $37 million does not appear in that database.
Foundation occupies the 12th position in the list of the 20 companies most favoured with contracts by the Government of Puerto Rico. Its contract appears on the Housing and FOMB pages. This contract was approved despite the fact that Foundation did not present a proposalexplaining its expertise or interest in running a community program financed with CDBG-DR funds.
Rafael René Díaz-Torres is a member of Report for America.
–The Center for Investigative Journalism (CPI by its Spanish initials) is a nonprofit organization that trains journalists and has a legal program to help it in its objective of “working for freedom of information in Puerto Rico.”
—Views expressed in this section do not necessarily represent the opinion of Caribbean Business.