The state government agency responsible for building and maintaining highways and other roads across Illinois has “paused” awarding contracts to a suburban construction company run by members of the Palumbo family — and the firm is now suing, records show.
Builders Paving LLC claims in recent court filings that the Illinois Department of Transportation “unjustifiably and unlawfully” refused to award the company nine contracts totaling more than $21 million even though it “submitted the lowest responsible and responsive bid between September 20, 2024 and March 7, 2025.”
Builders — part of a group of affiliated construction businesses known as Builders Companies — is asking the court to, among other things, direct “IDOT and its employees to immediately award the contracts” before there’s “irreparable harm.”
A spokeswoman for the state transportation department would not comment on the litigation but says a “review into whether the necessary prequalification steps were followed by the firms, allowing them to bid on state projects, is ongoing.”
“Until it is complete, the department has paused contract awards to the firms in question.”
The agency began looking into Builders last year after the Chicago Sun-Times raised questions about whether the company had any direct connections to Sebastian “Sam” Palumbo.
Palumbo, a brother and their father 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 Hillside-based business called Orange Crush LLC, according to the state transportation department.
Palumbo is also personally barred from state projects.
Top Builders executives include Ryan Gandy and wife Kaitlyn Palumbo Gandy. She’s Palumbo’s daughter who records show has been part of a firm called Five Sisters Management LLC, that has served as a manager of Orange Crush. Her father has been a part owner of Orange Crush.
The lawyer they share has disputed that Orange Crush is subject to the same “contractor debarment” and added: “Sebastian Palumbo has never owned any interest, direct or indirect, or invested in either of the Builders Companies and has not been an officer, director or employee of the Builders Companies and has never received compensation from the Builders Companies.”
“The Builders Companies are wholly independent of Sebastian Palumbo.”
Orange Crush’s current status is unclear — its web site wasn’t accessible Thursday and its public incorporation records had changed.
Attorneys representing the companies and family either didn’t return calls or emails this week, or wouldn’t answer detailed questions. The firm filing the lawsuit on behalf of Builders is Chico & Nunes, PC, whose partners include Gery Chico, a former aide to ex-Mayor Richard M. Daley and former Ald. Edward M. Burke.
The transportation department, which answers to Gov. JB Pritzker, responded to a Sun-Times inquiry last summer by saying: “The firms in question have been prequalified by the Illinois Department of Transportation and met the criteria to do business with the state based on the information that was provided in their applications. The department is diligently examining further to confirm that all of the rules and regulations concerning any firms prohibited from working with IDOT have been met and are being followed.”
What that review now entails is unclear.
Beyond the lawsuit filed in recent days, which names not only IDOT but also one of its top lawyers, Builders asked the court to prevent the agency from allowing another company to complete the work Builders believes it’s entitled to.
A judge this week obliged, issuing a temporary restraining order that “prohibits IDOT from awarding the contracts to another vendor and will set deadlines for pleading and argument in the case on an expedited basis,” according to IDOT.
Builders says in court records that “awarding over $21 million in contracts to another bidder, even temporarily, will put a severe strain on Builders Paving’s ongoing operations in the interim, will likely lead to the departure of some employees due to a lack of ongoing work, and will likely cause Builders Paving and its affiliates to be in technical violation of lender covenants.”
“Awarding the contracts to another bidder also will further impact Builders Paving’s reputation in the industry and with its other customers in the interim, causing them to restrict, suspend or even cancel Builders Paving’s existing contracts and ability to bid on future work.”
The road projects at stake are in, among other municipalities, Chicago, Aurora, Des Plaines, Elgin, Maywood and the North Shore, records show.
The lawsuit notes that beyond the nine contracts, there are five others totaling more than $13 million that “are not the subject of this action, but Builders Paving reserves the right to amend this complaint or commence a new action should Defendants unjustifiably and unlawfully delay the award of those contracts.”