SB3560 EngrossedLRB100 17563 RJF 32733 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 State Prompt Payment Act is amended by
5adding Sections 3-3.5, 8, 9, 10, and 11 as follows:
 
6    (30 ILCS 540/3-3.5 new)
7    Sec. 3-3.5. Vendor payment contracts. Any contract
8executed under the Vendor Payment Program specified in Section
9900.125 of Title 74 of the Illinois Administrative Code prior
10to June 30, 2018 shall remain in effect until those contracts
11have expired. Those parties with existing contracts shall
12comply with additional reporting requirements established
13under this amendatory Act of the 100th General Assembly or
14rules adopted hereunder.
 
15    (30 ILCS 540/8 new)
16    Sec. 8. Vendor Payment Program.
17    (a) As used in this Section:
18        "Applicant" means any entity seeking to be designated
19    as a qualified purchaser.
20        "Application period" means the time period when the
21    Program is accepting applications as determined by the
22    Department of Central Management Services.

 

 

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1        "Assigned penalties" means penalties payable by the
2    State in accordance with this Act that are assigned to the
3    qualified purchaser of an assigned receivable.
4        "Assigned receivable" means the base invoice amount of
5    a qualified account receivable and any associated assigned
6    penalties due, currently and in the future, in accordance
7    with this Act.
8        "Assignment agreement" means an agreement executed and
9    delivered by a participating vendor and a qualified
10    purchaser, in which the participating vendor will assign
11    one or more qualified accounts receivable to the qualified
12    purchaser and make certain representations and warranties
13    in respect thereof.
14        "Base invoice amount" means the unpaid principal
15    amount of the invoice associated with an assigned
16    receivable.
17        "Department" means the Department of Central
18    Management Services.
19        "Medical assistance program" means any program which
20    provides medical assistance under Article V of the Illinois
21    Public Aid Code, including Medicaid.
22        "Participating vendor" means a vendor whose
23    application for the sale of a qualified account receivable
24    is accepted for purchase by a qualified purchaser under the
25    Program terms.
26        "Program" means a Vendor Payment Program.

 

 

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1        "Prompt payment penalties" means penalties payable by
2    the State in accordance with this Act.
3        "Purchase price" means 100% of the base invoice amount
4    associated with an assigned receivable minus: (1) any
5    deductions against the assigned receivable arising from
6    State offsets; and (2) if and to the extent exercised by a
7    qualified purchaser, other deductions for amounts owed by
8    the participating vendor to the qualified purchaser for
9    State offsets applied against other accounts receivable
10    assigned by the participating vendor to the qualified
11    purchaser under the Program.
12        "Qualified account receivable" means an account
13    receivable due and payable by the State that is outstanding
14    for 90 days or more, is eligible to accrue prompt payment
15    penalties under this Act and is verified by the relevant
16    State agency. A qualified account receivable shall not
17    include any account receivable related to medical
18    assistance program (including Medicaid) payments or any
19    other accounts receivable, the transfer or assignment of
20    which is prohibited by, or otherwise prevented by,
21    applicable law.
22        "Qualified purchaser" means any entity that, during
23    any application period, is approved by the Department of
24    Central Management Services to participate in the Program
25    on the basis of certain qualifying criteria as determined
26    by the Department.

 

 

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1        "State offsets" means any amount deducted from
2    payments made by the State in respect of any qualified
3    account receivable due to the State's exercise of any
4    offset or other contractual rights against a participating
5    vendor. For the purpose of this Section, "State offsets"
6    include statutorily required administrative fees imposed
7    under the State Comptroller Act.
8        "Sub-participant" means any individual or entity that
9    intends to purchase assigned receivables, directly or
10    indirectly, by or through an applicant or qualified
11    purchaser for the purposes of the Program.
12        "Sub-participant certification" means an instrument
13    executed and delivered to the Department of Central
14    Management Services by a sub-participant, in which the
15    sub-participant certifies its agreement, among others, to
16    be bound by the terms and conditions of the Program as a
17    condition to its participation in the Program as a
18    sub-participant.
19    (b) This Section reflects the provisions of Section 900.125
20of Title 74 of the Illinois Administrative Code prior to
21January 1, 2018. The requirements of this Section establish the
22criteria for participation by participating vendors and
23qualified purchasers in a Vendor Payment Program. Information
24regarding the Vendor Payment Program may be found at the
25Internet website for the Department of Central Management
26Services.

