Mon | Oct 22, 2018

Study: Post-Maria contracts go to mainland, not Puerto Rico

Published:Sunday | September 30, 2018 | 12:00 AM
In this May 16, 2018, file photo, a worker from the Cobra Energy Company, contracted by the Army Corps of Engineers, installs power lines in the Barrio Martorel area of Yabucoa, a town where many residents continue without power in Puerto Rico.

A study published last Wednesday found that the bulk of federal funds slated for post-hurricane reconstruction efforts in Puerto Rico are going to mainland companies despite a federal provision that states that local companies should receive priority.

Of the nearly US$5 billion allocated by the United States government by late August for work in Puerto Rico, nearly US$4.3 billion has been awarded to mainland US firms and less than 10 per cent to Puerto Rico companies, according to the study by the Center for a New Economy. The Puerto Rico-based think tank analysed a federal database of contracts awarded through late August after Hurricane Maria hit the US territory.

The study also found that of the 45 federal agencies that have awarded contracts after the storm, 24 of them did not give any to Puerto Rican firms.

The findings have raised concerns that Puerto Rico will not see the expected economic boost a year after the Category 4 storm hit and as the island is struggling to emerge from a 12-year recession.

"This popular notion that hurricanes and federal funds are going to lift the economy is not producing the results we're waiting for," said Deepak Lamba-Nieves, co-author of the study and the centre's investigations director.

Most federal funds are going towards construction, followed by services including engineering, inspection and remediation, which have largely been awarded to US-based firms. Meanwhile, local firms have been contracted for jobs including waste collection, security, and roofing, he said.

The study also found that the federal government spent almost US$12 billion in the first 336 days after Hurricane Katrina, more than double what has been spent so far in post-Maria contracts in Puerto Rico. Raul Santiago, co-author of the study and the centre's research associate, noted that Katrina caused an estimated US$160 billion in damage, compared with the US$140 billion that Puerto Rico's government is requesting after Maria.

He said that current contracts could be amended to include more Puerto Rico companies.

A spokeswoman for the US Federal Emergency Management Agency declined immediate comment, saying officials had not yet obtained a copy of the study.

Meanwhile, an analysis that Moody's Analytics published on Wednesday estimates that Puerto Rico's economy will rebound through early 2019 but then "come off its disaster relief-induced sugar high in 2020". The analysis assumes that at least US$62 billion in overall disaster relief will be spent in Puerto Rico in the next decade.

"Puerto Rico's economy is in for a rollercoaster ride over the next couple of years," the report stated. "How steep and dizzying the ride turns out to be will depend on the fiscal boost the island receives."

- AP