All of this happened in Puerto Rico under the U.S. Army Corps of Engineers’ watch.
These are some of the irregularities revealed in an audit of the U.S. Department of Defense’s Office of the Inspector General on the repair and restoration of Puerto Rico’s power grid after Hurricane María and that could have added up to $50.1 million in federal funds.
The audit of the U.S. Army Corps of Engineers (USACE) published Sept. 30, 2019 details how two of its districts — Hunstville and Jacksonville — failed to supervise and review the contracts, invoices and work performed by companies Fluor Enterprises and PowerSecure in Puerto Rico. These failures led to the U.S. Corps of Engineers paying $20.9 million to Fluor Enterprises and $29.2 million to PowerSecure.
The Center for Investigative Journalism (CPI, for its initials in Spanish) requested reactions from Fluor Enterprises and PowerSecure, but as of the closing of this story they did not answer questions about the audit findings.
“Fluor is honored to have played a role in helping to bring back a sense of normalcy to the people of Puerto Rico and is proud of the many accomplishments to restore power through our contract with the U.S. Army Corps of Engineers,” was part of the general statement the company sent to the CPI.
Among the findings, the CPI found that Fluor Enterprises submitted an invoice for four line workers and two crane operators corresponding to the payment period between December 3, 2017 and December 16, 2017, for $221,718. However, those employees arrived in Puerto Rico on Dec. 17, 2017. The company was unable to present evidence that those employees performed any work before arriving on the island.
The audit found that 122 employees charged 6,482 hours for work before they had set foot on Puerto Rico. The U.S. Corps of Engineers paid $1.4 million for those work hours that could not be validated.
Moreover, the company billed $134,777 for 1,043 hours of unsupported work by 12 employees who never arrived in Puerto Rico.
A total of 866 employee timesheets were analyzed related to the first contract awarded to Fluor Enterprises for the payment period between Dec. 18 and Dec. 24, 2017. None of the documents were signed by the workers to validate the veracity of the reported hours.
Late approvals of attendance sheets were also found. For example, 519 work hour reports were approved five weeks late.
The company reported that 200 employees worked on Dec. 21, 2017. However, when evaluating the attendance sheets, only 58 appear as working that day. That’s a difference of 142 employees.
The same happened on Dec. 23, 2017, when 190 employees were reported to have worked, but only 46 employees appear in the review.
In a second contract granted to Fluor Enterprises, it was found that only three of 520 timesheets were signed by the employees. It was also found that 218 timesheets were certified without the date showing when the approval occurred.
According to the audit, which does not mention the imposition of penalties, the U.S. Corps of Engineers violated the Federal Acquisition Regulation that says that although service contracts do not provide tools to guarantee compliance standards, it is up to the agencies to properly monitor contractor performance to ensure the best use of public funds.
The Administrative Contracting Officer said, to ensure compliance, USACE was able to rely on the worksheets of each company’s staff to corroborate the quality of the work performed. These sheets contain the daily reports, the name of the person in charge, the category of the team’s assignment, the hours worked, the equipment used, the location, and the work assigned.
On March 8, 2018, USACE asked Fluor Enterprises to provide all individually signed worksheets. However, the company said because at that time they had finished all the repair work for which they were hired, those employees were no longer in Puerto Rico.
Irregularities are also repeated with PowerSecure. On Dec. 21, 2017, they reported 311 employees, but USACE reports indicate there were 245.
The audit analyzed reports of PowerSecure hours and could not confirm the veracity of the hours billed for 19 of 45 days of the evaluated sample, because the company reports only mention the number of workers assigned for a task without including their names. Employees did not fill out their own timesheets, as it was the company that was responsible for entering this information manually, the audit said.
There also wasn’t an optimal corroboration of the accuracy of the hours that PowerSecure billed. USACE justified the mistake with the complexity of the work. Occasionally, workers traveled by helicopter to their work areas, but USACE’s quality control personnel, who were required to complete reports on the quality of work, were not authorized to use this transport. Even though the quality reports did not match the invoices, USACE paid them.
Certifying the need to work overtime was possible on only three of 77 timesheets. When Fluor was asked why the rest of the 74 employees worked overtime, the company just said they accomplished other tasks: safety meetings, garbage collection, cleaning their rooms and equipment organization; jobs for which they were not hired.
