Contracts
Judlau's Wrongful Termination Lawsuit Blocks Walsh From Work on Illinois Interchange
The controversy started with a bid preference being overlooked
New York-based Judlau Contracting had already begun work to rebuild the Interstate 290/Interstate 88 Interchange near Oak Brook, Ill. when its contract was terminated. Photo courtesy of Judlau Contracting
The Illinois State Tollway Authority is blocked from hiring another contractor to work on a $324-million project to rebuild the southbound lanes of the Interstate 290 and Interstate 88 interchange near Oak Brook, Ill., until resolution of a wrongful contract termination lawsuit brought against the authority by New York-based Judlau Contracting.
In court documents, the tollway authority acknowledges that it failed to apply a 4% preference to Illinois companies seeking the job. If the authority had done so, a nearly $327-million bid by Illinois-based Walsh Construction would have been considered as a nearly $314 million bid and qualified Walsh as the low bidder
Walsh protested the award to Judlau based on a different issue of whether one of the subcontractors in Judlau's bid met the contract’s requirements for disadvantaged business subcontractors, but lost in January. Nevertheless, the tollway authority, in June, after it had terminated the contract with Judlau, declared its intention to hand the contract to Walsh.
Judlau then sued in state court in Wheaton, Ill., where a judge issued an injunction preventing the authority from moving forward.
In a court affidavit, Peter Foernssler, chief procurement officer for the tollway authority, said the tollway misunderstood “the mandatory nature” of an Illinois procurement law that was passed in December 2023 and which requires a 4% preference—or reduction—for any Illinois business bidding on a project over $100,000.
In issuing a temporary restraining order on June 20 that prevents the tollway from hiring Walsh for the project, Judge Anne Hayes wrote, “Judlau has established an ascertainable right in need of protection; that is, the right to participate in a fair and open competitive bidding process.”
Six weeks into the job after Judlau said it had hired workers, purchased materials and was excavating and grading the roadway, the contractor received a two-line letter from the tollway on May 16 terminating its contract. The formal award had been made in February following Walsh's unsuccessful bid protest.
"It wasn’t until April that the tollway says it realized its error, and it did not communicate with Judlau about the issue and allowed Judlau to continue working until serving the notice of termination," said Judlau spokesperson Randall Samborn. "Even then and since then, the tollway has provided inconsistent explanations for the termination. Also, there was no reference to or information about the 4% preference in any of the bid package documents."
Samborn also said that the 4% bid reduction for Walsh would have been on paper only.
"If Walsh had been the successful bidder, they still would receive $327 million, or about $3 million more than Judlau’s winning bid to do the same job," he said. "Walsh wouldn’t be forced to accept $314 million. The tollway users who fund the tollway don’t get a break – they would actually pay more."
Following the termination, Judlau immediately filed a lawsuit, according to Judlau Executive Vice President Arnav Amin, who said in a statement, “Regrettably, we were forced to take this action to protect ourselves, our subcontractors and motorists.”
Bid Process Disputed
The tollway authority argues in court documents its contract with Judlau is “void ab initio,” which means it was void from the beginning because the tollway did not properly administer the bidding process, and didn't allocate a 4% bid preference to an Illinois company.
The interchange project is part of the tollway’s $4 billion Central Tri-State Project reconstructing and widening a 22-mile corridor along Interstate 294 between Balmoral Avenue on the north and 95th Street on the south. The project began in 2018 with completion expected in 2026.
Judlau's Amin claims that the termination “negatively impacts nearly 160 subcontractors and vendors and will substantially delay the project at the expense of 300,000 motorists daily while the work already in progress remains halted.”
Dan Rozek, a spokesperson for the tollway authority, declined to comment on the lawsuit, but said, “while a final determination on the I-290/I-88 Interchange project is worked out, it is important to note that construction is continuing on other portions of I-290/I-88, and tremendous progress is being made."
Walsh Construction did not immediately respond to a request for comment.
