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90_HB3660
New Act
30 ILCS 500/45-65
30 ILCS 500/55-7 new
30 ILCS 500/45-45 rep.
30 ILCS 575/5 from Ch. 127, par. 132.605
Creates the Small Business Procurement Bill of Rights Act
and amends the Illinois Procurement Code and the Business
Enterprise for Minorities, Females, and Persons with
Disabilities Act. Removes from the Illinois Procurement Code
the provisions of the small business set-aside preference in
State procurements of the executive branch and creates a
similar preference within the Small Business Procurement Bill
of Rights Act. Also requires State approval of a contractor's
change of subcontractors. With respect to construction
contracts, adds to the preference program certain provisions
(i) prohibiting the waiver of lien rights in anticipation of
the award of a contract; (ii) requiring prompt payment of
subcontractors; (iii) requiring the State, unless otherwise
provided in the contract, to make progress payments; and (iv)
prohibiting issuance of certificates of occupancy before
payment of contractors. Requires the Business Council for
Minorities, Females, and Persons with Disabilities to devise
a procedure for reciprocal certification of qualified
businesses under that Act with other entities engaged in
similar certification.
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1 AN ACT concerning State procurements from small
2 businesses, amending named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 1. Short title. This Act may be cited as the
6 Small Business Procurement Bill of Rights Act.
7 Section 5. Purpose; policy. It is the purpose of this
8 Act and is declared to be the policy of this State that,
9 because the existence of a strong and healthy free enterprise
10 system is directly related to the well-being and competitive
11 strength of small business concerns and to the opportunity
12 for small businesses to have free entry into business, to
13 grow, and to expand, the State shall ensure that a fair
14 proportion of the State's total purchases and contracts for
15 construction, property, and services be placed with small
16 business concerns.
17 Section 10. Definitions. The words and phrases used in
18 this Act have the definitions set forth in the following
19 Sections.
20 Section 10.5. Chief procurement officer. "Chief
21 procurement officer" is defined as in the Illinois
22 Procurement Code.
23 Section 10.10. Construction. "Construction" means
24 building, altering, repairing, improving, or demolishing any
25 public structure or building or making improvements of any
26 kind to public real property. Construction does not include
27 the routine operation, routine repair, or routine maintenance
28 of existing structures, buildings, or real property.
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1 Section 10.15. Contract. "Contract" means all types of
2 State agreements, regardless of what they may be called, for
3 the procurement, use, or disposal of supplies, services,
4 professional or artistic services, or construction or for
5 leases of real property or capital improvements, and
6 including master contracts, contracts for financing through
7 use of installment or lease-purchase arrangements, and
8 renegotiated contracts.
9 Section 10.20. Small business. "Small business" means a
10 business that is independently owned and operated and that is
11 not dominant in its field of operation. The chief
12 procurement officer shall establish a detailed definition by
13 rule, using in addition to the foregoing criteria other
14 criteria, including the number of employees and the dollar
15 volume of business. When computing the size status of a
16 bidder, annual sales and receipts of the bidder and all of
17 its affiliates shall be included. The maximum number of
18 employees and the maximum dollar volume that a small business
19 may have under the rules promulgated by the chief procurement
20 officer may vary from industry to industry to the extent
21 necessary to reflect differing characteristics of those
22 industries, subject to the following limitations:
23 (1) No wholesale business is a small business if
24 its annual sales for its most recently completed fiscal
25 year exceed $7,500,000.
26 (2) No retail business or business selling services
27 is a small business if its annual sales and receipts
28 exceed $1,500,000.
29 (3) No manufacturing business is a small business
30 if it employs more than 250 persons.
31 (4) No construction business is a small business if
32 its annual sales and receipts exceed $14,000,000.
33 These employee and dollar limitations shall represent the
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1 average employee total or dollar volume of business over the
2 past 3 fiscal years.
3 Section 10.25. Small business set-aside. "Small business
4 set-aside" means a construction contract, service contract,
5 or purchase request for which bids are to be invited and
6 accepted only from small businesses.
7 Section 10.30. Fair proportion. "Fair proportion" for
8 construction contracts means no less than 25% nor more than
9 40% of the annual total contracts for construction.
