99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3486

 

Introduced , by Rep. William Davis

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 2705/2705-615 new
30 ILCS 500/45-45
30 ILCS 540/7  from Ch. 127, par. 132.407
30 ILCS 540/8 new

    Amends the Civil Administrative Code of Illinois. Provides that a small business subcontractor may enter into an agreement with the Department of Transportation to receive direct payments from the Department on a construction project. Amends the Procurement Code. Provides that any construction project under the authority of the chief procurement officer valued at $195,000 or less shall be designated for a small business set-aside. Amends the State Prompt Payment Act. Provides that when a State official or agency responsible for administering a contract submits a voucher to the Comptroller for payment to a small business subcontractor who enters into a contract, that State official or agency shall make available electronically the voucher information. Provides that if a contractor with the Department or a small business subcontractor claims that additional payment is due under the terms of the contract, and the Department of Transportation has not agreed that payment is due, the contractor or subcontractor desiring to pursue additional compensation shall file a claim according to the requirements and procedures specified by the Department. Provides that if the claim, after consideration by the Department, is found to have merit, the Department will make an equitable adjustment.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3486LRB099 09361 SXM 31696 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Department of Transportation Law of the
5Civil Administrative Code of Illinois is amended by adding
6Section 2705-615 as follows:
 
7    (20 ILCS 2705/2705-615 new)
8    Sec. 2705-615. Small business; Disadvantaged Business
9Enterprise; subcontractor direct payments.
10    (a) A small business subcontractor may enter into an
11agreement with the Department to receive direct payments from
12the Department on a construction project if the following
13conditions have been met:
14        (1) the subcontractor is listed on the Chief
15    Procurement Office's Small Business Vendors Directory;
16        (2) the subcontractor is listed on the Department of
17    Transportation Disadvantaged Business Enterprise
18    Directory; and
19        (3) the Department has reviewed the contract and
20    determined that it meets the requirements for fairness and
21    responsiveness to the Department's bid specifications.
22    (b) Any contract entered pursuant to this Section shall
23include the following terms:

 

 

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1        (1) Any mobilization payment in the contract shall be
2    capped at the same percentage as the mobilization payment
3    in the contract between the Department and the prime
4    contractor. "Mobilization payment" means an advance
5    payment to a contractor that enables the contractor to
6    purchase necessary machinery and tools for a project or its
7    customary meaning in the context of the contract. The
8    mobilization payments shall be set at a per year basis.
9    Mobilization Payments on a multi-year project shall be paid
10    on an annual basis.
11        (2) If the prime contractor and the Department agree to
12    an accelerated pay schedule, the Department must agree to
13    the new pay schedule for the subcontractor as well.
 
14    Section 10. The Illinois Procurement Code is amended by
15changing Section 45-45 as follows:
 
16    (30 ILCS 500/45-45)
17    Sec. 45-45. Small businesses.
18    (a) Set-asides. Each chief procurement officer has
19authority to designate as small business set-asides a fair
20proportion of construction, supply, and service contracts for
21award to small businesses in Illinois. Any construction project
22under the authority of the chief procurement officer appointed
23pursuant to paragraph (2) of subsection (a) of Section 10-20
24valued at $195,000 or less shall be designated for a small

 

 

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1business set-aside. Advertisements for bids or offers for those
2contracts shall specify designation as small business
3set-asides. In awarding the contracts, only bids or offers from
4qualified small businesses shall be considered.
5    (b) Small business. "Small business" means a business that
6is independently owned and operated and that is not dominant in
7its field of operation. The chief procurement officer shall
8establish a detailed definition by rule, using in addition to
9the foregoing criteria other criteria, including the number of
10employees and the dollar volume of business. When computing the
11size status of a potential contractor, annual sales and
12receipts of the potential contractor and all of its affiliates
13shall be included. The maximum number of employees and the
14maximum dollar volume that a small business may have under the
15rules promulgated by the chief procurement officer may vary
16from industry to industry to the extent necessary to reflect
17differing characteristics of those industries, subject to the
18following limitations:
19        (1) No wholesale business is a small business if its
20    annual sales for its most recently completed fiscal year
21    exceed $13,000,000.
22        (2) No retail business or business selling services is
23    a small business if its annual sales and receipts exceed
24    $8,000,000.
25        (3) No manufacturing business is a small business if it
26    employs more than 250 persons.

