Rep. John Connor

Filed: 5/15/2018





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2    AMENDMENT NO. ______. Amend Senate Bill 3560 by replacing
3everything after the enacting clause with the following:
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)



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1    Sec. 8. Vendor Payment Program.
2    (a) As used in this Section:
3        "Applicant" means any entity seeking to be designated
4    as a qualified purchaser.
5        "Application period" means the time period when the
6    Program is accepting applications as determined by the
7    Department of Central Management Services.
8        "Assigned penalties" means penalties payable by the
9    State in accordance with this Act that are assigned to the
10    qualified purchaser of an assigned receivable.
11        "Assigned receivable" means the base invoice amount of
12    a qualified account receivable and any associated assigned
13    penalties due, currently and in the future, in accordance
14    with this Act.
15        "Assignment agreement" means an agreement executed and
16    delivered by a participating vendor and a qualified
17    purchaser, in which the participating vendor will assign
18    one or more qualified accounts receivable to the qualified
19    purchaser and make certain representations and warranties
20    in respect thereof.
21        "Base invoice amount" means the unpaid principal
22    amount of the invoice associated with an assigned
23    receivable.
24        "Department" means the Department of Central
25    Management Services.
26        "Medical assistance program" means any program which



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1    provides medical assistance under Article V of the Illinois
2    Public Aid Code, including Medicaid.
3        "Participating vendor" means a vendor whose
4    application for the sale of a qualified account receivable
5    is accepted for purchase by a qualified purchaser under the
6    Program terms.
7        "Program" means a Vendor Payment Program.
8        "Prompt payment penalties" means penalties payable by
9    the State in accordance with this Act.
10        "Purchase price" means 100% of the base invoice amount
11    associated with an assigned receivable minus: (1) any
12    deductions against the assigned receivable arising from
13    State offsets; and (2) if and to the extent exercised by a
14    qualified purchaser, other deductions for amounts owed by
15    the participating vendor to the qualified purchaser for
16    State offsets applied against other accounts receivable
17    assigned by the participating vendor to the qualified
18    purchaser under the Program.
19        "Qualified account receivable" means an account
20    receivable due and payable by the State that is outstanding
21    for 90 days or more, is eligible to accrue prompt payment
22    penalties under this Act and is verified by the relevant
23    State agency. A qualified account receivable shall not
24    include any account receivable related to medical
25    assistance program (including Medicaid) payments or any
26    other accounts receivable, the transfer or assignment of



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1    which is prohibited by, or otherwise prevented by,
2    applicable law.
3        "Qualified purchaser" means any entity that, during
4    any application period, is approved by the Department of
5    Central Management Services to participate in the Program
6    on the basis of certain qualifying criteria as determined
7    by the Department.
8        "State offsets" means any amount deducted from
9    payments made by the State in respect of any qualified
10    account receivable due to the State's exercise of any
11    offset or other contractual rights against a participating
12    vendor. For the purpose of this Section, "State offsets"
13    include statutorily required administrative fees imposed
14    under the State Comptroller Act.
15        "Sub-participant" means any individual or entity that
16    intends to purchase assigned receivables, directly or
17    indirectly, by or through an applicant or qualified
18    purchaser for the purposes of the Program.
19        "Sub-participant certification" means an instrument
20    executed and delivered to the Department of Central
21    Management Services by a sub-participant, in which the
22    sub-participant certifies its agreement, among others, to
23    be bound by the terms and conditions of the Program as a
24    condition to its participation in the Program as a
25    sub-participant.
26    (b) This Section reflects the provisions of Section 900.125