10 Section 15. Designation of small business set-asides.
11 The chief procurement officer may designate as a small
12 business set-aside a fair proportion of construction
13 contracts, service contracts, and purchase requests for
14 specified commodities or equipment that must be awarded in
15 accordance with the provisions of the Illinois Procurement
16 Code. The designation shall be made prior to the
17 advertisement for bids in the Illinois Procurement Bulletin,
18 and when the advertisement is published it shall indicate the
19 purchases or contracts that have been designated small
20 business set-asides.
21 For small business set-asides, invitations to bid shall
22 be confined to small businesses, and bids from other
23 businesses shall be rejected. The purchase, contract, or
24 expenditure of funds shall be awarded to the lowest
25 responsible bidder among the small businesses (considering
26 conformity with specifications and terms) in accordance with
27 the rules for purchasing published by the chief procurement
28 officer.
29 Section 20. Rejection of bid; withdrawal of designation.
30 If the chief procurement officer determines that acceptance
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1 of the best bid will result in the payment of an unreasonable
2 price, all the bids shall be rejected and the designation of
3 small business set-aside shall be withdrawn.
4 If the designation of small business set-aside is
5 withdrawn, the chief procurement officer shall notify the
6 bidders of the reason why the bids were rejected.
7 Invitations to bid containing the same or rewritten
8 specifications and terms shall then be re-issued under the
9 Illinois Procurement Code without the designation of small
10 business set-aside.
11 Section 25. Small business specialist. The chief
12 procurement officer shall engage an experienced contract
13 negotiator to serve as the small business specialist, whose
14 duties shall include:
15 (1) Compiling and maintaining a comprehensive
16 bidders list of small businesses. In this duty, he or
17 she shall cooperate with the Federal Small Business
18 Administration in locating potential sources for various
19 products and services.
20 (2) Assisting small businesses in complying with
21 the procedures for bidding on State contracts.
22 (3) Examining requests from State agencies for the
23 purchase of property or services to help determine which
24 invitations to bid are to be designated small business
25 set-asides.
26 (4) Making recommendations to the chief procurement
27 officer for the simplification of specifications and
28 terms in order to increase the opportunities for small
29 business participation.
30 (5) Assisting in investigations to determine the
31 responsibility of bidders on small business set-asides.
32 Section 30. Small business annual report. The chief
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1 procurement officer shall annually before December 1 report
2 in writing to the General Assembly concerning the awarding of
3 contracts to small businesses. The report shall include the
4 total value of awards made in the preceding fiscal year under
5 the designation of small business set-aside.
6 The requirement for reporting to the General Assembly
7 shall be satisfied by filing copies of the report as required
8 by Section 3.1 of the General Assembly Organization Act.
9 Section 35. Subcontractors.
10 (a) A contract awarded under this Act shall state
11 whether the services of a subcontractor will be used. The
12 contract shall include the names and addresses of all
13 subcontractors and the expected amount of money each will
14 receive under the contract.
15 (b) If at any time during the term of a contract, a
16 contractor adds or changes any subcontractors, he or she
17 shall promptly notify, in writing, the chief procurement
18 officer of the names and addresses and the expected amount of
19 money each new or replaced subcontractor will receive. All
20 changes in subcontractors shall be approved in writing by the
21 chief procurement officer.
22 Section 40. Waiver of lien or claim. An agreement to
23 waive any right to enforce or claim any lien when the
24 agreement is in anticipation of and in consideration for the
25 awarding of a contract or subcontract under this Act, either
26 express or implied, to perform work or services or to supply
27 fixtures or materials for an improvement upon real property
28 is against public policy and unenforceable. This provision
29 shall not affect the validity of the lien waiver in the hands
30 of any third party who has detrimentally relied upon the lien
31 waiver given by a party furnishing labor, material, fixtures,
32 or other services after work has been fully or partially
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1 performed; however, a waiver of lien shall not be construed
2 as waiving lien rights beyond the dollar amount stated in the
3 waiver. This Section does not prohibit subordination or
4 release of a lien.