 

 

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1    (c) The State Comptroller and the Department of Central
2Management Services are authorized to establish and implement
3the Program under Section 3-3. This Section applies to all
4qualified accounts receivable not otherwise excluded from
5receiving prompt payment interest under Section 900.120 of
6Title 74 of the Illinois Administrative Code. This Section
7shall not apply to the purchase of any accounts receivable
8related to payments made under a medical assistance program,
9including Medicaid payments, or any other purchase of accounts
10receivable that is otherwise prohibited by law.
11    (d) Under the Program, qualified purchasers may purchase
12from participating vendors certain qualified accounts
13receivable owed by the State to the participating vendors. A
14participating vendor shall not simultaneously apply to sell the
15same qualified account receivable to more than one qualified
16purchaser. In consideration of the payment of the purchase
17price, a participating vendor shall assign to the qualified
18purchaser all of its rights to payment of the qualified account
19receivable, including all current and future prompt payment
20penalties due to that qualified account receivable in
21accordance with this Act.
22    (e) A vendor may apply to participate in the Program if:
23        (1) the vendor is owed an account receivable by the
24    State for which prompt payment penalties have commenced
25    accruing;
26        (2) the vendor's account receivable is eligible to

 

 

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1    accrue prompt payment penalty interest under this Act;
2        (3) the vendor's account receivable is not for payments
3    under a medical assistance program; and
4        (4) the vendor's account receivable is not prohibited
5    by, or otherwise prevented by, applicable law from being
6    transferred or assigned under this Section.
7    (f) Factors to be considered by the Department in
8determining whether an applicant shall be designated as a
9qualified purchaser include, but are not limited to, the
10following:
11        (1) the qualified purchaser's agreement to commit a
12    minimum purchase amount as established from time to time by
13    the Department based upon the current needs of the Program
14    and the qualified purchaser's demonstrated ability to fund
15    its commitment;
16        (2) the demonstrated ability of a qualified
17    purchaser's sub-participants to fund their portions of a
18    qualified purchaser's minimum purchase commitment;
19        (3) the ability of a qualified purchaser and its
20    sub-participants to meet standards of responsibility
21    substantially in accordance with the requirements of the
22    Standards of Responsibility found in Section 1.2046 of
23    Title 44 of the Illinois Administrative Code concerning
24    government contracts, procurement, and property
25    management;
26        (4) the agreement of each qualified purchaser, at its

 

 

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1    sole cost and expense, to administer and facilitate the
2    operation of the Program with respect to that qualified
3    purchaser, including, without limitation, assisting
4    potential participating vendors with the application and
5    assignment process;
6        (5) the agreement of each qualified purchaser, at its
7    sole cost and expense, to establish a website that is
8    determined by the Department to be sufficient to administer
9    the Program in accordance with the terms and conditions of
10    the Program;
11        (6) the agreement of each qualified purchaser, at its
12    sole cost and expense, to market the Program to potential
13    participating vendors;
14        (7) the agreement of each qualified purchaser, at its
15    sole cost and expense, to educate participating vendors
16    about the benefits and risks associated with participation
17    in the Program;
18        (8) the agreement of each qualified purchaser, at its
19    sole cost and expense, to deposit funds into, release funds
20    from, and otherwise maintain all required accounts in
21    accordance with the terms and conditions of the Program.
22    Subject to the Program terms, all required accounts shall
23    be maintained and controlled by the qualified purchaser at
24    the qualified purchaser's sole cost and at no cost, whether
25    in the form of fees or otherwise, to the participating
26    vendors;

 

 

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1        (9) the agreement of each qualified purchaser, at its
2    sole cost and expense, to submit a monthly written report,
3    in both hard copy and Excel format, to the State
4    Comptroller or its designee and the Department or its
5    designee, within 10 days after the end of each month,
6    which, unless otherwise specified by the Department, at a
7    minimum, shall contain:
8            (A) a listing of each assigned receivable
9        purchased by that qualified purchaser during the
10        month, specifying the base invoice amount and invoice
11        date of that assigned receivable and the name of the
12        participating vendor, State contract number, voucher
13        number, and State agency associated with that assigned
14        receivable;
15            (B) a listing of each assigned receivable with
16        respect to which the qualified purchaser has received
17        payment of the base invoice amount from the State
18        during that month, including the amount of and date on
19        which that payment was made and the name of the
20        participating vendor, State contract number, voucher
21        number, and State agency associated with the assigned
22        receivable, and identifying the relevant application
23        period for each assigned receivable;
24            (C) a listing of any payments of assigned penalties
25        received from the State during the month, including the
26        amount of and date on which the payment was made, the

 

 

