Chicago is asking all of its contractors, including primes on construction projects, to cut 3% off the cost of signed contracts and invoices for the work sent to the city over the next 12 months. 

The letter, which was emailed to contractors the week of March 16, is from Sharla D. Roberts, chief procurement officer of Chicago's Dept. of Procurement Services, and is considered effective from the date it was received.  

It asks contractors to respond via email no later than five days after receiving the letter indicating the price reduction they would be willing to provide Chicago under current contracts. 

The letter states that “In these difficult economic times, the City of Chicago faces new challenges to reduce its costs and allocate resources in a way that accomplishes more with less ensuring service delivery to its citizens.” 

Brian Helm, president and CEO of mechanical contractor Helm Group, said his company had received the letter, but did not reduce the cost of its contracts because they “were competitively bid and the contract was awarded.” 

"It's unusual for them to ask to reduce the cost of the contract without changing the scope," he said, adding that it's not "unfair for the city to ask, but it is unfair for the city to approve a contract and then ask for 3% back." 

In addition to reducing the scope, he said if the city wants to reduce costs it has another option.  

“They have other levers to pull. They can terminate the contacts,” he said. Helm Group is currently working on two projects for the city, including one at a water pumping facility and another at O’Hare International Airport.  

Sheila Marionneaux, director of public affairs for the city, said it sent 1,300 letters and has received a 30% response so far. Marionneueaux said she does not yet have information on the number of city contractors including those in construction who had either agreed to a cost reduction or had not. 

"Currently, all the responses are being evaluated and analyzed," she said, adding that the city hopes to receive the bulk of responses by March 21. 

She said the reduction request was made because the city is in the process of adjusting its recently passed budget.  

"The timing of the letter is in accordance with the rollout of city council’s approved budget amendment," she said, adding that it was not an unheard-of request.

"The city has implemented cost reduction initiatives in the past under two previous administrations," she said. 

The city passed a $17.1-billion budget for 2025 in December. It is currently considering a $139-million proposed budget amendment to pay for obligations including pension payments for non-teaching staff like janitors and cafeteria workers at Chicago's Public Schools. Chicago Mayor Brandon Johnson was supported in the last mayoral election by the Chicago Teachers' Union.

While the letter to contractors states that “The city will always seek to do business with vendors that offer the most competitive rates," Helm said whether a contractor could be barred from working for the city based on how they respond to the letter "is a legal question." 

Another contractor who received the letter, and who asked not to be identified, called the request “very problematic.” 

“As the professional service contracts are selection-based awards, the implications of requesting/demanding a credit post is troubling,” the contractor wrote.