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Company attorney warns canceling Puerto Rico Housing contract could be expensive

By on February 14, 2018

SAN JUAN – The legal representatives of Adjusters International / Rising Phoenix warned Wednesday that the decision to suspend and potentially cancel the contract with the company to manage the “Tu Hogar Renace” home repair project could cost more than the contract’s $133 million cap.

“Since the bid was won and the contract with the Housing Department was signed in January to manage the Tu Hogar Renace program, Adjusters International has enrolled thousands of Puerto Ricans in the program and conducts almost 1,500 inspections of homes daily to help Puerto Ricans return to their homes.

“Adjusters International has also employed more than 700 Puerto Ricans to assist with this program, as well as having made collaborations with local companies. This decision puts that progress at risk and could cost Puerto Rico more money,” said attorney Eric Pérez-Ochoa, of Adsuar Muñiz Goyco Seda & Pérez-Ochoa PSC, who represents the company in Puerto Rico.

The contract with the Housing to make minor repairs to homes damaged by Hurricane Maria will be suspended, Secretary Fernando Gil Enseñat announced Wednesday, after the department’s Bid Review Board recommended its cancellation because the Bid Board “erred in its evaluation of Adjusters’ proposal, to the point of arbitrarily applying evaluation criteria.”

“Adjusters International is seriously disappointed with the interpretation of the facts made by the Bid Review Board of the Department of Housing in this case, on the applicable administrative requirements in record. The Adjusters International proposal complied with all the requirements of the Request for Proposal (RFP) and represented the best value for Puerto Rico, offering savings of more than $20 million over the other proposal. The company will continue to study the decision,” the lawyer added.

Puerto Rico Housing Department suspends contract with Adjusters International

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.”

Caribbean Business has not received a request for comment from FEMA on the controversy that once again calls into question the prudence exercised in the use of public funds by both the local and federal governments after disasters.

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