Congressman Dan Donovan (NY-11) and Congresswoman Kyrsten Sinema (AZ-09) introduced H.R. 4462, the Taking Responsibility by Accounting for Corruption and Excess (TRACE) Act, bipartisan legislation that ensures federal contractors for disaster response cannot shield expenses and activities from audits and reviews.
“It’s mind-boggling that a contract payable with taxpayer dollars could so brazenly stipulate ‘audits not allowed.’ Emergency spending after a disaster is chaotic and sometimes difficult to track, as New Yorkers know all too well after Sandy and 9/11,” said Congressman Donovan. “But whenever public funds are spent, auditors need to account for the money and defend against corruption. Our legislation rightfully prohibits ‘no-audit’ contracts.”
“It is outrageous that contractors tasked with helping Americans recover from disasters would instead take generous perks for themselves, shield themselves from government oversight, and leave Arizonans with the bill,” said Congresswoman Sinema. “Hardworking Arizona families have a right to see how their tax dollars are being spent. The TRACE Act is a commonsense fix that brings much needed transparency and accountability to disaster relief contracts, ensuring that funds are spent appropriately to help American families and small businesses recover from natural disasters.”
The TRACE Act prohibits the Federal Emergency Management Agency (FEMA) from reimbursing disaster relief contractors if the contracts prohibit government audits and reviews. In response to Puerto Rico being ravaged by Hurricane Maria, the Puerto Rico Electric Power Authority (PREPA) hired Whitefish Energy, a little-known Montana firm, for a $300 million contract to restore the island’s power infrastructure. Whitefish Energy’s contract included a passage that stated “in no event shall [government entities] have the right to audit or review the cost and profit elements.” Whitefish’s work in Puerto Rico faced broad, bipartisan criticism and is the subject of several Congressional investigations. While the $300 million contract was ultimately cancelled, the company continues to do work in Puerto Rico and seeks $83 million in payments from PREPA. More than two months after the storm, approximately half of Puerto Rico remains without power.