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1        name of the participating vendor, the voucher number
2        for the assigned penalty receivable, and the
3        associated assigned receivable, including the State
4        contract number, voucher number, and State agency
5        associated with the assigned receivable, and
6        identifying the relevant application period for each
7        assigned receivable;
8            (D) the aggregate number and dollar value of
9        assigned receivables purchased by the qualified
10        purchaser from the date on which that qualified
11        purchaser commenced participating in the Program
12        through the last day of the month;
13            (E) the aggregate number and dollar value of
14        assigned receivables purchased by the qualified
15        purchaser for which no payment by the State of the base
16        invoice amount has yet been received, from the date on
17        which the qualified purchaser commenced participating
18        in the Program through the last day of the month; and
19            (F) any other data the State Comptroller and the
20        Department may reasonably request from time to time;
21        (10) the agreement of each qualified purchaser to use
22    its reasonable best efforts, and for any sub-participant to
23    cause a qualified purchaser to use its reasonable best
24    efforts, to diligently pursue receipt of assigned
25    penalties associated with the assigned receivables,
26    including, without limitation, by promptly notifying the

 

 

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1    relevant State agency that an assigned penalty is due and,
2    if necessary, seeking payment of assigned penalties
3    through the Illinois Court of Claims; and
4        (11) the agreement of each qualified purchaser and any
5    sub-participant to use their reasonable best efforts to
6    implement the Program terms and to perform their
7    obligations under the Program in a timely fashion.
8    (g) Each qualified purchaser's performance and
9implementation of its obligations under subsection (f) shall be
10subject to review by the Department and the State Comptroller
11at any time to confirm that the qualified purchaser is
12undertaking those obligations in a manner consistent with the
13terms and conditions of the Program. A qualified purchaser's
14failure to so perform its obligations including, without
15limitation, its obligations to diligently pursue receipt of
16assigned penalties associated with assigned receivables, shall
17be grounds for the Department and the State Comptroller to
18terminate the qualified purchaser's participation in the
19Program under subsection (i). Any such termination shall be
20without prejudice to any rights a participating vendor may have
21against that qualified purchaser, in law or in equity,
22including, without limitation, the right to enforce the terms
23of the assignment agreement and of the Program against the
24qualified purchaser.
25    (h) In determining whether any applicant shall be
26designated as a qualified purchaser, the Department shall have

 

 

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1the right to review or approve sub-participants that intend to
2purchase assigned receivables, directly or indirectly, by or
3through the applicant. The Department reserves the right to
4reject or terminate the designation of any applicant as a
5qualified purchaser or require an applicant to exclude a
6proposed sub-participant in order to become or remain a
7qualified purchaser on the basis of a review, whether prior to
8or after the designation. Each applicant and each qualified
9purchaser has an affirmative obligation to promptly notify the
10Department of any change or proposed change in the identity of
11the sub-participants that it disclosed to the Department no
12later than 3 business days after that change. Each
13sub-participant shall be required to execute a sub-participant
14certification that will be attached to the corresponding
15qualified purchaser designation. Sub-participants shall meet,
16at a minimum, the requirements of paragraphs (2), (3), (10),
17and (11) of subsection (f).
18    (i) The Program, as codified under this Section, shall
19commence July 1, 2018, and shall continue until terminated as
20follows:
21        (1) The Program may be terminated: (A) by the State
22    Comptroller, after consulting with the Department, by
23    giving 10 days prior written notice to the Department and
24    the qualified purchasers in the Program; or (B) by the
25    Department, after consulting with the State Comptroller,
26    by giving 10 days prior written notice to the State

 

 

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1    Comptroller and the qualified purchasers in the Program.
2        (2) In the event a qualified purchaser or
3    sub-participant breaches or fails to meet any of the terms
4    or conditions of the Program, that qualified purchaser or
5    sub-participant may be terminated from the Program: (A) by
6    the State Comptroller, after consulting with the
7    Department. The termination shall be effective immediately
8    upon the State Comptroller giving written notice to the
9    Department and the qualified purchaser or sub-participant;
10    or (B) by the Department, after consulting with the State
11    Comptroller. The termination shall be effective
12    immediately upon the Department giving written notice to
13    the State Comptroller and the qualified purchaser or
14    sub-participant.
15        (3) A qualified purchaser or sub-participant may
16    terminate its participation in the Program, solely with
17    respect to its own participation in the Program, in the
18    event of any change to this Act from the form that existed
19    on the date that the qualified purchaser or the
20    sub-participant, as applicable, submitted the necessary
21    documentation for admission into the Program if the change
22    materially and adversely affects the qualified purchaser's
23    or the sub-participant's ability to purchase and receive
24    payment on receivables on the terms described in this
25    Section.
26    If the Program, a qualified purchaser, or a sub-participant

 

 

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1is terminated under paragraphs (1) or (2) of this subsection
2(i), the Program, qualified purchaser, or sub-participant may
3be reinstated only by written agreement of the State
4Comptroller and the Department. No termination under
5paragraphs (1), (2), or (3) of this subsection (i) shall alter
6or affect the qualified purchaser's or sub-participant's
7obligations with respect to assigned receivables purchased by
8or through the qualified purchaser prior to the termination.
 
