Judge sides with IDOT in legal fight with road construction company run by Palumbo family members
A judge dealt a blow this week to a Chicago area road construction company run by members of the Palumbo family, siding with the Illinois Department of Transportation in a lawsuit filed by the business after millions of dollars in taxpayer-funded contracts were put on hold by the agency.
Executives of Builders Companies — a consortium of several related businesses, Hillside-based Builders Paving LLC among them — include a daughter and son-in-law of Sebastian “Sam” Palumbo, a felon barred from involvement in federal or state road projects.
The Sun-Times raised questions in 2024 about whether Palumbo was secretly involved in Builders, which was a growing contractor that had shared in more than $80 million in state work over the prior five years.
IDOT then halted the award of new contracts to the business as it launched an internal investigation — though Builders Paving was allowed to keep trying for IDOT work and ended up as the apparent low bidder on more than $50 million in projects that it wasn’t allowed to break ground or get paid on.
Builders sued IDOT in May, trying to stop the agency from awarding those contracts to anyone else and insisting Builders was entitled to them.
The company argued in the suit it “has a clear legal right” to the contracts, with IDOT “legally required to award” them “to Builders Paving within 45 days of bid submission.”
“There is no justification under the Illinois Procurement Code or applicable regulations for IDOT to withhold awarding the Contracts,” and Builders Paving could suffer “irreparable injury” if there’s “an indeterminate, unexplained and unjustified delay in the award of millions of dollars in Contracts to Builders Paving.”
On Thursday, Judge Joel Chupack rejected that claim, siding with IDOT’s argument that it had a level of discretion over inking road contracts.
Builders argued “that its entitlement to the contracts stems from the fact that IDOT’s refusal to award the contracts violates timing and procedural sections of Part 6” of the state administrative code, Chupack wrote in a seven-page opinion and order.
“The Court finds that the provisions highlighted by IDOT negate the existence of a ministerial obligation to award the contracts by providing that no bidder has a right to a State contract absent execution, that the State is under no obligation to issue an award, and that IDOT retains authority to reject any or all bids or cancel a solicitation in the State’s best interests.”
“Builders Paving does not cite any case law indicating that the provisions of Part 6 it relies upon impose a mandatory duty for IDOT to award the contracts to the lowest responsible and responsive bidder.”
Chupack wrote: “This is a final and appealable order that disposes of all matters before the Court.”
It’s unclear whether Builders will appeal. Company officials and attorneys wouldn't comment.
But Michael Sturino of the Illinois Road & Transportation Builders Association, a trade group to which Builders and its competitors belong, said of the ruling: “Whether IDOT has the discretion” when it comes to contract awards, “it should be used in a judicious way.”
“If someone is the responsible and responsive and low bidder, they should be awarded the contract.”
The status of IDOT’s internal investigation wasn’t immediately clear, and the ruling does not resolve the underlying questions about Palumbo.
The agency would only say it's "been looking out for the public’s best interests in this matter. We are pleased with the judge’s decision and will be reviewing the ruling to determine next steps.”
Palumbo and other family companies had once been top road builders in Illinois, until he, his brother Joseph and their late father Peter pleaded guilty in 1999 to a scam shortchanging their union employees’ benefit plans. Two of their companies, Palumbo Brothers, Inc., and Monarch Asphalt Company, admitted to overbilling taxpayers on numerous road projects.
Those two companies were permanently banned from state and federal projects, as were “all existing or later created affiliates and successors,” including a Palumbo-run company called Orange Crush LLC, according to IDOT.
Palumbo agreed in a long-ago plea deal with federal prosecutors he’d stay away from state and federal projects.
An attorney shared by Orange Crush and Builders has said Palumbo was never involved in the Builders enterprise, and Builders is not subject to the contract “debarment” implemented by IDOT years ago.
Records show Kaitlyn Palumbo Gandy, a Palumbo daughter, is not only an executive with Builders along with husband Ryan Gandy, she also has been part of a firm called Five Sisters Management LLC that’s served as a manager of Orange Crush.