 

 

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1        (4) No construction business is a small business if its
2    annual sales and receipts exceed $14,000,000.
3    (c) Fair proportion. For the purpose of subsection (a), for
4State agencies of the executive branch, a fair proportion of
5construction contracts shall be no less than 25% nor more than
640% of the annual total contracts for construction.
7    (d) Withdrawal of designation. A small business set-aside
8designation may be withdrawn by the purchasing agency when
9deemed in the best interests of the State. Upon withdrawal, all
10bids or offers shall be rejected, and the bidders or offerors
11shall be notified of the reason for rejection. The contract
12shall then be awarded in accordance with this Code without the
13designation of small business set-aside.
14    (e) Small business specialist. The chief procurement
15officer shall designate a State purchasing officer who will be
16responsible for engaging an experienced contract negotiator to
17serve as its small business specialist, whose duties shall
18include:
19        (1) Compiling and maintaining a comprehensive list of
20    potential small contractors. In this duty, he or she shall
21    cooperate with the Federal Small Business Administration
22    in locating potential sources for various products and
23    services.
24        (2) Assisting small businesses in complying with the
25    procedures for bidding on State contracts.
26        (3) Examining requests from State agencies for the

 

 

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1    purchase of property or services to help determine which
2    invitations to bid are to be designated small business
3    set-asides.
4        (4) Making recommendations to the chief procurement
5    officer for the simplification of specifications and terms
6    in order to increase the opportunities for small business
7    participation.
8        (5) Assisting in investigations by purchasing agencies
9    to determine the responsibility of bidders or offerors on
10    small business set-asides.
11    (f) Small business annual report. The State purchasing
12officer designated under subsection (e) shall annually before
13December 1 report in writing to the General Assembly concerning
14the awarding of contracts to small businesses. The report shall
15include the total value of awards made in the preceding fiscal
16year under the designation of small business set-aside. The
17report shall also include the total value of awards made to
18businesses owned by minorities, females, and persons with
19disabilities, as defined in the Business Enterprise for
20Minorities, Females, and Persons with Disabilities Act, in the
21preceding fiscal year under the designation of small business
22set-aside.
23    The requirement for reporting to the General Assembly shall
24be satisfied by filing copies of the report as required by
25Section 3.1 of the General Assembly Organization Act.
26(Source: P.A. 98-1076, eff. 1-1-15.)
 

 

 

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1    Section 15. The State Prompt Payment Act is amended by
2changing Section 7 and by adding Section 8 as follows:
 
3    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
4    Sec. 7. Payments to subcontractors and material suppliers.
5    (a) When a State official or agency responsible for
6administering a contract submits a voucher to the Comptroller
7for payment to (i) a contractor; or (ii) a subcontractor who
8enters into a contract pursuant to Section 2705-615 of the
9Civil Administrative Code of Illinois, that State official or
10agency shall promptly make available electronically the
11voucher number, the date of the voucher, and the amount of the
12voucher. The State official or agency responsible for
13administering the contract shall provide subcontractors and
14material suppliers, known to the State official or agency, with
15instructions on how to access the electronic information. When
16a contractor receives any payment, the contractor shall pay
17each subcontractor and material supplier in proportion to the
18work completed by each subcontractor and material supplier
19their application, plus interest received under this Act, less
20any retention. If the contractor receives less than the full
21payment due under the public construction contract, the
22contractor shall be obligated to disburse on a pro rata basis
23those funds received, plus interest received under this Act,
24with the contractor, subcontractors and material suppliers

 

 