9    (30 ILCS 540/9 new)
10    Sec. 9. Vendor Payment Program financial backer
11disclosure.
12    (a) The Department of Central Management Services shall
13collect and certify the following information from each
14qualified purchaser about each person, director, owner,
15officer, association, financial backer, partnership, other
16entity, corporation, or trust with an indirect or direct
17financial interest in each qualified purchaser:
18        (1) percent ownership;
19        (2) type of ownership;
20        (3) first name, middle name, last name, maiden name (if
21    applicable), including aliases or former names; and
22        (4) resident mailing address, work mailing address,
23    work telephone, and work email address.
24    (b) If a corporation or other entity associated with the
25qualified purchaser, the Department of Central Management

 

 

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1Services shall also collect and certify the following
2information from each qualified purchaser:
3        (1) business name, mailing address, telephone number,
4    and website, if any;
5        (2) type of business entity;
6        (3) dates and jurisdiction of business formation or
7    incorporation;
8        (4) names of controlling shareholders, class of stock,
9    percentage ownership;
10        (5) any indirect earnings resulting from the Program;
11    and
12        (6) any earnings associated with the Program to any
13    parties not previously disclosed.
14    (c) If a trust associated with the qualified purchaser, the
15Department of Central Management Services shall also collect
16and certify the following information:
17        (1) names, addresses, dates of birth, and percentages
18    of interest of all beneficiaries;
19        (2) any indirect earnings resulting from the Program;
20    and
21        (3) any earnings associated with the Program to any
22    parties not previously disclosed.
23    (d) Each person, director, owner, officer, or financial
24backer of a qualified purchaser must submit a statement to the
25Department of Central Management Services disclosing whether
26he or she has previously or currently retained or contracted

 

 

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1with any registered lobbyist, lawyer, or consultant to prepare
2the disclosure required under this Section.
3    (e) The Department of Central Management Services shall
4file information collected under subsections (a), (b), (c), and
5(d) of this Section with the Office of the Comptroller in a
6manner and form prescribed by the Office of the Comptroller.
7The Office of the Comptroller shall make information collected
8under this Section publicly available. The Office of the
9Comptroller shall adopt rules and policies to govern the
10reporting requirements of this Section. These rules and
11policies may be made effective no earlier than July 1, 2018.
 
12    (30 ILCS 540/10 new)
13    Sec. 10. Vendor Payment Program audit. The Office of the
14Auditor General shall perform a performance audit of the
15Program established under Section 8. The audit shall include,
16but not be limited to, a review of the administration of the
17Program and compliance with requirements applicable to
18participating vendors, qualified purchasers, qualified
19accounts receivable, and financial backer disclosures. The
20audit shall cover the Program's operations for fiscal years
212019 and 2020. Upon its completion and release, the Auditor
22General's report shall be posted on the Internet website of the
23Auditor General.
 
24    (30 ILCS 540/11 new)

 

 

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1    Sec. 11. Vendor Payment Program accountability portal. The
2Department of Central Management Services shall publish on its
3Internet website a monthly report disclosing the following:
4        (1) a listing of each assigned receivable with respect
5    to which the qualified purchaser has received payment of
6    the base invoice amount from the State during that month,
7    including the amount of and date on which that payment was
8    made and the name of the participating vendor, State
9    contract number, voucher number, and State agency
10    associated with the assigned receivable, and identifying
11    the relevant application period for each assigned
12    receivable;
13        (2) a listing of any payments of assigned penalties
14    received from the State during the month, including the
15    amount of and date on which the payment was made, the name
16    of the participating vendor, the voucher number for the
17    assigned penalty receivable, and the associated assigned
18    receivable, including the State contract number, voucher
19    number, and State agency associated with the assigned
20    receivable, and identifying the relevant application
21    period for each assigned receivable;
22        (3) the aggregate number and dollar value of assigned
23    receivables purchased by the qualified purchaser from the
24    date on which that qualified purchaser commenced
25    participating in the Program through the last day of the
26    month;

 

 

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1        (4) the aggregate number and dollar value of assigned
2    receivables purchased by the qualified purchaser for which
3    no payment by the State of the base invoice amount has yet
4    been received, from the date on which the qualified
5    purchaser commenced participating in the Program through
6    the last day of the month;
7        (5) the aggregate number and dollar value of invoices
8    purchased by the qualified purchaser for which no
9    appropriation has been authorized; and
10        (6) any other data the State Comptroller and the
11    Department of Central Management Services may reasonably
12    request from time to time.
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.