8:58AM Court session is due to start momentarily. All the defendants are already in the courtroom, seated at the table.
Kwame Kilpatrick is in a black suit with a maroon striped tie, Bobby Ferguson is sporting a three piece light beige suit and Bernard Kilpatrick is in a caramel sports coat and orange tie. I don't think I've ever bothered mentioning "invisible man" Victor Mercado but given that he is finally getting his time in the spotlight it may be worth saying that he is in a dark suit and royal blue shirt. That's about as crazy as it gets with him.
9:03AM Judge Nancy Edmunds enters the courtroom. Wondering if they will bother redirecting DWSD employee Daniel Edwards this morning. Hoping we get to move on.
9:05AM Judge asks government if they need to redirect Edwards. Government says no.
Jennifer Blackwell for government calls new witness to the stand. Pratap Rajadhyaksha. Currently self-employed. He was at DLZ for 29 years. He was COO. He worked there with his brother. DLZ is a large diversified engineering firm. When he left, it had about 700 employees. Generated about $90 million.
Witness graduated from Highland Park High School, went to MIT for college.
Some of DLZ's clients included federal, state, Army Corp of engineers, major cities like Detroit, Cincinnati and Columbus. Also in southeastern Michigan where they had an office. DLZ operated through each state and licensed there. The office in Michigan operated as DLZ Michigan. Did about $5 million annually there.
9:15AM DLZ did pilot project with DWSD that was successful. Used Hayes Excavating and Ferguson Enterprises in that. Ferguson issued many change orders according to witness.
After pilot project success, which took 6 months instead of 2 years in 2003, got CM 2012. Wanted to use minority contractors. None of the 3 lowest bidders were minority contractors. After talking to Mercado, witness decided to talk to the minority contractors to try to get their bids in line. The 3 minority contractors were Hayes Excavating, Wili McCormick and Ferguson Enterprises Inc.
Talked to Mercado. Super Bowl was coming so wanted to make sure the water mains got replaced. Witness understood it was a time sensitive contract. DLZ got contract through emergency special administratorship.
Witness says no one complained to him the DLZ didn't have bonds. witness says DLZ managing project so it was only sub-contractors who needed bonds.
Witness reviewed Hayes construction work. They did fine, a small firm. McCormick did ok as well. At one point, witness talked to Mercado about Ferguson's company. He indicated that he wanted to have Ferguson get some work on CM 2012. Mercado did not make this recommendation for working any other firms. No other contractors recommended by Mercado. Witness says that Mercado did not tell him why, just that he wanted to see Bobby get some of the work. "Anything you could do to help Bobby would be well received by the mayor," said Mercado.
Ferguson wanted to get paid a lot of change orders that DLZ thought were unjustified. Witness says they spent 50% of their time managing Ferguson Enterprises. DLZ tried to work with Ferguson to accelerate their work so wrote to DWSD indicating there was a problem. Witness took project management very seriously.
Bobby called witness very upset and told witness that he was making him look bad to the DWSD. Witness said he had responsibility to director and department. Bobby said" Don't worry about the director. You need to worry about me." Witness hung up on Bobby. Ferguson had been yelling and screaming on the phone.
After the call, they never talked again. Witness took Bobby to mean that he was in close contact with people above Mercado. Connections with people above Mercado. Who asks Blackwell. "The mayor" answers witness.
9:28AM Witness says that they divided 50,000 feet into small segments and awarded 1 or 2 to each contractor. whoever finished first got the next project. there was an incentive to do good work and fast to get more work.
The basic contracts all had unit prices. Once they told them what segments they were working on, contractors would give lump sum for the segment. If there was a difference with DLZ pricing, they would work together to come up with a negotiated price which they would then recommend to DWSD.
It was in the best interest of taxpayers and government to do that. If we did good work, expected to get more in the future says witness.
Government shows document that is letter from DLZ to DWSD on October 15th 2004. Original price from FEI was 1.293 million or $401 per linear feet. DLZ negotiated price down to $1.067 million. A savings of $223,000.
Witness says it was more difficult to deal with FEI than other contractors on pricing. His initial quotes were usually higher. And his change order requests were usually quite frequent.
Each contractor had base contract with unit prices. Then they would get a work order. Change order was more money for changed conditions. Document we just saw should be called a work order.\
9:37AM Witness doesn't know which contractor got the most segments of work. Hayes Excavating was small contractor so probably didn't get much. Lanzo was big and moved quickly so probably got the most. There was not one that got significantly more than others.
Near the end of the contract, Mercado called him. There was a large segment of work yet to be done by Ferguson. But he was behind so DLZ decided not to give it to him because he wouldn't be able to finish it in time. Decided to give it to Lanzo. After that decision, got a call from Mercado asking why they were awarding segment to Lanzo and not Ferguson. witness told Mercado that Ferguson was behind in his work, this was a large segment and didn't think that Ferguson could complete it in time. That was why he recommended it to Lanzo. Mercado said ok and accepted explanation.
Witness met with Mercado once a month and Awni Qaqish was a liaison for DWSD. Kept DWSD up-to-date with what was going on. Qaqiah had been appointed special person to keep paperwork moving. Mercado was generally happy with how things were going with CM 2012. Witness did tell Mercado on occasion that Bobby's firm was late pretty regularly and Mercado would say do the best you can to help him.
Witness says it was unusual that Mercado was calling about one specific segment and about one specific contractor.