Whitefish Is Charging Puerto Rico Hundreds More Per Hour Than What Its Workers Earn
With a little less than three weeks left in its canceled contract to work on Puerto Rico's damaged power lines, the Montana firm hired to do the repairs is facing increased scrutiny, according to a report by The New York Times. Whitefish, whose contract with Puerto Rico's state-run power company was prematurely canceled after it faced criticism over certain details in the contract, is charging Puerto Rico $319 per hour of power line work — that's at least three times what it actually pays its power line workers.
"Simply looking at the rate differential does not take into account Whitefish's overhead costs," Chris Chiames, a spokesperson for Whitefish, told the Times. He also said that the cost for labor is higher because of where the job is located, which accounts for the markup in the contract with the power company, generally called PREPA. "We have to pay a premium to entice the labor to come to Puerto Rico to work," he said.
According to the report, Whitefish, which doesn't have many employees of its own, hired electrical workers from Florida to do the work. Six employees from Kissimmee are earning $42 an hour, senior linemen from Lakeland are earning $63 an hour, and 40 linemen from Jacksonville are earning up to $100 an hour, with varying overtime depending on seniority and other stipulations, like union contracts and job titles. Whitefish, however, has been billing PREPA $319 an hour for each lineman.
"The rates in the contract were fairly negotiated between PREPA and the company and were based on the mutual knowledge about the difficulty of the work and associated risks," Chiames told the Times. But some energy experts disagreed that the rates were reasonable.
Energy officials told the Times that, even accounting for the emergency work, billing PREPA over $300 per lineman didn't add up. This charge was also separate from what PREPA was being charged for food and lodging per employee. Johnny Rodríguez Ortiz, who heads the local organization for retired electrical workers, acknowledged to the Times that over-inflated rates like these have often been used by others in the past to cover kickbacks to corrupt officials.
In October, PREPA received permission to cancel its contract with Whitefish after FEMA and members of Congress heavily criticized the $300 million contract PREPA entered with the firm. Reasons for criticism were varied: One point of contention was that, despite the fact that Whitefish only has two full-time employees, the firm was awarded the contract only mere days after Hurricane Maria devastated the U.S. territory in September.
Also under scrutiny are several connections between the company and Interior Secretary Ryan Zinke. Zinke and the company's chief executive both hail from the same Montana town, and Zinke's son worked for Whitefish last summer, according to the Times. The Department of the Interior and the company's chief executive have both denied that anything inappropriate in relation to the contract had occurred. However, several congressional committees are investigating the contract, as are the F.B.I. and the Office of Inspector General for the Department of Homeland Security.
On Thursday, a power outage related to infrastructure reportedly worked on by Whitefish plunged much of the island back into darkness. Over 80 percent of Puerto Rico was without power after the power line failure. Some areas affected by the Thursday outage had reportedly only enjoyed a return to electricity for less than a week before it once again disappeared. According to CNN, repairs to the damaged line began later the same day. As of early Monday morning, almost 48 percent of the island's power system was back up and running. By some estimates, Hurricane Maria has caused the biggest power blackout in U.S. history.