TRANSMITTAL LETTER FOR BOARD MEETING OF OCTOBER 15, 2026
COMMITTEE ON JUDICIARY
Mr. John P. Murray, Executive Director
Title
Authority to settle the Show Cause Complaint filed in Metropolitan Water Reclamation District of Greater Chicago v. Core Mechanical, LLC, for Itself and as Successor-in-Interest to Core Mechanical, Inc., Case No. 26B-007 (As Revised)
Body
Dear Sir:
Core Mechanical, LLC, for Itself and as Successor-in-Interest to Core Mechanical, Inc. (“Core”) is a contractor offering services in heating, air conditioning, refrigeration, and plumbing. On July 16, 2020, the District awarded Core Contract 20-618-11, Furnish and Deliver HVAC and Refrigeration Parts and Services to Various Service Locations (“Contract”), in an amount not to exceed $409,400.00 making Core the Prime Contractor on the Contract. As a construction contract with a value of over $100,000.00, the Contract was subject to the District’s Affirmative Action Ordinance, Revised Appendix D dated June 4, 2015 (“Appendix D”), as well as the District’s Veteran-Owned Business Enterprise Ordinance, Appendix V (“Appendix V”)(collectively, “the Appendices.”) The Contract contained Appendix D goals of 20% MBE, 9% WBE, 10% SBE, and an Appendix V goal of 3 percent VBE. As a prerequisite for being awarded the Contract, Core agreed to abide by the requirements of the Appendices.
Over the course of the Contract, Core met the WBE and SBE requirements but failed to meet the MBE and VBE requirements. The District’s Diversity staff were in contact with Core throughout the life of the contract, but ultimately, Core failed to meet certain contractual requirements, namely meeting the MBE and VBE requirements as required under the Appendices and the Contract. Consequently, the District notified Core that it would be pursuing sanctions for non-compliance.
On August 26, 2026, the District initiated Show Cause proceedings against Core. Thereafter, the District’s Law Department and counsel for Core entered into settlement negotiations. At a Pre-Hearing Conference before a Board-appointed Hearing Officer, Core admitted that it had failed to meet its MBE and VBE obligations under the Appendices, and the District and Core reached a proposed settlement agreement (“Agreement”).
Under the Agreement, the District and Core agree that:
1) Core will pay $50,028.00, as a settlement for the value of the work it self-performed instead of subcontracting to MBE and VBE contractors.
2) Core agrees to not bid on or participate in District contracts for one year.
3) The Hearing Officer will retain jurisdiction over this case for a period of one year following the date that the Board approves the proposed Agreement.
The District currently holds $115,459.12 under Core’s original purchase orders. If the Board approves this Agreement, the District will then issue a final payment to Core in the amount of $65,431.12, upon execution of the Agreement between the District and Core.
Diversity staff and the Law Department worked closely to effectuate settlement on terms and conditions favorable to the District, and Core has agreed to these terms. The Board-appointed Hearing Officer helped negotiate the terms of the Agreement, determined that it was appropriate, and is prepared to sign an Agreement, if approved by the Board.
Accordingly, the General Counsel respectfully requests that the Board of Commissioners authorize a settlement of the Show Cause Complaint filed in Metropolitan Water Reclamation District of Greater Chicago v. Core Mechanical, LLC, for Itself and as Successor-in-Interest to Core Mechanical, Inc., Case No. 26B-007, and to authorize the General Counsel to execute all other documents in furtherance thereof.
Requested, Susan T. Morakalis, General Counsel, STM:BO’C:DRP:nl
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for October 15, 2026