5 Section 45. Prompt payment to subcontractors.
6 Construction contracts awarded under this Act must require
7 the prime contractor and all subcontractors to promptly pay
8 any subcontractor or material supplier under the contract
9 within 10 business days of the prime contractor's or
10 subcontractor's receipt of payment from the State for
11 undisputed services provided by the subcontractor or material
12 provided by the supplier. The contract must require the
13 prime contractor or subcontractor to pay interest at the same
14 rate as provided in the Mechanics Lien Act on any undisputed
15 amount not paid on time to the subcontractor. A
16 subcontractor or supplier who prevails in a civil action to
17 collect interest penalties from a prime contractor shall be
18 awarded its costs and disbursements, including attorney fees
19 incurred in enforcing this provision.
20 Section 50. Progress payments and retainage.
21 (a) Unless a construction contract awarded under this
22 Act provides otherwise, the State must make progress payments
23 monthly as the work progresses. Payments shall be based upon
24 reasonable estimates of work completed as approved by the
25 State. A progress payment shall not be considered acceptance
26 or approval of any work or waiver of any defects in that
27 work.
28 (b) Unless a construction contract awarded under this
29 Act provides otherwise, the State may reserve a retainage
30 from any progress payments on the construction contract in an
31 amount not to exceed 5% of the payment. The State may reduce
32 the amount of retainage and may eliminate retainage on any
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1 monthly contract payment if, in the State's opinion, the work
2 is progressing satisfactorily.
3 Section 55. Payment before certificate of occupancy
4 issued. All contractors under a construction contract
5 awarded under this Act shall be paid before a certificate of
6 occupancy is issued.
7 Section 60. Illinois Procurement Code. Except to the
8 extent provided in this Act to the contrary, contracts
9 awarded under this Act are subject to the Illinois
10 Procurement Code.
11 Section 65. Illinois Administrative Procedure Act. This
12 Act is subject to the Illinois Administrative Procedure Act.
13 Section 900. The Illinois Procurement Code is amended by
14 changing Section 45-65 and adding Section 55-7 as follows:
15 (30 ILCS 500/45-65)
16 Sec. 45-65. Additional preferences. This Code is
17 subject to applicable provisions of:
18 (1) the Public Purchases in Other States Act;
19 (2) the Illinois Mined Coal Act;
20 (3) the Steel Products Procurement Act;
21 (4) the Veterans Preference Act; and
22 (5) the Business Enterprise for Minorities,
23 Females, and Persons with Disabilities Act; and.
24 (6) the Small Business Procurement Bill of Rights
25 Act.
26 (Source: P.A. 90-572, eff. date - see Sec. 99-5.)
27 (30 ILCS 500/55-7 new)
28 Sec. 55-7. Small Business Procurement Bill of Rights
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1 Act. To the extent that the provisions of this Code conflict
2 with the provisions of the Small Business Procurement Bill of
3 Rights Act, this Code is subject to the Small Business
4 Procurement Bill of Rights Act and the provisions of that Act
5 control.
6 (30 ILCS 500/45-45 rep.)
7 Section 905. The Illinois Procurement Code is amended by
8 repealing Section 45-45.
9 Section 910. The Business Enterprise for Minorities,
10 Females, and Persons with Disabilities Act is amended by
11 changing Section 5 as follows:
12 (30 ILCS 575/5) (from Ch. 127, par. 132.605)
13 (Section scheduled to be repealed on September 6, 1999)
14 Sec. 5. Business Enterprise Council.
15 (1) To help implement, monitor and enforce the goals of
16 this Act, there is created the Business Enterprise Council
17 for Minorities, Females, and Persons with Disabilities,
18 hereinafter referred to as the Council, composed of the
19 Secretary of Human Services and the Directors of the
20 Department of Human Rights, the Department of Commerce and
21 Community Affairs, the Department of Central Management
22 Services, the Department of Transportation and the Capital
23 Development Board, or their duly appointed representatives.
24 Ten individuals representing businesses that are minority or
25 female owned or owned by persons with disabilities, 2
26 individuals representing the business community, and a
27 representative of public universities shall be appointed by
28 the Governor. These members shall serve 2 year terms and
29 shall be eligible for reappointment. Any vacancy occurring
30 on the Council shall also be filled by the Governor. Any
31 member appointed to fill a vacancy occurring prior to the
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1 expiration of the term for which his predecessor was
2 appointed shall be appointed for the remainder of such term.
3 Members of the Council shall serve without compensation but
4 shall be reimbursed for any ordinary and necessary expenses
5 incurred in the performance of their duties.
