Wednesday, July 6, 2022

Puerto Rico Housing Department going forward with controversial contract

By on January 19, 2018

SAN JUAN – Puerto Rico Housing Secretary Fernando Gil insisted the rules for granting the contract for the Tu Hogar Renace program to provide temporary repairs for homeowners who sought refuge during Hurricane Maria, were not tailored to any company and assured this “isn’t another little white fish,” referring to a controversial contract the island’s power utility had granted to Whitefish Energy Holdings.

In an interview with Caribbean Business, Gil, who headed the Housing bids review board during the administration of former Gov. Luis Fortuño, said the contract with Adjusters International has already been approved by the fiscal control board. Training, he added, begins next week for legislators and mayors on how to submit cases on the affected homes in the communities they represent.

Puerto Rico Housing contract: Flashbacks of Whitefish scheme

“I’m going forward with this [contract]. I won’t allow this to hinder the recovery process,” the secretary said. His only interested, he stated, “is that things are done well.” Gil said that until he receives an order to halt the contract, the winning company will continue with its mission.

The contract to administer the Tu Hogar Renace project has nonetheless created controversy. The dispute surfaced after one of the competing companies challenged the decision to grant the contract to Adjusters International, the latter whose second in command, Daniel Craig, is close to the Trump administration and was singled out for mismanagement of federal funds while working on Hurricane Katrina’s recovery process stateside.

Documents obtained by CB indicate the company won the contract even though it did not comply with the main requirement in the request for proposal (RFP), which was to present an available $35 million line of credit.

On Nov. 15, as stated in the Adjusters’ cost proposal and signed by Craig, NBT Bank issued a certification stating the company had a credit line of $35 million but it was almost entirely committed. The available credit balance was only $9 million.

On Nov. 16, Housing amended the RFP to make this requirement more flexible so that instead of only the credit line, the companies could prove they had the access to that $35 million through a line of credit or audited financial statements that showed they had that amount available from other sources.

On Nov. 17, according to the record of the process included in the Housing agreement with Adjusters, the Delaware-based company submitted its proposal in response to the RFP, “which fully complied with all requirements made by the Housing Department.”

Housing CPA asserts noncompliance

However, Antonio Arias, the legal adviser for AECOM, the company challenging the contract, told CB he received this week the file with the proposal, and it was clear the CPA hired by Housing to evaluate the financial capacity of the competing companies, Aníbal Jover, submitted a memorandum after the closing of the RFP, in which he states Adjusters did not comply with the required financial requirements.

“Subsequently, what’s in the file is a list of emails in which Adjusters says that through the accounts of other companies, without intercompany agreements that allow for payments between them, had accounts receivable that when added equal $35 million. Accounts receivable is not money available,” Arias said.

Gil admitted he has not seen details of the documents in the case file, but as far as he knows and what his advisers have indicated, Adjusters complied with the RFP when presenting the accounts of companies included as part of the holding company.

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The secretary indicated that the amendment to the RFP, to make liquidity requirements more flexible, was completed after the general contractors, summoned by a parallel RFP, had requested the change in the order so they could comply.

“It was determined to make it more flexible so they could comply; what was sought was for them to demonstrate they had liquidity,” said Gil, referring to the fact that evidence of liquidity could be provided from different sources, not only through a line of credit.

AECOM’s Arias said the file does not include a Housing CPA memorandum establishing noncompliance with the requirements.

‘The bonus was received by all’

Gil also explained that Adjusters could have access to the 10 bonus points that guaranteed it passed the first round of proposal evaluations, as it showed it had a “teaming agreement” with local company LinkActiv. “A joint venture or a teaming agreement are similar terms in this context,” he said, while stressing that the bonus was given to all companies that submitted a proposal.

The request for proposal clearly states that to receive the bonus, the company had to present a joint venture proposal with a local business. In addition, it is detailed that “the proposals presented by a joint business must be signed by all members of the joining company. If the proposal is signed by only one of the members of the entity, the proposal must be accompanied by a copy of the partnership agreement, as evidence the proposal is signed by an official with the authority to commit both companies. The joint business agreement must be executed before the date and time specified for the presentation of the proposal.”

Adjusters did not present its proposal in conjunction with any other company. Instead, Adjusters presented, as partners in the project, Atkins; call service company LinkActiv Inc.; Servium Group; and Buffalo Computer Graphics. All except LinkActiv are U.S. companies.

Gil insisted there was nothing irregular in the process and that he is aware it could be reviewed by the federal government. He also pointed out that the decision to grant the contract to Adjusters was mainly based on the fact it was the company, after complying with the technical and financial requirements and experience, that provided the best value for the government. Adjusters proposal was $21 million lower than that of its main competitor AECOM / CPM JV.

The contract with Adjusters has a cap of $132 million. Housing has available up to $1.5 billion in federal funds for disaster recovery through the Tu Hogar Renace program to repair homes of nearly 75,000 families affected by Hurricane Maria in Puerto Rico.


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