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1of Title 74 of the Illinois Administrative Code prior to
2January 1, 2018. The requirements of this Section establish the
3criteria for participation by participating vendors and
4qualified purchasers in a Vendor Payment Program. Information
5regarding the Vendor Payment Program may be found at the
6Internet website for the Department of Central Management
8    (c) The State Comptroller and the Department of Central
9Management Services are authorized to establish and implement
10the Program under Section 3-3. This Section applies to all
11qualified accounts receivable not otherwise excluded from
12receiving prompt payment interest under Section 900.120 of
13Title 74 of the Illinois Administrative Code. This Section
14shall not apply to the purchase of any accounts receivable
15related to payments made under a medical assistance program,
16including Medicaid payments, or any other purchase of accounts
17receivable that is otherwise prohibited by law.
18    (d) Under the Program, qualified purchasers may purchase
19from participating vendors certain qualified accounts
20receivable owed by the State to the participating vendors. A
21participating vendor shall not simultaneously apply to sell the
22same qualified account receivable to more than one qualified
23purchaser. In consideration of the payment of the purchase
24price, a participating vendor shall assign to the qualified
25purchaser all of its rights to payment of the qualified account
26receivable, including all current and future prompt payment



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1penalties due to that qualified account receivable in
2accordance with this Act.
3    (e) A vendor may apply to participate in the Program if:
4        (1) the vendor is owed an account receivable by the
5    State for which prompt payment penalties have commenced
6    accruing;
7        (2) the vendor's account receivable is eligible to
8    accrue prompt payment penalty interest under this Act;
9        (3) the vendor's account receivable is not for payments
10    under a medical assistance program; and
11        (4) the vendor's account receivable is not prohibited
12    by, or otherwise prevented by, applicable law from being
13    transferred or assigned under this Section.
14    (f) The Department shall review and approve or disapprove
15each applicant seeking a qualified purchaser designation.
16Factors to be considered by the Department in determining
17whether an applicant shall be designated as a qualified
18purchaser include, but are not limited to, the following:
19        (1) the qualified purchaser's agreement to commit a
20    minimum purchase amount as established from time to time by
21    the Department based upon the current needs of the Program
22    and the qualified purchaser's demonstrated ability to fund
23    its commitment;
24        (2) the demonstrated ability of a qualified
25    purchaser's sub-participants to fund their portions of a
26    qualified purchaser's minimum purchase commitment;



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1        (3) the ability of a qualified purchaser and its
2    sub-participants to meet standards of responsibility
3    substantially in accordance with the requirements of the
4    Standards of Responsibility found in subsection (b) of
5    Section 1.2046 of Title 44 of the Illinois Administrative
6    Code concerning government contracts, procurement, and
7    property management;
8        (4) the agreement of each qualified purchaser, at its
9    sole cost and expense, to administer and facilitate the
10    operation of the Program with respect to that qualified
11    purchaser, including, without limitation, assisting
12    potential participating vendors with the application and
13    assignment process;
14        (5) the agreement of each qualified purchaser, at its
15    sole cost and expense, to establish a website that is
16    determined by the Department to be sufficient to administer
17    the Program in accordance with the terms and conditions of
18    the Program;
19        (6) the agreement of each qualified purchaser, at its
20    sole cost and expense, to market the Program to potential
21    participating vendors;
22        (7) the agreement of each qualified purchaser, at its
23    sole cost and expense, to educate participating vendors
24    about the benefits and risks associated with participation
25    in the Program;
26        (8) the agreement of each qualified purchaser, at its



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1    sole cost and expense, to deposit funds into, release funds
2    from, and otherwise maintain all required accounts in
3    accordance with the terms and conditions of the Program.
4    Subject to the Program terms, all required accounts shall
5    be maintained and controlled by the qualified purchaser at
6    the qualified purchaser's sole cost and at no cost, whether
7    in the form of fees or otherwise, to the participating
8    vendors;
9        (9) the agreement of each qualified purchaser, at its
10    sole cost and expense, to submit a monthly written report,
11    in an acceptable electronic format, to the State
12    Comptroller or its designee and the Department or its
13    designee, within 10 days after the end of each month,
14    which, unless otherwise specified by the Department, at a
15    minimum, shall contain:
16            (A) a listing of each assigned receivable
17        purchased by that qualified purchaser during the
18        month, specifying the base invoice amount and invoice
19        date of that assigned receivable and the name of the
20        participating vendor, State contract number, voucher
21        number, and State agency associated with that assigned
22        receivable;
23            (B) a listing of each assigned receivable with
24        respect to which the qualified purchaser has received
25        payment of the base invoice amount from the State
26        during that month, including the amount of and date on



