Crony Capitalism

The $300 Million Contract Awarded to the Interior Secretary's Friend's Company Is Exempt from Government Audits

Oh, okay.


Jose A. Iglesias/TNS/Newscom

The federal government has awarded a tiny Montana company a $300 million no-bid contract to repair Puerto Rico's hurricane-wrecked electrical grid. The company, Whitefish Energy, has close ties to Interior Secretary Ryan Zinke. A copy of that contract leaked last night, and it seems to prohibit the federal government from auditing Whitefish's work and to shield other details of the company's efforts from being disclosed via open records laws.

"In no event," the contract says, will the Puerto Rico Electric Power Authority, the Federal Emergency Management Agency, the Comptroller General of the United States, "or any of their authorized representatives have the right to audit or review the cost and profit elements" of the deal.

The contract was posted online by Ken Klippenstein, a contributor to The Daily Beast, the first publication to report on the connections between the company and the secretary of the interior.

The leaked document seems to confirm concerns—voiced by lawmakers, pundits, and reform groups—that the Whitefish contract is a lucrative special deal for a friend of a top administration official, and that it places politics ahead of what's in the best interest of Puerto Ricans, many of whom are still without electricity.

Andy Techmanski, owner of Whitefish Energy, is a neighbor and friend of Secretary Zinke, according to multiple news reports. The two men have publicly disclosed their acquaintance. The company has only a handful of employees and is relying almost entirely on subcontractors to do the actual work of restoring power in Peurto Rico.

Members of Congress have called for an investigation into the Whitefish contract. Yesterday members of the House Committee on Energy and Commerce sent a letter to Techmanski seeking copies of all contracts and subcontracts signed by Whitefish as part of its work in Puerto Rico. Meanwhile, members of the House Natural Resources Committee wrote to the Puerto Rico Electric Power Authority (PREPA) requesting more information about how and why Whitefish was selected for this work.

Separately, Sens. Maria Cantwell (D-Wash.) and Ron Wyden (D-Ore.) have requested a Government Accountability Office review of the "use of public money to reimburse work completed by Whitefish Energy," according to Reuters.

Prior to landing the contract for repair work in Puerto Rico, Whitefish's largest project had been a $1.3 million deal to rebuild less than 5 miles of electrical lines in Arizona, The Washington Post reported this week. By comparison, there are more than 2,400 miles of transmission lines and 30,000 of distribution electrical lines in Puerto Rico.

The Trump administration and the company itself have offered only the barest of explanations for how a small electrical firm from Montana managed to land a lucrative contract for work in the Caribbean. Both have claimed that the company has experience working in mountain ranges and on rugged terrain and have denied that cronyism played a role in awarding the contract.

"There was no federal involvement," Chris Chiames, a spokesman for Whitefish Energy, told BuzzFeed this week. "There was never any special favors asked, nor would there have been."

The Federal Emergency Management Agency (FEMA), which is no stranger to fiscal malfeasance, said Friday that it had "significant concerns" about the Whitefish contract. According to The Hill, FEMA denied having signed off on the contract and said details of the contract suggesting as much were inaccurate.

Whether Whitefish gets the job done is supposed to be shrouded in secrecy. The copy of the contract posted by Klippenstein includes a provision prohibiting the government from auditing its work. Another part of the contract says the Puerto Rican government "waives any claim against [Whitefish Energy] related to delayed completion of work."

Until the Trump administration can offer a better explanation for the decision to award a multi-million no-bid contract to a company with close ties to a top administration official, this whole thing smells really bad. The administration sure looks like it's been swallowed by the very swamp it promised to drain.