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FEMA nominee who withdrew helps win $133M Puerto Rico hurricane contract

by Suzy Khimm /  / Updated 

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WASHINGTON — A multinational engineering firm contends that a $133 million contract for hurricane relief in Puerto Rico was inappropriately awarded to the firm of President Donald Trump’s former pick for a top FEMA position, who withdrew his nomination after NBC News revealed that he had been under federal investigation.

AECOM, the firm that lost the bid, has formally challenged the Puerto Rican housing department's decision in December to award the lucrative contract to Adjusters International, a New York-based disaster recovery firm. Daniel Craig, Adjusters' senior vice president, withdrew his nomination to become FEMA’s deputy administrator in September after NBC News reported that he had been under investigation for ethics issues surrounding his work at FEMA under President George W. Bush, when the agency was giving out huge contracts for Hurricane Katrina relief.

AECOM alleges that Adjusters International did not meet the mandatory requirements of the bid proposal and should have been disqualified, according to a Dec. 28 motion it filed with the Puerto Rico housing department.

The contract, which is part of a FEMA-funded program, is for managing emergency repairs for up to 75,000 hurricane-damaged homes in Puerto Rico. The dispute comes amid ongoing criticism about the government's management of the island's recovery. In October, Puerto Rico cancelled a controversial $300 million contract with Whitefish Energy to repair its power grid.

The story was first reported by Bloomberg News.

Image: Dan Craig
Dan Craig, in 2001Greg Schaler

AECOM alleges that Adjusters International is not properly certified to do business with the Puerto Rican government and “failed to demonstrate that it has adequate financial resources to perform the services,” according to its filing.

AECOM said that it received the highest score in the housing department's final evaluation of the bidders, based on past performance, experience, qualifications and project approach, as well as cost. Adjusters International, however, offered a lower price: Its proposal would cost $133 million, while AECOM's was priced at $154 million. AECOM points out, however, that the housing department said the contract would be awarded to the firm that “represents the best value,” and that cost was only one factor.

Awarding the contract to Adjusters International violated “clearly applicable procurement statutes and regulations,” AECOM concluded. “As the highest ranked bid, we strongly believe that our proposal represents the best value and that we should be awarded the contract.”

Adjusters International denies its competitor’s allegations. The firm met the agency’s amended financial criteria for qualified bidders and is properly authorized to do business in Puerto Rico, said Chad Kolton, a spokesman for Adjusters International. He said that his firm offered the best value “at the lowest cost for taxpayers," adding that Puerto Rican officials made a transparent decision based on the technical evaluation and pricing.

“AECOM is putting its own interests ahead of the needs of Puerto Ricans as it has with so many other communities where it has engaged in lengthy protests whenever contracts are awarded to another bidder,” Kolton said.

Puerto Rico’s housing department defended its award decision.

"Both companies were technically capable to perform the services, but Adjusters International’s proposal represents a savings of $21 million in federal funds," said agency spokesperson Leticia Jover, adding that AECOM’s concerns and allegations would be appropriately adjudicated.

Craig signed the original cost proposal for the contract on behalf of Adjusters International, Jover said, but she denied that he had any political sway over the bidding process.

"Certainly, neither Mr. Craig nor any other person connected to Adjusters International used any political connection to influence upon the award of the contract," Jover said. She added that the housing department “does not have any direct knowledge" of the earlier federal investigation into Craig.

Federal investigators concluded in 2011 there was insufficient evidence to prove that Craig had violated conflict-of-interest laws, but said that he had falsified government travel and timekeeping records during his time in the Bush administration. Craig never faced charges for his actions and has denied any wrongdoing.

Adjusters International declined to describe Craig's specific role in the bidding process, but said that he was well removed from political matters when Puerto Rican officials decided to award the contract.

"Dan withdrew his nomination almost three months before the Department of Housing made their decision," said Kolton.

The minority leadership of Puerto Rico's House and Senate, Rafael Hernández and Eduardo Bhatia of the Popular Democratic Party, called Wednesday for an official investigation into the contract, decrying the award as "scandalous" and reminiscent of the Whitefish agreement. "The Department of Housing had more than enough reasons not to grant that contract, since [Adjusters International] did not meet multiple requirements in the process. However, they chose to ignore the law," they said in a joint statement.

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