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Puerto Rico suspends $133M contract awarded to firm of Trump's failed FEMA nominee

by Suzy Khimm /
Image: Garcia removes debris in what is left of his home, in Maunabo
Miguel Garcia removes debris in what is left of his home in Maunabo, Puerto Rico, on Jan. 27.Alvin Baez / Reuters

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WASHINGTON — Puerto Rico has suspended a $133 million contract for hurricane relief given to the firm of President Donald Trump’s former pick for a top FEMA position after an independent review board determined it was improperly awarded.

A review board overseeing the U.S. territory's housing contracts said Tuesday that the winning firm, Adjusters International, should have been disqualified for failing to comply with the requirements for the FEMA-funded contract overseeing repairs for up to 75,000 homes damaged by Hurricane Maria.

Daniel Craig, Adjusters' senior vice president, helped his firm with its bid for the contract, which was awarded by Puerto Rico's housing department in December. In September, Craig withdrew his nomination to become second-in-command at FEMA after NBC News reported he had been under federal investigation for ethics issues involving lucrative FEMA contracts awarded in the aftermath of Hurricane Katrina.

Adjusters International did not provide the required certification and failed to prove that it could meet the financial requirements for the contract, which requires qualified bidders to have a $35 million credit line confirmed by a third party, or an account with an available balance of $35 million, according to the resolution released Tuesday by the independent review board.

"Adjusters’ offer should have been disqualified, and it should have in no way gone through to the second round of the proposals’ evaluations," the board said, adding that the firm’s proposal seemed to have been evaluated "in an arbitrary manner."

Image: Dan Craig
Portrait of FEMA's Dan Craig created on December 19, 2001 in Washington.Greg Schaler

The Puerto Rican housing department will “respect the decision made by the Review Board” and suspend the contract until an appeals court makes a determination, said spokeswoman Leticia Jover.

The housing department, however, defended its original decision to award the contract to Adjusters International. “All administrative processes are carried out in accordance with applicable law and regulations, ensuring the best use of public funds and the successful implementation of our programs,” Jover said.

She added that transparency in contracts "is of paramount importance" to the Puerto Rican government and that the bidding process had not been subject to pressure from the winning firm. "Neither Daniel Craig or Adjusters staff approached [Housing Secretary Fernando Gil] to influence in the decision making," she said. (The review board did not mention Craig in its resolution.)

In 2011, federal investigators said there was not enough evidence to prove that Craig had violated ethics laws, but concluded that he had falsified government records while working in the Bush administration. Craig has denied any wrongdoing and never faced criminal charges for his actions.

Adjusters International said it was "deeply disappointed" with the review board’s decision, asserting that it had complied with all the requirements for the award and "represented the best value for Puerto Rico," according to a statement from Eric Perez-Ochoa, an attorney for the firm.

Since January, the company has conducted "almost 1,500 home inspections daily to help Puerto Ricans get back into their homes," Perez-Ochoa said. "This decision puts that progress at risk and may cost Puerto Rico more money."

The review board found other problems with the decision to award the contract to Adjusters International. During the points-based evaluation of competing bids, the firm should not have been awarded extra credit for having a partnership with a local business, the review board said. Adjusters had an agreement with a local call center company that did not meet the requirements for the extra points, according to the resolution.

A competing firm, AECOM, said that it had received the highest score in the government’s final evaluation of bidders and filed a formal challenge to the contract award last month. Adjusters International, however, offered to do the work at a lower price.

AECOM praised the review board for "evaluating the facts and correcting the decision," adding that it was "ready and able to start working immediately" to help residents return to their homes, according to a company statement.

Puerto Rico’s minority leadership called for an official investigation into the contract last month, comparing it to the $300 million contract with Whitefish Energy, a small Montana company, that the government cancelled last year after public outcry.

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