Illinois General Assembly - Full Text of SB0104
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Full Text of SB0104  101st General Assembly




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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 State Prompt Payment Act is amended by
5changing Sections 1 and 7 as follows:
6    (30 ILCS 540/1)  (from Ch. 127, par. 132.401)
7    Sec. 1. This Act applies to any State official or agency
8authorized to provide for payment from State funds, by virtue
9of any appropriation of the General Assembly, for goods or
10services furnished to the State.
11    For purposes of this Act, "goods or services furnished to
12the State" include but are not limited to (i) covered health
13care provided to eligible members and their covered dependents
14in accordance with the State Employees Group Insurance Act of
151971, including coverage through a physician-owned health
16maintenance organization under Section 6.1 of that Act, (ii)
17prevention, intervention, or treatment services and supports
18for persons with developmental disabilities, mental health
19services, alcohol and substance abuse services, rehabilitation
20services, and early intervention services provided by a vendor,
21and (iii) prevention, intervention, or treatment services and
22supports for youth provided by a vendor by virtue of a
23contractual grant agreement. For the purposes of items (ii) and



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1(iii), a vendor includes but is not limited to sellers of goods
2and services, including community-based organizations that are
3licensed to provide prevention, intervention, or treatment
4services and supports for persons with developmental
5disabilities, mental illness, and substance abuse problems, or
6that provides prevention, intervention, or treatment services
7and supports for youth.
8    For the purposes of this Act, "appropriate State official
9or agency" is defined as the Director or Chief Executive or his
10designee of that State agency or department or facility of such
11agency or department. With respect to covered health care
12provided to eligible members and their dependents in accordance
13with the State Employees Group Insurance Act of 1971,
14"appropriate State official or agency" also includes an
15administrator of a program of health benefits under that Act.
16    As used in this Act, "eligible member" means a member who
17is eligible for health benefits under the State Employees Group
18Insurance Act of 1971, and "member" and "dependent" have the
19meanings ascribed to those terms in that Act.
20    As used in this Act, "a proper bill or invoice" means a
21bill or invoice, including, but not limited to, an invoice
22issued under a contractual grant agreement, that includes the
23information necessary for processing the payment as may be
24specified by a State agency and in rules adopted in accordance
25with this Act. Beginning on and after July 1, 2021, "a proper
26bill or invoice" shall also include the names of all



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1subcontractors or subconsultants to be paid from the bill or
2invoice and the amounts due to each of them, if any.
3(Source: P.A. 100-549, eff. 1-1-18.)
4    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
5    Sec. 7. Payments to subcontractors and material suppliers.
6    (a) When a State official or agency responsible for
7administering a contract submits a voucher to the Comptroller
8for payment to a contractor, that State official or agency
9shall promptly make available electronically the voucher
10number, the date of the voucher, and the amount of the voucher.
11The State official or agency responsible for administering the
12contract shall provide subcontractors and material suppliers,
13known to the State official or agency, with instructions on how
14to access the electronic information.
15    (a-5) When a contractor receives any payment, the
16contractor shall pay each subcontractor and material supplier
17electronically within 10 business days or 15 calendar days,
18whichever occurs earlier, or, if paid by a printed check, the
19printed check must be postmarked within 10 business days or 15
20calendar days, whichever occurs earlier, after receiving
21payment in proportion to the work completed by each
22subcontractor and material supplier its application or pay
23estimate, plus interest received under this Act. When a
24contractor receives any payment, the contractor shall pay each
25lower-tiered subcontractor and material supplier and each



