Clout contractor in Carrie Austin probe got millions in no-bid add-ons on city deals

A construction company whose records have been subpoenaed as part of an investigation that also includes Ald. Carrie Austin and a Chicago building inspector has gotten no-bid increases worth $2 million on two city deals to put in noise insulation for homes near O’Hare Airport.

Oakk Construction Co. offered City Hall the lowest price to win two city contracts in 2012 to soundproof 350 homes, according to city records that show the deals were supposed to cost the city a total of about $3.8 million.

Less than six months after winning the city contracts, though, Mayor Rahm Emanuel’s administration agreed to add $2 million to the deals, the records examined by the Chicago Sun-Times show.

Oakk and city officials determined after the company was hired that more materials would be needed than had been estimated, according to Matt McGrath, a spokesman for city Aviation Commissioner Jamie Rhee, who was the city’s chief procurement officer at the time the deals were made and whose office oversaw the awarding of those contracts. Emanuel put Rhee in charge of the city aviation department, overseeing O’Hare and Midway Airport, last year, and Mayor Lori Lightfoot has kept her in the job.

All of the work “was completed to the city’s satisfaction,” according to McGrath, who says there’s nothing “remarkable about this contract except that it involves a firm that is otherwise in the news.”

Oakk has made millions of dollars under a city program to repair porches and roofs for low-income homeowners. The company and its president, Alex Nitchoff, were named in a grand jury subpoena seeking a wide range of information about them, about other businesses owned by or affiliated with the clout-heavy Nitchoff family and about Austin’s purchase of a new, $236,000 home on the Far South Side with a $231,000 loan guaranteed by the federal government, the Sun-Times has reported.

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City Hall has paid the companies more than $100 million since 2002 for work including the porch and roof repairs as well as soundproofing homes near O’Hare and Midway.

On Thursday, the Sun-Times reported that city inspector Joseph E. Garcia has been charged in connection with that investigation with wire fraud and lying to the FBI. He’s accused of cutting corners on porch and roof inspections and improperly signing off on inspections so City Hall would pay Oakk, in some cases before the work was done.

In 2011, City Hall solicited bids from companies to insulate 250 homes in Chicago and Park Ridge to protect them from O’Hare noise. Among four companies who sought the work, Oakk’s price was the lowest, under $2.6 million — about $130,000 less than the next-lowest bidder, city records show.

The company was awarded the job in January 2012. Then, on June 11, 2012, the city approved a no-bid “modification” to the contract that upped the amount of money Oakk would be paid by nearly $1.5 million, records show.

Along with other changes made to the contract, the total price tag went up to $4.2 million. That’s how much Oakk was paid from 2012 to 2015, according to city records.

That’s in line with the city’s initial estimate for the project — that it would cost $4 million to $5 million, records show.

Two of the four subcontractors Oakk listed for the project — Maxwell Services, which frequently works with the Nitchoffs on city contracts, and the Nitchoff family-owned Koal Enterprises — also were named in the federal subpoena.

Reached by phone, Alex Nitchoff told a reporter, “I really have no comment.”

Oakk also was the lowest of five companies that went after a separate 2012 city contract to soundproof 100 O’Hare-area homes in Chicago, Park Ridge and Rosemont, which could include new windows, doors, frames, awnings and insulation. It said it could do the job for close to $1.3 million — about $100,000 less than the next best offer, records show. The city had estimated that work would cost $1.4 million to $2 million.

Less than six months later, records show, City Hall increased the price tag of that Oakk contract by more than $660,000.

According to McGrath, Oakk also based its initial offer on the city’s figures for what similar work in the past had involved.

For instance, in the 250-home contract, the city estimated each house would need 13 to 15 new windows, but many homes were bigger than expected, with 27 to 39 windows, according to McGrath.

The city’s estimates for the 100-home contract also called for 13 to 15 new windows per home, but it was later determined 25 to 29 might be needed.

“The Oakk contract wasn’t atypical,” according to McGrath, who says some of these types of projects end up costing more than the estimates and some lower, with the cost hinging in part on “homeowner taste and preference.”