SB3560 EnrolledLRB100 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) The Department shall review and approve or disapprove
8each applicant seeking a qualified purchaser designation.
9Factors to be considered by the Department in determining
10whether an applicant shall be designated as a qualified
11purchaser include, but are not limited to, the following:
12        (1) the qualified purchaser's agreement to commit a
13    minimum purchase amount as established from time to time by
14    the Department based upon the current needs of the Program
15    and the qualified purchaser's demonstrated ability to fund
16    its commitment;
17        (2) the demonstrated ability of a qualified
18    purchaser's sub-participants to fund their portions of a
19    qualified purchaser's minimum purchase commitment;
20        (3) the ability of a qualified purchaser and its
21    sub-participants to meet standards of responsibility
22    substantially in accordance with the requirements of the
23    Standards of Responsibility found in subsection (b) of
24    Section 1.2046 of Title 44 of the Illinois Administrative
25    Code concerning government contracts, procurement, and
26    property management;

 

 

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

 

 

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

 

 

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1        amount of and date on which the payment was made, the
2        name of the participating vendor, the voucher number
3        for the assigned penalty receivable, and the
4        associated assigned receivable, including the State
5        contract number, voucher number, and State agency
6        associated with the assigned receivable, and
7        identifying the relevant application period for each
8        assigned receivable;
9            (D) the aggregate number and dollar value of
10        assigned receivables purchased by the qualified
11        purchaser from the date on which that qualified
12        purchaser commenced participating in the Program
13        through the last day of the month;
14            (E) the aggregate number and dollar value of
15        assigned receivables purchased by the qualified
16        purchaser for which no payment by the State of the base
17        invoice amount has yet been received, from the date on
18        which the qualified purchaser commenced participating
19        in the Program through the last day of the month;
20            (F) the aggregate number and dollar value of
21        invoices purchased by the qualified purchaser for
22        which no voucher has been submitted; and
23            (G) any other data the State Comptroller and the
24        Department may reasonably request from time to time;
25        (10) the agreement of each qualified purchaser to use
26    its reasonable best efforts, and for any sub-participant to

 

 

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

 

 

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

 

 

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

 

 

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1    or the sub-participant's ability to purchase and receive
2    payment on receivables on the terms described in this
3    Section.
4    If the Program, a qualified purchaser, or a sub-participant
5is terminated or suspended under paragraphs (1) or (2) of this
6subsection (i), the Program, qualified purchaser, or
7sub-participant may be reinstated only by written agreement of
8the State Comptroller and the Department. No termination or
9suspension under paragraphs (1), (2), or (3) of this subsection
10(i) shall alter or affect the qualified purchaser's or
11sub-participant's obligations with respect to assigned
12receivables purchased by or through the qualified purchaser
13prior to the termination.
 
14    (30 ILCS 540/9 new)
15    Sec. 9. Vendor Payment Program financial backer
16disclosure.
17    (a) Within 60 days after the effective date of this
18amendatory Act of the 100th General Assembly, at the time of
19application, and annually on July 1 of each year, each
20qualified purchaser shall submit to the Department and the
21State Comptroller the following information about each person,
22director, owner, officer, association, financial backer,
23partnership, other entity, corporation, or trust with an
24indirect or direct financial interest in each qualified
25purchaser:

 

 

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1        (1) percent ownership;
2        (2) type of ownership;
3        (3) first name, middle name, last name, maiden name (if
4    applicable), including aliases or former names;
5        (4) mailing address;
6        (5) type of business entity, if applicable;
7        (6) dates and jurisdiction of business formation or
8    incorporation, if applicable;
9        (7) names of controlling shareholders, class of stock,
10    percentage ownership;
11        (8) any indirect earnings resulting from the Program;
12    and
13        (9) any earnings associated with the Program to any
14    parties not previously disclosed.
15    (b) Within 60 days after the effective date of this
16amendatory Act of the 100th General Assembly, at the time of
17application, and annually on July 1 of each year, each trust
18associated with the qualified purchaser shall submit to the
19Department and the State Comptroller the following
20information:
21        (1) names, addresses, dates of birth, and percentages
22    of interest of all beneficiaries;
23        (2) any indirect earnings resulting from the Program;
24    and
25        (3) any earnings associated with the Program to any
26    parties not previously disclosed.

 

 

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1    (c) Each qualified purchaser must submit a statement to the
2State Comptroller and the Department of Central Management
3Services disclosing whether such qualified purchaser or any
4related person, director, owner, officer, or financial backer
5has previously or currently retained or contracted with any
6registered lobbyist, lawyer, accountant, or other consultant
7to prepare the disclosure required under this Section.
 
8    (30 ILCS 540/10 new)
9    Sec. 10. Vendor Payment Program audit. The Office of the
10Auditor General shall perform a performance audit of the
11Program established under Section 8. The audit shall include,
12but not be limited to, a review of the administration of the
13Program and compliance with requirements applicable to
14participating vendors, qualified purchasers, qualified
15accounts receivable, and financial backer disclosures. The
16audit shall cover the Program's operations for fiscal years
172019 and 2020. Upon its completion and release, the Auditor
18General's report shall be posted on the Internet website of the
19Auditor General.
 
20    (30 ILCS 540/11 new)
21    Sec. 11. Vendor Payment Program accountability portal. The
22Department of Central Management Services and the State
23Comptroller shall publish on their respective Internet
24websites: (1) the monthly report information submitted under

 

 

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1paragraph 9 of subsection (f) of Section 8; and (2) the
2information required to be submitted under Section 9.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.