Mercado, 61, who headed the city's Department of Water and Sewerage from 2002 to 2008, pleaded guilty Monday to one charge, admitting he conspired with Kilpatrick to steer construction contracts to a friend of Kilpatrick's, contractor Bobby Ferguson, the Detroit News reported Monday.
Under the terms of Mercado's plea deal with federal prosecutors, he faces up to 18 months in prison and a $100,000 fine, the newspaper said.
"It was the right decision at the right time," said Martin Crandall, Mercado's attorney. "[Prosecutors] did not make an offer like this before."
The surprise plea was offered while the case is in recess, due to the health of defense lawyer Gerald Evelyn, who was hospitalized last week after collapsing in court. The complex corruption trial is in its sixth week and is expected to last until January, the newspaper said.
Still on trial are Kilpatrick, his father Bernard and Ferguson. Former mayoral aide Derrick Miller pleaded guilty and awaits sentencing.
Kilpatrick resigned as mayor in 2008 after being charged with 10 felony counts, including perjury and obstruction of justice, in several scandals involving his administration's abuse of power. After a plea deal he was sentenced to four months' imprisonment, and another imprisonment following the violation of his parole.
Guilty pleas during a trial, such as Mercado's, are uncommon, the newspaper said, and need to be explained carefully to jurors so that a plea by one defendant will not prejudice the case against the others.
"The defense is going to go ballistic," observed law professor and former federal prosecutor and Peter Henning. "They will be concerned about prejudice and that the jury will think they are all guilty because one pleaded guilty."
Avril Lavigne denies racism in 'Hello Kitty' music video
Jeb Bush 'thinking about running for president' in 2016