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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 
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changing Section 1 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 
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officials, boards,
commissions, or agents of this State, or of

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any political subdivision thereof in making contracts for 
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public work of
any kind costing over $50,000 $5,000 to be 
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performed for the State, and all officials, boards, 
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commissions, or agents of any political subdivision of this 
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State in making contracts for public work of any kind costing 
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over $5,000 to be performed for the political subdivision, or a 
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political
subdivision thereof
shall require every contractor 
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for the work to furnish, supply and deliver
a bond to the 
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State, or to the political subdivision thereof entering into

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the contract, as the case may be, with good and sufficient 
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sureties. The
amount of the bond shall be fixed by the 
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officials, boards, commissions,
commissioners or agents, and 
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the bond, among other conditions,
shall be
conditioned for the 
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completion of the contract, for the payment of material
used in 
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the work and for all labor performed in the work, whether by

 


 






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subcontractor or otherwise.

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    If the contract is for emergency repairs as provided in the 
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Illinois
Procurement
Code, proof of payment for all labor, 
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materials, apparatus, fixtures, and
machinery may be
furnished 
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in lieu of the bond required by this Section.

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    Each such bond is deemed to contain the following 
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provisions whether
such provisions are inserted in such bond or 
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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 
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the contract
or contracts entered into between the principal 
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and the State or any
political subdivision thereof will be 
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performed and fulfilled and to pay
all persons, firms and 
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corporations having contracts with the principal or
with 
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subcontractors, all just claims due them under the provisions 
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of such
contracts for labor performed or materials furnished in 
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the performance of
the contract on account of which this bond 
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is given, when such claims are
not satisfied out of the 
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contract price of the contract on account of which
this bond is 
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given, after final settlement between the officer, board,

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commission or agent of the State or of any political 
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subdivision thereof
and the principal has been made.
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    Each bond securing contracts between the Capital 
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Development Board or any board of a public institution of 
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higher education and a contractor shall contain the following 
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provisions, whether the provisions are inserted in the bond or 
 


 






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not:  
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    "Upon the default of the principal with respect to 
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undertakings, covenants, terms, conditions, and agreements, 
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the termination of the contractor's right to proceed with the 
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work, and written notice of that default and termination by the 
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State or any political subdivision to the surety ("Notice"), 
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the surety shall promptly remedy the default by taking one of 
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the following actions:
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        (1) The surety shall complete the work pursuant to a 
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    written takeover agreement, using a completing contractor 
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    jointly selected by the surety and the State or any 
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    political subdivision; or
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        (2) The surety shall pay a sum of money to the obligee, 
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    up to the penal sum of the bond, that represents the 
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    reasonable cost to complete the work that exceeds the 
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    unpaid balance of the contract sum.
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    The surety shall respond to the Notice within 15 working 
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days of receipt indicating the course of action that it intends 
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to take. If the surety elects to complete the work with a 
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completing contractor and if the State or any political 
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subdivision determines it is in the best interest of the State 
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to maintain the progress of the work, the State or any 
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political subdivision may continue to work until the completing 
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contractor is prepared to commence performance. The surety 
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shall be liable for reasonable costs incurred by the State or 
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any political subdivision to maintain the progress to the 
 


 






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extent the costs exceed the unpaid balance of the contract sum, 
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subject to the penal sum of the bond.".

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    The surety bond required by this Section may be acquired 
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from the
company, agent or broker of the contractor's choice.  
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The bond and sureties
shall
be subject to the right of 
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reasonable approval or disapproval, including
suspension, by 
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the State or political subdivision thereof concerned. In the

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case of State construction contracts, a contractor shall not be 
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required to
post a cash bond or letter of credit in addition to 
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or as a substitute for the
surety bond required by this 
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Section.

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    When other than motor fuel tax funds, federal-aid funds, or 
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other
funds received from the State are used, a political 
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subdivision may allow
the contractor to provide a 
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non-diminishing irrevocable bank letter of
credit, in lieu of 
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the bond required by this Section, on contracts under
$100,000 
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to comply with the requirements of this Section.  Any such bank

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letter of credit shall contain all provisions required for 
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bonds by this
Section.

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(Source: P.A. 93-221, eff. 1-1-04.)

 

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    Section 99. Effective date. This Act takes effect upon 
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becoming law.