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1subcontractor and material supplier shall make payment to its
2own respective subcontractors and material suppliers. If the
3contractor receives less than the full payment due under the
4public construction contract, the contractor shall be
5obligated to disburse on a pro rata basis those funds received,
6plus interest received under this Act, with the contractor,
7subcontractors and material suppliers each receiving a
8prorated portion based on the amount of payment each has
9earned. When, however, the State official or agency does not
10release the full payment due under the contract because there
11are specific areas of work or materials the State agency or
12official has determined are not suitable for payment, then
13those specific subcontractors or material suppliers involved
14shall not be paid for that portion of work rejected or deemed
15not suitable for payment and all other subcontractors and
16suppliers shall be paid based upon the amount of payment each
17has earned, plus interest received under this Act.
18    (a-10) For construction contracts with the Department of
19Transportation, the contractor, subcontractor, or material
20supplier, regardless of tier, shall not offset, decrease, or
21diminish payment or payments that are due to its subcontractors
22or material suppliers without reasonable cause.
23    A contractor, who refuses to make prompt payment within 10
24business days or 15 calendar days, whichever occurs earlier,
25after receiving payment, in whole or in part, shall provide to
26the subcontractor or material supplier and the public owner or



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1its agent, a written notice of that refusal. The written notice
2shall be made by a contractor no later than 5 calendar days
3after payment is received by the contractor. The written notice
4shall identify the Department of Transportation's contract,
5any subcontract or material purchase agreement, a detailed
6reason for refusal, the value of the payment to be withheld,
7and the specific remedial actions required of the subcontractor
8or material supplier so that payment may be made. Written
9notice of refusal may be given in a form and method which is
10acceptable to the parties and public owner.
11    (b) If the contractor, without reasonable cause, fails to
12make full payment of amounts due under subsection (a) to its
13subcontractors and material suppliers within 10 business days
14or 15 calendar days, whichever occurs earlier, 15 calendar days
15after receipt of payment from the State official or agency, the
16contractor shall pay to its subcontractors and material
17suppliers, in addition to the payment due them, interest in the
18amount of 2% per month, calculated from the expiration of the
1910-business-day period or the 15-calendar-day 15-day period
20until fully paid. This subsection shall further apply to any
21payments made by subcontractors and material suppliers to their
22subcontractors and material suppliers and to all payments made
23to lower tier subcontractors and material suppliers throughout
24the contracting chain.
25        (1) If a contractor, without reasonable cause, fails to
26    make payment in full as provided in subsection (a-5) within



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1    10 business days or 15 calendar days, whichever occurs
2    earlier, 15 calendar days after receipt of payment under
3    the public construction contract, any subcontractor or
4    material supplier to whom payments are owed may file a
5    written notice and request for administrative hearing with
6    the State official or agency setting forth the amount owed
7    by the contractor and the contractor's failure to timely
8    pay the amount owed. The written notice and request for
9    administrative hearing shall identify the public
10    construction contract, the contractor, and the amount
11    owed, and shall contain a sworn statement or attestation to
12    verify the accuracy of the notice. The notice and request
13    for administrative hearing shall be filed with the State
14    official for the public construction contract, with a copy
15    of the notice concurrently provided to the contractor.
16    Notice to the State official may be made by certified or
17    registered mail, messenger service, or personal service,
18    and must include proof of delivery to the State official.
19        (2) The State official or agency, within 15 calendar
20    days after receipt of a subcontractor's or material
21    supplier's written notice and request for administrative
22    hearing, shall hold a hearing convened by an administrative
23    law judge to determine whether the contractor withheld
24    payment, without reasonable cause, from the subcontractors
25    or material suppliers and what amount, if any, is due to
26    the subcontractors or material suppliers, and the