Fluor Enterprises also billed USACE 454 hours of overtime work without validating how they were justified. In total, the company charged $2.6 million to pay 12,106 hours without providing documentation that employees performed overtime work.
A line worker was paid $57,820 for 252 hours, which would be equivalent to a month-and-a-half of work by a PREPA employee. He had less than a year of experience instead of the required three years. The average salary of PREPA lineman is $40,000 a year, according to the president of the Electric Industry Workers Union (UTIER, for its initials in Spanish), Ángel Figueroa-Jaramillo.
Moreover, Fluor Enterprises billed $94,589 to pay a superintendent who did not have documentation to show he had 10 years of experience.
It also subcontracted crane operators with certifications that did not specify which equipment they could handle; with outdated documentation, or that did not train them to work with cranes.
In other words, the U.S. Corps of Engineers did not require Fluor Enterprises to prove that its employees had at least one year of general work experience, three years of experience in handling heavy equipment or cranes, and between three and 10 years for specialized jobs in energy, as required by the contract.
USACE also accepted that it did not validate the certifications of PowerSecure subcontractors before paying for the services provided. The agency approved six invoices for this company without including the hourly rates contained in the contract. It included them five months later. The audit does not indicate whether they overpaid for the service.
The U.S. Corps of Engineers was not available to issue a reaction on the findings of this audit.
USACE Huntsville hired Fluor Enterprises in October 2017 for $240,000. After several amendments, the contract, which extended until June 2018, increased to $505.8 million.
USACE Huntsville granted a second contract to this company in December 2017 for $495 million. That contract was modified on Nov. 26, 2018 and was reduced to $276.4 million. Both contracts included the repair of the power transmission and distribution network, equipment evaluation and the recommissioning of substations.
USACE Jacksonville awarded a third contract to PowerSecure in October 2017 for $1.3 million. Originally, the company would be responsible for carrying out the cost estimates associated with the repair of the electrical system. But USACE modified and assigned additional repair work to this company, which increased the value of the contract to $523 million.
PowerSecure was now in charge of repair work on the transmission and distribution lines, substation restoration, and clearing and removal of debris.
Todd Semonite, the Lieutenant General in charge of the mission in Puerto Rico, said in a letter that USACE allocated 250 military, 3,000 civilians, and 3,000 hired employees for the mission to repair and restore the electrical system. Its work consisted of repairing 2,400 miles of transmission lines, 30,000 miles of distribution lines, 300 substations, and 16 power plants.
Following the audit by the Department of Defense’s Inspector General, Semonite said in the letter that he ordered another internal audit with all documents, timesheets, invoices and payments, the results of which he would announce in January 2020.
The restoration and repair of the electrical system was one of the priority missions after Hurricane María made landfall.
For PREPA, it implied that 1.5 million customers were without power and without communications. The island was dealing with this situation, but PREPA did not have the structure or capacity for the work required due to a lack of personnel and materials, the document said.
Although the federal agency should have been in charge of restoring Puerto Rico’s electrical system, the U.S. Department of Energy admitted — according to the audit — did not have the capacity to manage such a mission. It did not have the resources or tools.
In addition, the Federal Emergency Management Agency (FEMA) did not have a plan, the audit stated. It had never coordinated the restoration of an electrical system after a disaster of Hurricane María’s magnitude. Juan Rosado, FEMA’s spokesman in Puerto Rico, declined to comment on the follow-up that his agency gave to the funds granted to USACE and whether FEMA will take any action following the Department of Defense’s audit.
USACE clarified that this type of work is not part of its core mission. Furthermore, the agency did not have a contract prototype in its files to start this type of work immediately.
However, on Sept. 30, 2017, FEMA entrusted the reins of the repair and restoration of the electrical system to the U.S. Corps of Engineers and approved $2.2 billion for that monumental task.
With that money, USACE contracted the services of Fluor Enterprise (of South Carolina) and PowerSecure (of North Carolina), which lead the list of companies with the most federal government contracts after Hurricane María’s landfall.
For two years, many irregularities have come to light related to the contracting for the repair of Puerto Rico’s electrical system: Whitefish and Cobra were the first, and now Flour and PowerSecure.
In addition, in September this year, former FEMA Regional Administrator Ahsha Tribble was arrested for fraud related to the recovery of the power grid, which included $1.8 billion in contracts with PREPA.
Víctor Rodríguez Velázquez is a member of Report for America