Puerto Rico Deal to Rebuild Homes Unfairly Awarded, Rival Says

(Bloomberg) -- Two disaster recovery companies are battling over a $133 million contract to repair hurricane-battered homes in Puerto Rico, with the losing bidder formally challenging the result and suggesting the winner should have been disqualified.

The commonwealth’s Housing Department on Dec. 15 gave the deal to oversee 75,000 potential home rehabs to Utica, New York-based Adjusters International Inc., which employs as an executive a former Trump administration nominee to the Federal Emergency Management Agency. AECOM, the world’s biggest engineering firm, said Adjusters failed to show adequate financial resources and good standing to do business in Puerto Rico, according to a copy of AECOM’s motion for reconsideration provided to Bloomberg.

“Adjusters’ proposal did not even purport to meet mandatory terms,” AECOM said in its Dec. 28 filing.

The case is the latest to raise questions about the island government’s handling of contracts after Hurricane Maria made landfall Sept. 20. Puerto Rico’s recovery has dragged on for months, with large areas still without power and thousands living in precarious housing. The slow recovery has been accompanied by accusations of mismanagement, from concerns about a vast understatement of the death count to a dubious electricity contract awarded to Whitefish Energy Holdings LLC, a two-person Montana operation with seemingly little relevant experience.

Closely held Adjusters International has three decades of history, including work for Kuwait after the Gulf War and the Port Authority of New York and New Jersey after the Sept. 11, 2001, terrorist attacks, according to an email from spokesman Chad Kolton. The company is also working on a storm-damage job where Hurricane Irma hit the Florida Keys.

FEMA Veteran

The 2016 acquisition of Tidal Basin Group, founded and run by recent Trump nominee Daniel Craig, gave it a presence in disaster preparedness, according to the company’s website. Craig, a senior vice president, led FEMA’s Recovery Division under President George W. Bush during Hurricane Katrina. President Donald Trump nominated him last year as the agency’s deputy administrator, but he withdrew after an NBC News report uncovered accusations that he falsified travel and time-keeping records at FEMA. Efforts to reach Craig, who wasn’t charged or punished, were unsuccessful.

Now, his new company is ensnared in a high-stakes fight being waged before an independent review board. Leticia Jover, a spokeswoman for commonwealth Housing Secretary Fernando Gil, declined to comment on AECOM’s allegations, citing the possibility that the case could lead to legal action. 

Points of Contention

The Puerto Rico case may ultimately turn not on Adjusters International’s qualifications and capacity to perform the job, but finer matters such as what documents were filed, and when, during the bidding process.

The bid request -- a copy of which Bloomberg acquired through the housing agency -- stipulates that the qualifying bidder needed an unencumbered credit line of at least $35 million. AECOM said Adjusters submitted a letter showing a credit line of exactly that sum, but that some had been used. “It is conclusive that Adjusters’ purported line of credit does not meet the threshold requisite,” AECOM said.

In the email, Adjusters said the original bid request had been amended, and that $26 million in available credit and $10 million in cash met that criteria.

AECOM also questioned its competitor’s registration to do business in Puerto Rico. Its motion filed with the housing agency included a search of Puerto Rico’s Registry of Corporations and Entities that showed no results for “Adjusters International, Inc.”

Adjusters said it is in good standing to do business in Puerto Rico. The database does include “Adjusters International Puerto Rico LLC,” an entity formed in Delaware on Nov. 1, with the documents available on the system effective Nov. 28.

The company used the address of Fast Solutions LLC, a separate firm that helps businesses establish legal standing with Puerto Rico.

The bid request described a point-based process that addressed experience; personnel qualifications; project approach; past performance; and cost. Bonus points were awarded to bidders with a local partner, the bid documents said. Price got the heaviest weighting, but accounted for just 25 points of a possible 110 points.

AECOM said it scored 99.04, while Adjusters International had 95.06, which led AECOM to say the Housing Department “disregarded its own evaluation criteria” and focused on price primarily. AECOM said it turned in a proposal with a cost of a little more than $154 million, while Adjusters offered to do it for $133 million.

But Adjusters said the bid request makes clear that the winner would be selected based on the “best value,” considering price and “technical score.”

--With assistance from Paul Murphy

To contact the reporters on this story: Jonathan Levin in Miami at jlevin20@bloomberg.net, Daniel Flatley in Washington at dflatley1@bloomberg.net, Yalixa Rivera in San Juan at yrivera14@bloomberg.net.

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net, Flynn McRoberts

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