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1each receiving a prorated portion based on the amount of
2payment. When, however, the public owner does not release the
3full payment due under the contract because there are specific
4areas of work or materials the contractor is rejecting or
5because the contractor has otherwise determined such areas are
6not suitable for payment, then those specific subcontractors or
7suppliers involved shall not be paid for that portion of work
8rejected or deemed not suitable for payment and all other
9subcontractors and suppliers shall be paid in full, plus
10interest received under this Act.
11    (b) If the contractor, without reasonable cause, fails to
12make full payment of amounts due under subsection (a) to his
13subcontractors and material suppliers within 15 days after
14receipt of payment under the public construction contract, the
15contractor shall pay to his subcontractors and material
16suppliers, in addition to the payment due them, interest in the
17amount of 2% per month, calculated from the expiration of the
1815-day period until fully paid. This subsection shall also
19apply to any payments made by subcontractors and material
20suppliers to their subcontractors and material suppliers and to
21all payments made to lower tier subcontractors and material
22suppliers throughout the contracting chain.
23        (1) If a contractor, without reasonable cause, fails to
24    make payment in full as provided in subsection (a) within
25    15 days after receipt of payment under the public
26    construction contract, any subcontractor or material

 

 

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1    supplier to whom payments are owed may file a written
2    notice with the State official or agency setting forth the
3    amount owed by the contractor and the contractor's failure
4    to timely pay the amount owed.
5        (2) The State official or agency, within 15 days after
6    receipt of a subcontractor's or material supplier's
7    written notice of the failure to receive payment from the
8    contractor, shall hold a hearing convened by an
9    administrative law judge to determine whether the
10    contractor withheld payment, without reasonable cause,
11    from the subcontractors and material suppliers and what
12    amount, if any, is due to the subcontractors and material
13    suppliers. The State official or agency shall provide
14    appropriate notice to the parties of the date, time, and
15    location of the hearing. Each contractor, subcontractor,
16    and material supplier has the right to be represented by
17    counsel at the hearing and to cross-examine witnesses and
18    challenge documents.
19        (3) If there is a finding by the administrative law
20    judge that the contractor failed to make payment in full,
21    without reasonable cause, as provided in subsection (a),
22    then the administrative law judge shall, in writing, direct
23    the contractor to pay the amount owed to the subcontractors
24    and material suppliers plus interest within 15 days after
25    the finding.
26        (4) If a contractor fails to make full payment within

 

 

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1    15 days after the administrative law judge's finding, then
2    the contractor shall be barred from entering into a State
3    public construction contract for a period of one year
4    beginning on the date of the administrative law judge's
5    finding.
6(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)
 
7    (30 ILCS 540/8 new)
8    Sec. 8. Contract Claims. If (i) a contractor who has a
9contract with the Department of Transportation, or (ii) a
10subcontractor who enters into a contract pursuant to Section
112705-615 of the Civil Administrative Code of Illinois claims
12that additional payment is due under the terms of the contract,
13or for any other reason arising out of the performance of the
14contract, and the Department has not agreed during the ordinary
15course of contract administration that the payment is due, then
16the contractor or subcontractor may file a claim according to
17the requirements and procedures specified by the Department. If
18written notifications are not given, or if the Department is
19not afforded reasonable access by the contractor or
20subcontractor to complete records of actual costs or additional
21time claimed, or if a claim is not filed according to the
22procedures and within the time specified in the rules of the
23Department of Transportation, then the contractor or
24subcontractor's claim is waived and the Department is released
25from any and all demands and claims under that contract by the

 

 

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1contract or subcontractor. The fact that the contractor or
2subcontractor has provided a proper notification, provided a
3properly filed claim, or provided the Department access to
4records of actual cost shall not in any way be construed as
5proving or substantiating the validity of the claim. If the
6claim, after consideration by the Department, is found to have
7merit, the Department will make an equitable adjustment either
8in the amount of costs to be paid according to the basis of
9payment specified by the Department or in the time required for
10the work, or both. If the Department finds the claim to be
11without merit, no adjustment will be made.