Fiscal Board alarmed by Puerto Rico’s Electric Power Authority contract awarded to MasTec

(Editor’s Note: MasTec is today headed by Jorge Mas Santos and José Mas Santos, sons of the late Jorge Mas Canosa, who was president of the powerful Cuban American National Foundation (CANF). Mas Canosa became well known for his lobbying activities in favor of the blockade against Cuba after the Ronald Reagan’s election in 1980. During a period of the 1990s, Mas Canosa helped finance violent activities inside Cuba, as documented, and revealed by the recently deceased terrorist Luis Posada Carriles. Members of the CANF in Puerto Rico included such important figures as Domingo Sadurni Casas and Antonio “Tonin” LLama Muñoz involved in the murder of Carlos Muñiz Varela (as detailed in the book “The Cuban Counterrevolution in Puerto Rico,” pages 123,129,279,291,308 and pages 130,131 309 and 312). At the end of the 1990s, MasTec, by then under the direction of Mas Santos, was investigated by the authorities in Miami-Dade County for over-billing the county government for a street striping contract. Today MasTec, an influential, publicly traded company, continues to garner multi-million dollar government contracts across the U.S. and beyond its borders — including Miami-Dade government contracts, whose taxpayers they once cheated.)


Laura M. Quintero

A contract granted by the Electric Power Authority (PREPA) to initiate the second phase of recovery after hurricane Maria, which devastated Puerto Rico, has raised questions from the Federal Fiscal Control Board which has questioned the large amount authorized without defining the scope of work to be performed. It has also questioned a contract that appears not to fully comply with the laws and regulations that govern these processes.

Flags were raised by the Board after $700 million was awarded to MasTec North America, Inc. without providing details on the magnitude of the work or justification of the amount.

PREPA finally awarded the contract to MasTec for the maximum amount of $500 million to restore transmission and distribution lines, electric substations, as well as provide brigades of workers and supervision, equipment and materials. MasTec, like two other contractors, would be responsible for the second phase of the recovery, which consists of reinforcing the work done during the emergency after the hurricane.

The company will provide 315 workers to work on transmission and distribution lines, as well as personnel dedicated to safety, logistics, management and operations, according to the annexes of the contract. Rates consist of $195 per hour for transmission line workers; $186 per hour for distribution line workers; $107 per hour for the logistics manager; $120 per hour for the security manager and $250 per hour for the project’s general manager and executive director.

The contract also covers up to $225 per person, per day for lodging and food expenses, in addition to equipment such as excavators, tractors and trucks.

Corrections sought

In its review of the contract, the fiscal board had indicated to PREPA that it was not complying with a series of laws and regulations that govern government contracting in Puerto Rico. The agency also noted that it lacked information to evaluate whether the contractual agreement met the standards of the Federal Emergency Management Agency (FEMA).

This exchange occurred because PREPA had to send the contract in advance to the fiscal entity as part of the review protocol approved in October 2017. The errors in the contract were detected during review and the federal board then called attention to the errors.

The main point of contention is the inconsistency around the cost of the contract. The PREPA governing board had established in Resolution 4580 that the cost amounted to $300 million, but that amount was not inserted in the draft contract. On the contrary, other documents supplied by the public corporation detailed that the value of the contract would be $125 million and subsequently offered a new estimate of $700 million.

“The false documents must be corrected before moving forward,” the fiscal entity emphasized in its observations, which it attached to the letter.

“The structure of the agreement is such that PREPA will launch contracts as the work is defined. Therefore, it is not possible to evaluate the reasonableness or level of risk of the anticipated value of the contract shown to be $700 million,” reads the document in the possession of the newspaper EL VOCERO.

The fiscal board could not corroborate whether PREPA had prepared an estimate of the cost prior to the bid process. Nor did it clear up doubts about how much work remained to be done, and how it had estimated that the cost of the works involved was $700 million, or how work was being distributed with other contractors, such as Cobra Energy.

The fiscal entity’s observations were based on the draft contract and the letter that PREPA’s Chief Financial Officer, Todd W. Filsinger, sent to the Contracts and Acquisitions Compliance Office, headed by Ottmar Chávez.

Chávez, appointed by Governor Ricardo Rosselló,  assumed the role of trustee within PREPA as a control mechanism after the scandal caused by the $300 million Whitefish Energy Holdings contract granted to the small Montana company days after Hurricane Maria.

“It does not appear that a justification for this contract has been included … The contract includes a maximum amount of $700 million, but it is not clear how they reached this amount,” reads the analysis of the federal board.

The allegations include that the public corporation did not even write the name of the contractor in the contract, did not attach the articles of incorporation, did not indicate the dates of execution and effectiveness of the services, nor did it include the non-debt certifications of the Department of the Treasury, the Center of Municipal Revenue Collection (CRIM) and the Department of Labor and Human Resources.

Moreover, the federal entity requested that a series of clauses be included that certify that no official or employee of the PREPA will execute a contract in which it has an economic interest, or that benefits a former public employee.

This newspaper [el Vocero] [has] requested more information from PREPA and  the fiscal board. By the closing on June 13, PREPA had not answered the Vocero’s request. Meanwhile, the federal agency reported that it will issue statements on the matter during the week.

(From Puerto Rico’s El Vocero)