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1        which that payment was made and the name of the
2        participating vendor, State contract number, voucher
3        number, and State agency associated with the assigned
4        receivable, and identifying the relevant application
5        period for each assigned receivable;
6            (C) a listing of any payments of assigned penalties
7        received from the State during the month, including the
8        amount of and date on which the payment was made, the
9        name of the participating vendor, the voucher number
10        for the assigned penalty receivable, and the
11        associated assigned receivable, including the State
12        contract number, voucher number, and State agency
13        associated with the assigned receivable, and
14        identifying the relevant application period for each
15        assigned receivable;
16            (D) the aggregate number and dollar value of
17        assigned receivables purchased by the qualified
18        purchaser from the date on which that qualified
19        purchaser commenced participating in the Program
20        through the last day of the month;
21            (E) the aggregate number and dollar value of
22        assigned receivables purchased by the qualified
23        purchaser for which no payment by the State of the base
24        invoice amount has yet been received, from the date on
25        which the qualified purchaser commenced participating
26        in the Program through the last day of the month;



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1            (F) the aggregate number and dollar value of
2        invoices purchased by the qualified purchaser for
3        which no voucher has been submitted; and
4            (G) any other data the State Comptroller and the
5        Department may reasonably request from time to time;
6        (10) the agreement of each qualified purchaser to use
7    its reasonable best efforts, and for any sub-participant to
8    cause a qualified purchaser to use its reasonable best
9    efforts, to diligently pursue receipt of assigned
10    penalties associated with the assigned receivables,
11    including, without limitation, by promptly notifying the
12    relevant State agency that an assigned penalty is due and,
13    if necessary, seeking payment of assigned penalties
14    through the Illinois Court of Claims; and
15        (11) the agreement of each qualified purchaser and any
16    sub-participant to use their reasonable best efforts to
17    implement the Program terms and to perform their
18    obligations under the Program in a timely fashion.
19    (g) Each qualified purchaser's performance and
20implementation of its obligations under subsection (f) shall be
21subject to review by the Department and the State Comptroller
22at any time to confirm that the qualified purchaser is
23undertaking those obligations in a manner consistent with the
24terms and conditions of the Program. A qualified purchaser's
25failure to so perform its obligations including, without
26limitation, its obligations to diligently pursue receipt of



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1assigned penalties associated with assigned receivables, shall
2be grounds for the Department and the State Comptroller to
3terminate the qualified purchaser's participation in the
4Program under subsection (i). Any such termination shall be
5without prejudice to any rights a participating vendor may have
6against that qualified purchaser, in law or in equity,
7including, without limitation, the right to enforce the terms
8of the assignment agreement and of the Program against the
9qualified purchaser.
10    (h) In determining whether any applicant shall be
11designated as a qualified purchaser, the Department shall have
12the right to review or approve sub-participants that intend to
13purchase assigned receivables, directly or indirectly, by or
14through the applicant. The Department reserves the right to
15reject or terminate the designation of any applicant as a
16qualified purchaser or require an applicant to exclude a
17proposed sub-participant in order to become or remain a
18qualified purchaser on the basis of a review, whether prior to
19or after the designation. Each applicant and each qualified
20purchaser has an affirmative obligation to promptly notify the
21Department of any change or proposed change in the identity of
22the sub-participants that it disclosed to the Department no
23later than 3 business days after that change. Each
24sub-participant shall be required to execute a sub-participant
25certification that will be attached to the corresponding
26qualified purchaser designation. Sub-participants shall meet,



