May 1, 2014

To our clients, colleagues, competitors and friends

Since James McHugh Construction Co. was founded in 1897, we have operated on the principles of integrity, honor and transparency. That's how we were raised; that's how we do business, and that is how we conduct ourselves personally.

As many of you know, it has been more than two years since we first learned of a lengthy investigation into subcontracting practices involving disadvantaged businesses in Chicago. Among those targeted in that investigation was a certified woman-owned business that McHugh has relied upon as part of an effort to meet the city's requirement that up to 30% of all subcontracts go to disadvantaged businesses.

We were troubled by this inquiry, particularly because we are a company that has built a reputation as the industry leader for supporting minority- and women-owned companies. We take pride in our pioneer status as the first Chicago-based construction company to bring minorities into the ironworkers' union and the first to enter into a joint venture with a minority contractor, among other meaningful efforts. While we fully cooperated with that investigation, we did not wait for it to be complete to begin strengthening our commitment to compliance.

"... we chose to settle this matter to allow us to focus our energies and resources where they belong: on fulfilling the requirements of our existing contracts and continuing to compete for both public and private contracts."
Mike Meagher
Senior Vice President
Today, it will be announced that McHugh has resolved this matter with all the relevant agencies of federal, state, and local government. As part of that resolution, McHugh recognizes the seriousness of the allegations and the need to continue improving our compliance and training programs, but we dispute any suggestion that we intentionally disregarded the requirements of DBE programs.

Still, we chose to settle this matter to allow us to focus our energies and resources where they belong: on fulfilling the requirements of our existing contracts and continuing to compete for both public and private contracts. After 26 months, the facts show:

  • The investigation into McHugh's actions has concluded with no charges against the company.
  • All the relevant federal, state, and local governments agree that McHugh is a responsible contractor, fully eligible to compete for any project, and that no adverse action will be taken.
  • There are no questions as to the quality and integrity of McHugh's work, nor has there been any suggestion that McHugh did anything improper with any funds paid on those projects.
  • McHugh has designed and implemented new compliance and training policies that are considered the best of their kind in the construction industry.
  • McHugh has long supported the goals of DBE programs, but is also committed to improving clarity of that process for all companies. As part of that commitment to supporting disadvantaged and women- and minority-owned businesses, McHugh has contributed $2 million to the City of Chicago to improve its program for the benefit of all disadvantaged contractors. Anything that can be done to bring better understanding to that process will always have our full support.

Most important of all, this settlement allows us to officially put this matter behind us. While it has been a trying time, we are able to turn the page as a stronger company than we were two years ago. We have continued to grow both our private and public sector work and our company's foundation, finances and bonding capacity are just as strong today as many of the iconic structures we have built around the world.

Still, we would like to offer a heartfelt apology to our employees and clients for any distraction this situation might have caused. We would also like to express our sincere gratitude for your unwavering support and loyalty. We have learned from this experience and are excited about our future. We will not let you down.

Respectfully,



Patricia H. McHugh

Chairman

Bruce E. Lake

President