The Board of Water Commissioners for the Detroit Water and Sewerage Dept. says the contractors it recently suspended from bidding on department contracts due to “actions that have or may have caused [DWSD] economic or non-economic harm” will be allowed to appeal the decision, perhaps within weeks.

However, water board Chairman James Fausone hasn't specified the nature of the information the board will require from the 13 firms, which are referenced in a 2010 federal indictment of former Detroit Mayor Kwame Kilpatrick (D); his father, Bernard Kilpatrick; DWSD contractor Bobby Ferguson and a former DWSD director, Victor Mercardo.

On Jan. 5, one of the suspended firms, Macomb, Mich.-based L. D'Agostini and Sons, filed a suit against DWSD seeking a reversal of the decision, claiming “the indictment does not implicate D'Agostini in any wrongdoing.”

Another suspended firm, Detroit-based Walbridge Aldinger Co., is “exploring every appeal and remedy available,” says Terry Merritt, group vice president.

Issued by the U.S. Attorney's Office, East District of Michigan, the 38-count racketeer-influenced and corrupt organization (RICO) indictment alleges the defendants, in a scheme dubbed “The Kilpatrick Enterprise,” conspired to rig DWSD contracts in Ferguson's favor and pressure contractors into paying kickbacks from DWSD contracts to Ferguson or Ferguson-owned companies.

Although none of the suspended firms has been charged in the indictment, the Board of Water Commissioners (BOWC) in May retained Detroit-based law firm Miller Canfield Paddock & Stone to investigate contracts and contractors involved in 11 multimillion-dollar projects referenced in the indictment. The firm submitted a report to BOWC in late 2011, according to a MCPS spokesperson. 

On Dec. 21, the six-member BOWC unanimously voted to classify the 13 companies as non-responsible bidders and suspend them from bidding on any new contracts until Dec. 31, 2014.

“We were surprised and highly disappointed by the decision, since our company is not a target in the investigation and has not been accused of any wrongdoing by DWSD,” says Avinash Rachmale, CEO of Detroit-based Lakeshore Engineering Services Inc., one of the suspended firms. “We're disturbed by the negative fallout our company has experienced from this and currently are considering all options available to us.”

“Walbridge understands the water board’s intentions, but it unfairly suspended us,” says Merritt.

In a December 2010 letter to Detroit-based attorney Richard E. Zuckerman, U.S. Attorney Barbara L. McQuade, East District of Michigan, said, “Walbridge is not a target of the investigation or prosecutions, nor was Walbridge a target previously. … Your client has [cooperated in our requests] without requesting immunity from prosecution.”