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| Public Act 101-0065 | ||||
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AN ACT concerning finance.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Public Construction Bond Act is amended by | ||||
changing Sections 1 and 2 as follows:
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(30 ILCS 550/1) (from Ch. 29, par. 15)
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Sec. 1. Except as otherwise provided by this Act, all | ||||
officials, boards,
commissions, or agents of this State, or of | ||||
any political subdivision thereof, in making contracts for | ||||
public work of
any kind costing over $50,000 to be performed | ||||
for the State, or of any political subdivision thereof,
shall | ||||
require every contractor for the work to furnish, supply and | ||||
deliver
a bond to the State, or to the political subdivision | ||||
thereof entering into
the contract, as the case may be, with | ||||
good and sufficient sureties. The surety on the bond shall be a | ||||
company that is licensed by the Department of Insurance | ||||
authorizing it to execute surety bonds and the company shall | ||||
have a financial strength rating of at least A- as rated by | ||||
A.M. Best Company, Inc., Moody's Investors Service, Standard & | ||||
Poor's Corporation, or a similar rating agency. The
amount of | ||||
the bond shall be fixed by the officials, boards, commissions,
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commissioners or agents, and the bond, among other conditions,
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shall be
conditioned for the completion of the contract, for | ||||
the payment of material, apparatus, fixtures, and machinery
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used in the work and for all labor performed in the work, | ||
whether by
subcontractor or otherwise.
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If the contract is for emergency repairs as provided in the | ||
Illinois
Procurement
Code, proof of payment for all labor, | ||
materials, apparatus, fixtures, and
machinery may be
furnished | ||
in lieu of the bond required by this Section.
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Each such bond is deemed to contain the following | ||
provisions whether
such provisions are inserted in such bond or | ||
not:
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"The principal and sureties on this bond agree that all the
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undertakings, covenants, terms, conditions and agreements of | ||
the contract
or contracts entered into between the principal | ||
and the State or any
political subdivision thereof will be | ||
performed and fulfilled and to pay
all persons, firms and | ||
corporations having contracts with the principal or
with | ||
subcontractors, all just claims due them under the provisions | ||
of such
contracts for labor performed or materials furnished in | ||
the performance of
the contract on account of which this bond | ||
is given, when such claims are
not satisfied out of the | ||
contract price of the contract on account of which
this bond is | ||
given, after final settlement between the officer, board,
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commission or agent of the State or of any political | ||
subdivision thereof
and the principal has been made.". | ||
Each bond securing contracts between the Capital | ||
Development Board or any board of a public institution of | ||
higher education and a contractor shall contain the following | ||
provisions, whether the provisions are inserted in the bond or | ||
not: | ||
"Upon the default of the principal with respect to | ||
undertakings, covenants, terms, conditions, and agreements, | ||
the termination of the contractor's right to proceed with the | ||
work, and written notice of that default and termination by the | ||
State or any political subdivision to the surety ("Notice"), | ||
the surety shall promptly remedy the default by taking one of | ||
the following actions: | ||
(1) The surety shall complete the work pursuant to a | ||
written takeover agreement, using a completing contractor | ||
jointly selected by the surety and the State or any | ||
political subdivision; or | ||
(2) The surety shall pay a sum of money to the obligee, | ||
up to the penal sum of the bond, that represents the | ||
reasonable cost to complete the work that exceeds the | ||
unpaid balance of the contract sum. | ||
The surety shall respond to the Notice within 15 working | ||
days of receipt indicating the course of action that it intends | ||
to take or advising that it requires more time to investigate | ||
the default and select a course of action. If the surety | ||
requires more than 15 working days to investigate the default | ||
and select a course of action or if the surety elects to | ||
complete the work with a completing contractor that is not | ||
prepared to commence performance within 15 working days after | ||
receipt of Notice, and if the State or any political | ||
subdivision determines it is in the best interest of the State | ||
to maintain the progress of the work, the State or any | ||
political subdivision may continue to work until the completing | ||
contractor is prepared to commence performance. Unless | ||
otherwise agreed to by the procuring agency, in no case may the | ||
surety take longer than 30 working days to advise the State or | ||
political subdivision on the course of action it intends to | ||
take. The surety shall be liable for reasonable costs incurred | ||
by the State or any political subdivision to maintain the | ||
progress to the extent the costs exceed the unpaid balance of | ||
the contract sum, subject to the penal sum of the bond.".
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The surety bond required by this Section may be acquired | ||
from the
company, agent or broker of the contractor's choice. | ||
The bond and sureties
shall
be subject to the right of | ||
reasonable approval or disapproval, including
suspension, by | ||
the State or political subdivision thereof concerned. In the
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case of State construction contracts, a contractor shall not be | ||
required to
post a cash bond or letter of credit in addition to | ||
or as a substitute for the
surety bond required by this | ||
Section.
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When other than motor fuel tax funds, federal-aid funds, or | ||
other
funds received from the State are used, a political | ||
subdivision may allow
the contractor to provide a | ||
non-diminishing irrevocable bank letter of
credit, in lieu of | ||
the bond required by this Section, on contracts under
$100,000 | ||
to comply with the requirements of this Section. Any such bank
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letter of credit shall contain all provisions required for | ||
bonds by this
Section.
