Day 19: Bobby Ferguson's water contracts take center stage at Kilpatrick corruption trial

DETROIT (WXYZ) - Earlier today, 7 Action News Investigator Ross Jones ( rjones@wxyz.com) blogged all the details coming out of the Kilpatrick corruption trial downtown. Follow along below:

1:06--Done for the day: Thanks again for coming to WXYZ.com to follow all the latest in the Kilpatrick trial.  Some days will be harder to follow than others, but they're all important as this trial approaches its 20th day.

1:02--Others got change orders: Showing the prices for Lanzo Construction, another company that received city work, Rataj showed how the company went from an original contract price of $1.3 million to $6.5 million after a series of 12 change orders.

"Not unusual," said Rataj, who's argued that lots of companies rely on change orders.

Edwards agreed.

12:35--Rataj lays a defense: Defense lawyer Mike Rataj is pointing out the rules for a contract that Ferguson and others were ultimately selected to do work for the city.  The city took price, economic development, qualifications and past performance into account with each bidder's proposal, with "a strong preference to Detroit based businesses."  Rataj pointed out that the project could have as many as 7 contractors working on the project at the same time.

Here, Rataj can argue that price wasn't the "be all and end all' for the city: that, because they were using so many contractors, they could pick and choose some high bidders, and low bidders, to get the job done. 

12:20--Uh oh: Some jurors have told the judge that they're confused by some of today's testimony, and that's not entirely a surprise.  The last two days of court have been, to put it mildly, very technical and often quite dry.  The judge instructed jurors to raise their hands when something is said in court that confuses them.

At that point, Bernard Kilpatrick and two defense lawyers raised their hands. The courtroom erupted in laughter.

12:10--Short break: Stay with us.

Sorry for the delay in blog posts.  Had to run outside to update our 7 Action News at Noon viewers.

11:24--Lowest bidders: Normally, Edwards said, the lowest bidder for construction work receives the job.  That doesn't happen if they company is deemed "unresponsive" or "unqualified" for the project.  What defense lawyers haven't tried to explain so far: why did Ferguson receive work when he sometimes wasn't the lowest bidder?

10:50--More praise: Kilpatrick lawyer Jim Thomas is up now, but based on his cross-examination, you'd think he's representing Mercado, too.  He was quick to point out that the federal judge who oversaw the city's water department only had positive things to say about Mercado, even as recently as 2006.

""Mercado has promptly alerted this court to any potential problems and reported on his efforts to solve those problems," the judge wrote.  

He also noted that Mercado cut the water department's budget by 10% without impacting services for residents.

10:28--Mercado expressionless: Throughout the testimony this morning, Mercado has sat stoically with his head wresting on his hand.

10:14--Short break: Stay with us.

10:13--Praise for the old boss: Edwards only had nice things to say about Mercado. 

"Mr. Mercado was a very good director and a good boss to work with," he said.  Minock thanked him, and sat down.  

10:08--Messy already: Before Victor Mercado headed up the water department, says Minock, it was pretty messy.  Engineers were steering contracts to friends they owed favors to, details about a bid were leaked out before they were public and the department was too cozy with contractors.  Edwards agreed, and Minock suggested that Mercado ran a much tighter ship. 

9:52--Blame Coleman: Minock is pointing out that the process to appoint the mayor as a special administrator over certain water contracts was started by Coleman Young in the 1970s, not Kilpatrick. 

9:37--Time of the essence: The city needed to quickly replace its water mains because the Super Bowl and All-Star Game for Major League Baseball were soon coming to town.  Everyone, Minock said, wanted new infrastructure in place for Detroit's time in the spotlight, but they didn't have a lot of time get the job done.  That's why Mercado wanted to avoid the traditional bidding process to get the job done faster, Minock argued.

"It saves time," Edwards said.

9:21--Surprises down below: Going over change orders that called for adding "3,140 feet of water main" and scores of sewage equipment that weren't covered in journalism school, Minock is trying to drive home the point that the state of Detroit's sewers can be a real guessing game sometimes, and even major companies with decades of experience can sometimes be surprised by what they find below ground.

9:20--Checks and balances: Yesterday, Minock told reporters that he would be stressing facts that the government left out of its direct-examination.  So far, he is: like the fact that, for at least one change order, four department heads needed to sign-off on a change order for it to be approved.  He's trying to show that this change orders can't be done willy-nilly (that's a legal term). 

9:11--Low-balling: Minock is also asking Edwards if it's common for contractors to "low ball" the department when submitting bids.  In other words, to submit an artificially low bid in the hopes that they will be selected as the lowest bidder, and then "make up" what they believe they're owed through change orders. Edwards said it happens.

Why is Minock asking about this? Probably to argue that "change orders" might not be all that bad in the long run.  They allow contractors to make up money they give up in the competitive bidding process to first secure a city job.  Above board?  Maybe not.  But illegal?  Minock wouldn't like you to think so. 

9:07--Change orders: Edwards is talking about the necessity of "change orders," which we touched on yesterday.   Those are essentially unforeseen circumstances that drive up the cost of a job.  Ferguson used many change orders for his city work to drive up his prices in many cases.

Victor Mercado's lawyer John Minock is suggesting that they are very common when dealing with Detroit sewage jobs, because the city's underground pipes are very old and can sometimes require more work than was thought. 

9:05--We're back:  Thanks for coming back to WXYZ.com.  We're set to continue with Daniel Edwards, the Detroit Water and Sewerage employee who oversees construction contracts at DWSD. 

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