Fiscal board chastises LUMA for executing contract without bidding.

Jaime A. El Koury, general counsel to the Financial Oversight and Management Board for Puerto Rico (oversightboard.pr.gov)

By THE STAR STAFF

Despite conditionally approving it, the Financial Oversight and Management Board criticized LUMA Energy ServCo LLC for signing a $43.5 million contract with Evertec Group LLC without conducting competitive procurement and at a higher cost.

The decision was communicated in a letter dated March 10, addressed to LUMA Chief Procurement and Supply Chain Officer Juan Rogers Menchaca.

According to the oversight board, the contract covers the continuation and expansion of LUMA’s comprehensive billing system, including printing, address validation, invoice mailing, digital bill design and electronic delivery. The agreement would replace Contract No. 2021‑L00068, which expired on March 11, and originated from a competitive procurement process in 2020.

The new contract, worth up to $43.6 million over three years, was awarded through a direct, non-competitive process. LUMA said a new request for proposals (RFP) would take about 18 months and cause extra costs during the switch to a new vendor. The energy grid operator also said the higher prices reflect increased printing volume and more detailed bill content required by the Puerto Rico Energy Bureau.

However, the oversight board pointed out that it has raised similar concerns multiple times over the past two years, especially when reviewing changes to the current Evertec contract. The board emphasized that the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) requires public contracts to encourage market competition, and delaying a competitive process until fiscal year (FY) 2028 would let Evertec provide services for 10 years without a new bid.

As a result, the board approved the contract only on the condition that LUMA eliminate two proposed one‑year contract extensions and commit to launching a competitive procurement process before the new contract expires. LUMA must resubmit the contract with a revised term before execution and must notify the board when it issues the new RFP.

During its budget review, the oversight board confirmed that LUMA has enough funds in its FY 2026 PREPA budget to cover the contract costs. However, it warned that this depends on LUMA’s own budget certification and stressed that the utility must ask for budget adjustments if the contract causes overspending in future years.

The board also criticized the timing of the submission.

The letter, signed by General Counsel Jaime A. El Koury, made clear that the oversight board’s review only covers compliance with PROMESA’s Section 204(b)(2). It does not include legal due diligence, background checks, or verifying compliance with procurement laws. Any major changes to the contract must be sent back for further review.