6 The Director of the Department of Central Management
7 Services shall serve as the Council chairperson and shall
8 select, subject to approval of the council, a Secretary
9 responsible for the operation of the program who shall serve
10 as the Division Manager of the Business Enterprise for
11 Minorities, Females, and Persons with Disabilities Division
12 of the Department of Central Management Services.
13 The Director of each State agency and the chief executive
14 officer of each State university shall appoint a liaison to
15 the Council. The liaison shall be responsible for submitting
16 to the Council any reports and documents necessary under this
17 Act.
18 (2) The Council's authority and responsibility shall be
19 to:
20 (a) Devise a certification procedure to assure that
21 businesses taking advantage of this Act are legitimately
22 classified as businesses owned by minorities, females, or
23 persons with disabilities, and devise a reciprocity of
24 certification procedure with other entities that certify
25 businesses that meet standards no less stringent than
26 those of this Act.
27 (b) Maintain a list of all businesses legitimately
28 classified as businesses owned by minorities, females, or
29 persons with disabilities to provide to State agencies
30 and State universities.
31 (c) Review rules and regulations for the
32 implementation of the program for businesses owned by
33 minorities, females, and persons with disabilities.
34 (d) Review compliance plans submitted by each State
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1 agency and State university pursuant to this Act.
2 (e) Make annual reports as provided in Section 8f
3 to the Governor and the General Assembly on the status of
4 the program.
5 (f) Serve as a central clearinghouse for
6 information on State contracts, including the maintenance
7 of a list of all pending State contracts upon which
8 businesses owned by minorities, females, and persons with
9 disabilities may bid. At the Council's discretion,
10 maintenance of the list may include 24-hour electronic
11 access to the list along with the bid and application
12 information.
13 (g) Establish a toll free telephone number to
14 facilitate information requests concerning the
15 certification process and pending contracts.
16 (3) No premium bond rate of a surety company for a bond
17 required of a business owned by a minority, female, or person
18 with a disability bidding for a State contract shall be
19 higher than the lowest rate charged by that surety company
20 for a similar bond in the same classification of work that
21 would be written for a business not owned by a minority,
22 female, or person with a disability.
23 (4) Any Council member who has direct financial or
24 personal interest in any measure pending before the Council
25 shall disclose this fact to the Council and refrain from
26 participating in the determination upon such measure.
27 (5) The Secretary shall have the following duties and
28 responsibilities:
29 (a) To be responsible for the day-to-day operation
30 of the Council.
31 (b) To serve as a coordinator for all of the
32 State's programs for businesses owned by minorities,
33 females, and persons with disabilities and as the
34 information and referral center for all State initiatives
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1 for businesses owned by minorities, females, and persons
2 with disabilities.
3 (c) To establish an enforcement procedure whereby
4 the Council may recommend to the appropriate State legal
5 officer that the State exercise its legal remedies which
6 shall include (1) termination of the contract involved,
7 (2) prohibition of participation by the respondent in
8 public contracts for a period not to exceed one year,
9 (3) imposition of a penalty not to exceed any profit
10 acquired as a result of violation, or (4) any combination
11 thereof. Such procedures shall require prior approval by
12 Council.
13 (d) To devise appropriate policies, regulations and
14 procedures for including participation by businesses
15 owned by minorities, females, and persons with
16 disabilities as prime contractors including, but not
17 limited to, (i) encouraging the inclusions of qualified
18 businesses owned by minorities, females, and persons with
19 disabilities on solicitation lists, (ii) investigating
20 the potential of blanket bonding programs for small
21 construction jobs, (iii) investigating and making
22 recommendations concerning the use of the sheltered
23 market process.
24 (e) To devise procedures for the waiver of the
25 participation goals in appropriate circumstances.
26 (f) To accept donations and, with the approval of
27 the Council or the Director of Central Management
28 Services, grants related to the purposes of this Act; to
29 conduct seminars related to the purpose of this Act and
30 to charge reasonable registration fees; and to sell
31 directories, vendor lists and other such information to
32 interested parties, except that forms necessary to become
33 eligible for the program shall be provided free of charge
34 to a business or individual applying for the program.
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1 (Source: P.A. 88-377; 88-597, eff. 8-28-94; 89-507, eff.
2 7-1-97.)