CHICAGO (CBS) — McDonough Associates Inc., an engineering firm that was banned from accepting any state contracts after it was accused of overcharges that cost taxpayers millions, has struck back.

As WBBM Newsradio’s David Roe reports, the firm is suing officials at the Illinois Department of Transportation for what it calls “economic strangulation.”

LISTEN: WBBM Newsradio’s David Roe reports

The Chicago Tribune reports the McDonough lawsuit, filed Tuesday, claims procurement officer Bill Grunloh violated the company’s due-process rights during an audit. The lawsuit also names IDOT Secretary Ann Schneider.

IDOT is seeking nearly $2 million in compensation from the 45-year-old firm to compensate for the alleged overbilling and has referred its findings to prosecutors.

The department also barred McDonough from getting any state work for three years.

The Chicago Sun-Times reported earlier this month that similar action may be taken by the Illinois Toll Highway Authority and the City of Chicago, with which it also has millions of dollars in contracts.

The firm was founded by James J. McDonough, who served as Streets and Sanitation commissioner and Chicago Transit Authority Board chairman under the late Mayor Richard J. Daley, the Sun-Times reported.

The firm admits that it made what it calls “some honest mistakes in accounting procedures,” but denies stealing any money, the Sun-Times reported.

McDonough also says if the suspension survives a court challenge, it amount to a death sentence, the newspaper reported.

(TM and © Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)

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