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1at a minimum, the requirements of paragraphs (2), (3), (10),
2and (11) of subsection (f).
3    (i) The Program, as codified under this Section, shall
4continue until terminated or suspended as follows:
5        (1) The Program may be terminated or suspended: (A) by
6    the State Comptroller, after consulting with the
7    Department, by giving 10 days prior written notice to the
8    Department and the qualified purchasers in the Program; or
9    (B) by the Department, after consulting with the State
10    Comptroller, by giving 10 days prior written notice to the
11    State Comptroller and the qualified purchasers in the
12    Program.
13        (2) In the event a qualified purchaser or
14    sub-participant breaches or fails to meet any of the terms
15    or conditions of the Program, that qualified purchaser or
16    sub-participant may be terminated from the Program: (A) by
17    the State Comptroller, after consulting with the
18    Department. The termination shall be effective immediately
19    upon the State Comptroller giving written notice to the
20    Department and the qualified purchaser or sub-participant;
21    or (B) by the Department, after consulting with the State
22    Comptroller. The termination shall be effective
23    immediately upon the Department giving written notice to
24    the State Comptroller and the qualified purchaser or
25    sub-participant.
26        (3) A qualified purchaser or sub-participant may



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1    terminate its participation in the Program, solely with
2    respect to its own participation in the Program, in the
3    event of any change to this Act from the form that existed
4    on the date that the qualified purchaser or the
5    sub-participant, as applicable, submitted the necessary
6    documentation for admission into the Program if the change
7    materially and adversely affects the qualified purchaser's
8    or the sub-participant's ability to purchase and receive
9    payment on receivables on the terms described in this
10    Section.
11    If the Program, a qualified purchaser, or a sub-participant
12is terminated under paragraphs (1) or (2) of this subsection
13(i), the Program, qualified purchaser, or sub-participant may
14be reinstated only by written agreement of the State
15Comptroller and the Department. No termination or suspension
16under paragraphs (1), (2), or (3) of this subsection (i) shall
17alter or affect the qualified purchaser's or sub-participant's
18obligations with respect to assigned receivables purchased by
19or through the qualified purchaser prior to the termination.
20    (30 ILCS 540/9 new)
21    Sec. 9. Vendor Payment Program financial backer
23    (a) Within 60 days after the effective date of this
24amendatory Act of the 100th General Assembly, at the time of
25application, and annually on July 1 of each year, each



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



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1        (1) names, addresses, dates of birth, and percentages
2    of interest of all beneficiaries;
3        (2) any indirect earnings resulting from the Program;
4    and
5        (3) any earnings associated with the Program to any
6    parties not previously disclosed.
7    (c) Each qualified purchaser must submit a statement to the
8State Comptroller and the Department of Central Management
9Services disclosing whether such qualified purchaser or any
10related person, director, owner, officer, or financial backer
11has previously or currently retained or contracted with any
12registered lobbyist, lawyer, accountant, or other consultant
13to prepare the disclosure required under this Section.
14    (30 ILCS 540/10 new)
15    Sec. 10. Vendor Payment Program audit. The Office of the
16Auditor General shall perform a performance audit of the
17Program established under Section 8. The audit shall include,
18but not be limited to, a review of the administration of the
19Program and compliance with requirements applicable to
20participating vendors, qualified purchasers, qualified
21accounts receivable, and financial backer disclosures. The
22audit shall cover the Program's operations for fiscal years
232019 and 2020. Upon its completion and release, the Auditor
24General's report shall be posted on the Internet website of the
25Auditor General.



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1    (30 ILCS 540/11 new)
2    Sec. 11. Vendor Payment Program accountability portal. The
3Department of Central Management Services and the State
4Comptroller shall publish on their respective Internet
5websites: (1) the monthly report information submitted under
6paragraph 9 of subsection (f) of Section 8; and (2) the
7information required to be submitted under Section 9.
8    Section 99. Effective date. This Act takes effect upon
9becoming law.".