97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3944

 

Introduced 1/2/2013, by Sen. Martin A. Sandoval

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 550/1  from Ch. 29, par. 15

    Amends the Public Construction Bond Act. Provides that contractors are required to furnish, supply, and deliver a bond for public work of any kind costing over $250,000 (instead of $50,000) to be performed for the State. Provides that contractors are required to furnish, supply, and deliver a bond for public work of any kind costing over $50,000 (instead of $5,000) to be performed for a political subdivision of the State.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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 Public Construction Bond Act is amended by
5changing Section 1 as follows:
 
6    (30 ILCS 550/1)  (from Ch. 29, par. 15)
7    Sec. 1. Except as otherwise provided by this Act, all
8officials, boards, commissions, or agents of this State in
9making contracts for public work of any kind costing over
10$250,000 $50,000 to be performed for the State, and all
11officials, boards, commissions, or agents of any political
12subdivision of this State in making contracts for public work
13of any kind costing over $50,000 $5,000 to be performed for the
14political subdivision, shall require every contractor for the
15work to furnish, supply, and deliver a bond to the State, or to
16the political subdivision thereof entering into the contract,
17as the case may be, with good and sufficient sureties. The
18amount of the bond shall be fixed by the officials, boards,
19commissions, commissioners or agents, and the bond, among other
20conditions, shall be conditioned for the completion of the
21contract, for the payment of material used in the work and for
22all labor performed in the work, whether by subcontractor or
23otherwise.

 

 

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1    If the contract is for emergency repairs as provided in the
2Illinois Procurement Code, proof of payment for all labor,
3materials, apparatus, fixtures, and machinery may be furnished
4in lieu of the bond required by this Section.
5    Each such bond is deemed to contain the following
6provisions whether such provisions are inserted in such bond or
7not:
8    "The principal and sureties on this bond agree that all the
9undertakings, covenants, terms, conditions and agreements of
10the contract or contracts entered into between the principal
11and the State or any political subdivision thereof will be
12performed and fulfilled and to pay all persons, firms and
13corporations having contracts with the principal or with
14subcontractors, all just claims due them under the provisions
15of such contracts for labor performed or materials furnished in
16the performance of the contract on account of which this bond
17is given, when such claims are not satisfied out of the
18contract price of the contract on account of which this bond is
19given, after final settlement between the officer, board,
20commission or agent of the State or of any political
21subdivision thereof and the principal has been made.".
22    Each bond securing contracts between the Capital
23Development Board or any board of a public institution of
24higher education and a contractor shall contain the following
25provisions, whether the provisions are inserted in the bond or
26not:

 

 

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1    "Upon the default of the principal with respect to
2undertakings, covenants, terms, conditions, and agreements,
3the termination of the contractor's right to proceed with the
4work, and written notice of that default and termination by the
5State or any political subdivision to the surety ("Notice"),
6the surety shall promptly remedy the default by taking one of
7the following actions:
8        (1) The surety shall complete the work pursuant to a
9    written takeover agreement, using a completing contractor
10    jointly selected by the surety and the State or any
11    political subdivision; or
12        (2) The surety shall pay a sum of money to the obligee,
13    up to the penal sum of the bond, that represents the
14    reasonable cost to complete the work that exceeds the
15    unpaid balance of the contract sum.
16    The surety shall respond to the Notice within 15 working
17days of receipt indicating the course of action that it intends
18to take or advising that it requires more time to investigate
19the default and select a course of action. If the surety
20requires more than 15 working days to investigate the default
21and select a course of action or if the surety elects to
22complete the work with a completing contractor that is not
23prepared to commence performance within 15 working days after
24receipt of Notice, and if the State or any political
25subdivision determines it is in the best interest of the State
26to maintain the progress of the work, the State or any

 

 

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1political subdivision may continue to work until the completing
2contractor is prepared to commence performance. Unless
3otherwise agreed to by the procuring agency, in no case may the
4surety take longer than 30 working days to advise the State or
5political subdivision on the course of action it intends to
6take. The surety shall be liable for reasonable costs incurred
7by the State or any political subdivision to maintain the
8progress to the extent the costs exceed the unpaid balance of
9the contract sum, subject to the penal sum of the bond.".
10    The surety bond required by this Section may be acquired
11from the company, agent or broker of the contractor's choice.
12The bond and sureties shall be subject to the right of
13reasonable approval or disapproval, including suspension, by
14the State or political subdivision thereof concerned. In the
15case of State construction contracts, a contractor shall not be
16required to post a cash bond or letter of credit in addition to
17or as a substitute for the surety bond required by this
18Section.
19    When other than motor fuel tax funds, federal-aid funds, or
20other funds received from the State are used, a political
21subdivision may allow the contractor to provide a
22non-diminishing irrevocable bank letter of credit, in lieu of
23the bond required by this Section, on contracts under $100,000
24to comply with the requirements of this Section. Any such bank
25letter of credit shall contain all provisions required for
26bonds by this Section.

 

 

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1(Source: P.A. 95-1011, eff. 12-15-08; 96-1000, eff. 7-2-10.)