{"id":29978,"date":"2025-04-14T03:37:28","date_gmt":"2025-04-14T10:37:28","guid":{"rendered":"https:\/\/essential.construction\/news\/chicago-asks-city-contractors-to-cut-invoices-by-3\/"},"modified":"2025-04-14T03:37:28","modified_gmt":"2025-04-14T10:37:28","slug":"chicago-asks-city-contractors-to-cut-invoices-by-3","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/chicago-asks-city-contractors-to-cut-invoices-by-3\/","title":{"rendered":"Chicago asks city contractors to cut invoices by 3%"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><\/p>\n<p>            <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/images\/audio_icon.svg?482016190122\" alt=\"-\"><\/p>\n<p>        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">3 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/res.cloudinary.com\/dmgi9movl\/video\/upload\/q_1\/v1744293234\/news\/text_to_speech\/chicago-invoice-cut-construction-pushback_vfxia0.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<h3 class=\"standard-heading\"><span><span><span><span><span>Dive Brief:<\/span><\/span><\/span><\/span><\/span><\/h3>\n<ul>\n<li><span><span><span><span><span><span>Contractors that work with the city of Chicago have been asked to trim their invoices to the city, according to a letter the city\u2019s procurement office sent businesses last month.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>A <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.documentcloud.org\/documents\/25893337-letter-to-contractors-2\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>copy of the letter<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, signed by Sharla Roberts, Chicago\u2019s chief procurement officer, asked vendors for a price reduction of at least 3% off all invoices sent to the city for the next 12 months regarding any contracts they currently hold as a prime contractor.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<li><span><span><span><span><span><span>The letter shocked the city\u2019s construction industry. Jacqueline Gomez, the executive director of the Hispanic American Construction Industry Association, located in Chicago, said that the request wasn\u2019t evenhanded, given that contracts have already been signed. \u201cWe don&#8217;t think it&#8217;s a fair ask,\u201d she said.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<\/ul>\n<h3 class=\"standard-heading\"><span><span><span><span><span>Dive Insight:<\/span><\/span><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Henry Lopez, the president of Chicago-based Accel Construction, said his company has performed jobs for the city for a little over a decade. Accel gets as much as 70% of its business from public contracts.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>When he first received the letter, he initially thought it was a joke. He said that his company\u2019s profit margin is often 3%.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cTo ask for, essentially, 100% of our profits back is an insult,\u201d Lopez said. He told the city he wouldn&#8217;t be changing anything, and that he has yet to have a conversation with any other construction pros who would participate.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The March 16 letter didn\u2019t describe the specific economic conditions that precipitated the request \u2014 however, the city is facing a <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/abc7chicago.com\/post\/alders-want-included-mayor-brandon-johnsons-plan-cover-175m-budget-shortfall-chicago-public-schools-pensions\/16092055\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>$175 million budget shortfall<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> due to a failure by Chicago Public Schools to reimburse the city for pension payments, according to local news outlet ABC7.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>It also raised taxes and fees on parking, streaming services and grocery bags to help close a larger, $982 million gap from its $17.1 billion budget, which was passed in December.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Sheila Marionneaux, director of public affairs for the city\u2019s procurement department, said that it\u2019s regular practice for municipalities to search for cost savings across different budgets in times of urgent need.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe purpose of the cost reduction request to vendors is the rollout of the budget commitment to support the department budget goal,\u201d Marionneaux said in an email.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Gomez said that the city has made similar requests for price reductions in the past, under the administrations of former Mayors Rahm Emanuel and Richard Daley, but not without giving a warning first. But doing so now puts contractors in an almost impossible position, she said, \u201cparticularly of small businesses that feel that, \u2018If I don&#8217;t do it, will I get future work?\u2019\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The letter states that the city would appreciate a response \u201ceven if you are not able to accommodate the request at this time.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Gomez warned that the request, should vendors comply, could put small businesses under significant financial strain. If a prime contractor takes the 3% cut and they funnel it down to their subcontractors, Gomez warned, already thin profit margins could dwindle further.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe\u2019re talking about small businesses potentially going out of business,\u201d Gomez said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/chicago-invoice-cut-construction-pushback\/744971\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 3 min This audio is auto-generated. Please let us know if you have feedback. Dive &#8230; <a title=\"Chicago asks city contractors to cut invoices by 3%\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/chicago-asks-city-contractors-to-cut-invoices-by-3\/\" aria-label=\"Read more about Chicago asks city contractors to cut invoices by 3%\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-29978","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=29978"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29978\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=29978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=29978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=29978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}