After Multiple Botched Contracts, Blumenthal and Warren Call for Investigation into FEMA's Disaster Relief Contracting Process

[WASHINGTON, DC] – U.S. Senators Richard Blumenthal (D-CT) and Elizabeth Warren (D-MA) called for a Department of Justice investigation into the government contracting process undertaken as part of disaster relief efforts in Puerto Rico. The Senators’ letter follows multiple reports of contracts awarded to egregiously underqualified companies, amounting to hundreds of millions of dollars wasted while Puerto Ricans continue to suffer without electricity, food, or proper housing.

In one example reported by the New York Times, Tribute Contracting LLC was awarded a $156 million contract by the Federal Emergency Management Agency (FEMA) to supply 30 million meals to residents of Puerto Rico and Houston, Texas. The contract was terminated after the company provided just 50,000 meals that failed to include the proper preparation materials. FEMA had previously canceled five contracts with Tribute, which is owned and operated solely by the owner. Tribute, along with Whitefish Energy and Bronze Star LLC, were engaged to provide critical goods and services to Puerto Rico and other areas devastated by last year’s hurricanes. Public reporting later revealed each company had glaring ineptitudes that should have disqualified them from receiving contracts. Given multiple documented oversights, Blumenthal and Warren called on Attorney General Jeff Sessions to open an investigation into FEMA’s contracting process.

“It is impossible to believe that Tribute, Bronze Star, and Whitefish are anomalies. Rather they are canaries in a coalmine indicating that where there are three improvidently awarded contracts, there are bound to be more,” wrote the Senators. “The path to recovery for Puerto Rico is long. Hundreds of millions have already been spent and billions more will be needed to restore normalcy to the island. Taxpayers deserve to know that their money is going to bona fide entities.”

Blumenthal and Warren’s full letter to Sessions is available for download here, and copied below.

Dear Attorney General Sessions:

Recent weeks have brought to our attention a number of alarming stories concerning inappropriately awarded contracts during the disaster relief response in Puerto Rico. Last week The New York Times reported on a $156 million Federal Emergency Management Agency (FEMA) contract for food supplies awarded to an egregiously underqualified and ill-suited contractor. And this week, we learned that a contractor may have misled Puerto Rico officials in obtaining a $133 million contract to rebuild homes. We write demanding a swift and thorough investigation into the government contracting process around goods and services for the relief and recovery efforts underway in Puerto Rico.

The saga of scandalously awarded government contracts begins with Whitefish Energy. As we understand, Whitefish is a two-year old Montana-based company that had only two full-time employees at the time of the hurricane. Whitefish was awarded a $300 million contract to repair and rebuild large portions of Puerto Rico’s electrical infrastructure that allowed it to charge the Puerto Rico Electric Power Authority (PREPA) $319 an hour for linemen, a rate that industry experts say is exorbitant even for emergency work.

Then, the American people discovered that FEMA awarded $30 million in contracts to Bronze Star LLC to provide emergency tarps and plastic sheeting for tens of thousands of damaged homes in Puerto Rico. There was just one problem: we understand that Bronze Star was a new company based out of a residential home in Florida, formed by two brothers with no prior experience in disaster relief, and no history of government contract work. Bronze Star was unable to procure and deliver the emergency supplies. FEMA eventually terminated the contracts without paying any money, but in the weeks it took to reach that point thousands of Americans in Puerto Rico went without basic shelter.

Now, The New York Times reveals that FEMA awarded a $156 million contract to Tribute Contracting LLC (Tribute) to provide 30 million meals in Puerto Rico. Tribute is an Atlanta-based company with no employees except the owner, no experience in disaster relief, and a history of canceled government contracts. We understand, in an attempt to fulfill the contract for ready-to-eat meals, Tribute subcontracted with an Atlanta wedding caterer – Cooking With a Star LLC – and a Houston food bank – Breedlove Foods Inc. Tribute only delivered 50,000 meals of 18.5 million that were due. According to the Times, FEMA canceled the contract when it discovered that the meals were not packaged with heating pouches as required by the contract.

That Tribute would be unable to fulfill the largest direct meals contract of the 2017 hurricane season should not have been a surprise had FEMA done a cursory check on the company. Public records show that the government has canceled five contracts with Tribute in the past. Four of those cancellations were for contracts with the Federal Prison System, and involved a failure to deliver food products to correctional facilities. The company FEMA hired to provide meals to Puerto Ricans devastated by natural disaster failed to provide food products in four prior government contracts. The fifth canceled contract on Tribute’s record was with the Government Publishing Office (GPO) for 3,000 tote bags to be printed with the Marine Corps logo on both sides. Tribute failed to fulfill the contract as stipulated, and after an investigation by the Inspector General of the GPO, was prohibited from receiving any contracts over $35,000 with the GPO until January 2019. Information about Tribute’s government contracts history is publicly available on USAspending.gov, the Federal Awardee Performance and Integrity Information System (FAPIIS), and the System Award Management (SAM) system.

 The Federal Acquisition Regulation (FAR) stipulates that a contractor must have adequate financial resources to perform the contract, be able to comply with the required performance schedule, and have a satisfactory performance record. The owner of Tribute, Tiffany Brown, told reporters that she did not have sufficient funds to finance the project and that “They probably should have gone with someone else….” There were numerous red flags indicating that Tribute was not up to the task, yet FEMA chose them anyway. Rudimentary due diligence should have revealed Tribute’s unfitness for this contract. It is impossible to believe that Tribute, Bronze Star, and Whitefish are anomalies. Rather they are canaries in a coalmine indicating that where there are three improvidently awarded contracts, there are bound to be more.

The path to recovery for Puerto Rico is long. Hundreds of millions have already been spent and billions more will be needed to restore normalcy to the island. Taxpayers deserve to know that their money is going to bona fide entities. It is clear that internal investigations via inspector generals’ offices and existing procedures – while critical – are likely insufficient for the grim scale of unacceptable misconduct in the contracting process.

The issue here is not restrained to contracts and cost. Despite the official account placing the death toll in Puerto Rico at 64, independent reviews put the human loss of the hurricane around 1,052. Any disaster response expert will tell you that time matters. Responding quickly, appropriately, and efficiently is vital to the safety of Americans caught in the midst of natural disaster. With all that is at stake in Puerto Rico, it is imperative that recovery funds do not go to waste; that companies do not fraudulently acquire government contracts; that the laws regulating the contracting process are duly enforced.

We write to you today demanding an investigation into the contracting process and the companies that are abusing it at the expense of the American public. Importantly, your investigation should assess the degree to which the awarding of inappropriate contracts influenced the delay of aid and exacerbated the human cost of the natural disaster in Puerto Rico. In light of Congress’s recent authorization of additional recovery funds these questions have increased urgency and importance. We expect you will work closely with any investigations the Inspector General of the Department of Homeland Security conducts to ensure that their evidence gathering aligns with your requirements, and that you put special emphasis on the possibility of prosecuting cases. Additionally, your investigation should coordinate with the General Services Administration (GSA) as there is a glaring hole in the government contracting process around the disaster relief efforts. We expect those companies that are found to have abused the contracting process during a time of disaster and national emergency to face suspension and debarment and criminal penalties where warranted.       

Thank you for your attention to this matter.