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For the purposes of this Section, the terms "material", | ||
"labor", "apparatus", "fixtures", and "machinery" include | ||
those rented items that are on the construction site and those | ||
rented tools that are used or consumed on the construction site | ||
in the performance of the contract on account of which the bond | ||
is given. | ||
(Source: P.A. 98-216, eff. 8-9-13; 98-1018, eff. 8-22-14.)
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(30 ILCS 550/2) (from Ch. 29, par. 16)
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Sec. 2.
Every person furnishing material, apparatus, | ||
fixtures, machinery, or performing labor, either
as an | ||
individual or as a sub-contractor, hereinafter referred to as | ||
Claimant, for any contractor, with the
State, or a political | ||
subdivision thereof where bond or letter of
credit shall be | ||
executed as provided in this Act, shall have the right to
sue | ||
on such bond or letter of credit in the name of the State, or | ||
the
political subdivision thereof entering into such contract, | ||
as the case may
be, for his use and benefit, and in such suit | ||
the plaintiff shall file a
copy of such bond or letter of | ||
credit, certified by the party or parties in
whose charge such | ||
bond or letter of credit shall be, which copy shall,
unless | ||
execution thereof be denied under oath, be prima facie evidence | ||
of
the execution and delivery of the original; provided, | ||
however, that this
Act shall not be taken to in any way make | ||
the State, or the political
subdivision thereof entering into | ||
such contract, as the case
may be, liable to such | ||
sub-contractor, materialman or laborer to any
greater extent | ||
than it was liable under the law as it stood before the
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adoption of this Act. | ||
Provided, however, that any Claimant having a claim
for | ||
labor, and material, apparatus, fixtures, and machinery | ||
furnished to the State shall have no such right of action
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unless it shall have filed a verified notice of said claim with | ||
the
officer, board, bureau or department awarding the contract, | ||
within 180
days after the date of the last item of work or the | ||
furnishing of the
last item of materials, apparatus, fixtures, | ||
and machinery, and shall have furnished a copy of such verified
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notice to the contractor within 10 days of the filing of the | ||
notice with
the agency awarding the contract. | ||
When any Claimant has a claim for labor, and material, | ||
apparatus, fixtures, and machinery furnished to a political | ||
subdivision, the Claimant shall have no right of action unless | ||
it shall have filed a verified notice of that claim with the | ||
Clerk or Secretary of the political subdivision within 180 days | ||
after the date of the last item of work or furnishing of the | ||
last item of materials, apparatus, fixtures, and machinery, and | ||
shall have filed a copy of that verified notice upon the | ||
contractor in a like manner as provided herein within 10 days | ||
after the filing of the notice with the Clerk or Secretary. | ||
The Claimant may file said verified notice by using | ||
personal service or by depositing the verified notice in the | ||
United States Mail, postage prepaid, certified or restricted | ||
delivery return receipt requested limited to addressee only. | ||
The verified notice shall be deemed filed on the date personal | ||
service occurs or the date when the verified notice is mailed | ||
in the form and manner provided in this Section.
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The claim shall be verified and shall contain
(1) the name | ||
and address of the claimant; the business address of the
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Claimant within this State and if the Claimant shall be a | ||
foreign
corporation having no place of business within the | ||
State, the notice
shall state the principal place of business | ||
of said corporation and in
the case of a partnership, the | ||
notice shall state the names and
residences of each of the | ||
partners; (2) the name of the contractor for
the government; | ||
(3) the name of the person, firm or corporation by whom
the | ||
Claimant was employed or to whom he or it furnished materials, | ||
apparatus, fixtures, or machinery; (4)
a brief description of | ||
the public
improvement; (5) a description of the Claimant's | ||
contract as it pertains to the public improvement, describing | ||
the work done by the Claimant and stating the total amount due | ||
and unpaid as of the date of verified notice.
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No defect in the notice herein provided for shall deprive | ||
the
Claimant of his right of action under this article unless | ||
it shall
affirmatively appear that such defect has prejudiced | ||
the rights of an
interested party asserting the same.
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Provided, further, that no action shall be brought later | ||
than one year after the date of the
furnishing of the last item | ||
of work, or materials, apparatus, fixtures, or machinery by the | ||
Claimant. Such action shall be
brought only in the circuit | ||
court of this State in the judicial circuit in
which the | ||
contract is to be performed.
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The remedy provided in this Section is in addition to and | ||
independent of
any other rights and remedies provided at law or | ||
in equity. A waiver of rights
under the Mechanics Lien Act | ||
shall not constitute a waiver of rights under this
Section | ||
unless specifically stated in the waiver.
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For the purposes of this Section, the terms "material", | ||
"labor", "apparatus", "fixtures", and "machinery" include | ||
those rented items that are on the construction site and those | ||
rented tools that are used or consumed on the construction site | ||
in the performance of the contract on account of which the bond | ||
is given. | ||
(Source: P.A. 99-673, eff. 1-1-17.)
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