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1    reasonable cause or causes asserted by the contractor. The
2    State official or agency shall provide appropriate notice
3    to the parties of the date, time, and location of the
4    hearing. Each contractor, subcontractor, or material
5    supplier has the right to be represented by counsel at a
6    hearing and to cross-examine witnesses and challenge
7    documents. Upon the request of the subcontractor or
8    material supplier and a showing of good cause, reasonable
9    continuances may be granted by the administrative law
10    judge.
11        (3) Upon a finding by the administrative law judge that
12    the contractor failed to make payment in full, without
13    reasonable cause, as provided in subsection (a-10), then
14    the administrative law judge shall, in writing, order the
15    contractor to pay the amount owed to the subcontractors or
16    material suppliers plus interest within 15 calendar days
17    after the order.
18        (4) If a contractor fails to make full payment as
19    ordered under paragraph (3) of this subsection (b) within
20    15 days after the administrative law judge's order, then
21    the contractor shall be barred from entering into a State
22    public construction contract for a period of one year
23    beginning on the date of the administrative law judge's
24    order.
25        (5) If, on 2 or more occasions within a 3-calendar-year
26    period, there is a finding by an administrative law judge



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1    that the contractor failed to make payment in full, without
2    reasonable cause, and a written order was issued to a
3    contractor under paragraph (3) of this subsection (b), then
4    the contractor shall be barred from entering into a State
5    public construction contract for a period of 6 months
6    beginning on the date of the administrative law judge's
7    second written order, even if the payments required under
8    the orders were made in full.
9        (6) If a contractor fails to make full payment as
10    ordered under paragraph (4) of this subsection (b), the
11    subcontractor or material supplier may, within 30 days of
12    the date of that order, petition the State agency for an
13    order for reasonable attorney's fees and costs incurred in
14    the prosecution of the action under this subsection (b).
15    Upon that petition and taking of additional evidence, as
16    may be required, the administrative law judge may issue a
17    supplemental order directing the contractor to pay those
18    reasonable attorney's fees and costs.
19        (7) The written order of the administrative law judge
20    shall be final and appealable under the Administrative
21    Review Law.
22    (b-5) On or before July 2021, the Department of
23Transportation shall publish on its website a searchable
24database that allows for queries for each active construction
25contract by the name of a subcontractor or the pay item such
26that each pay item is associated with either the prime



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1contractor or a subcontractor.
2    (c) This Section shall not be construed to in any manner
3diminish, negate, or interfere with the
4contractor-subcontractor or contractor-material supplier
5relationship or commercially useful function.
6    (d) This Section shall not preclude, bar, or stay the
7rights, remedies, and defenses available to the parties by way
8of the operation of their contract, purchase agreement, the
9Mechanics Lien Act, or the Public Construction Bond Act.
10    (e) State officials and agencies may adopt rules as may be
11deemed necessary in order to establish the formal procedures
12required under this Section.
13    (f) As used in this Section:
14    "Payment" means the discharge of an obligation in money or
15other valuable consideration or thing delivered in full or
16partial satisfaction of an obligation to pay. "Payment" shall
17include interest paid pursuant to this Act.
18    "Reasonable cause" may include, but is not limited to,
19unsatisfactory workmanship or materials; failure to provide
20documentation required by the contract, subcontract, or
21material purchase agreement; claims made against the
22Department of Transportation or the subcontractor pursuant to
23subsection (c) of Section 23 of the Mechanics Lien Act or the
24Public Construction Bond Act; judgments, levies, garnishments,
25or other court-ordered assessments or offsets in favor of the
26Department of Transportation or other State agency entered



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1against a subcontractor or material supplier. "Reasonable
2cause" does not include payments issued to the contractor that
3create a negative or reduced valuation pay application or pay
4estimate due to a reduction of contract quantities or work not
5performed or provided by the subcontractor or material
6supplier; the interception or withholding of funds for reasons
7not related to the subcontractor's or material supplier's work
8on the contract; anticipated claims or assessments of third
9parties not a party related to the contract or subcontract;
10asserted claims or assessments of third parties that are not
11authorized by court order, administrative tribunal, or
12statute. "Reasonable cause" further does not include the
13withholding, offset, or reduction of payment, in whole or in
14part, due to the assessment of liquidated damages or penalties
15assessed by the Department of Transportation against the
16contractor, unless the subcontractor's performance or supplied
17materials were the sole and proximate cause of the liquidated
18damage or penalty.
19(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18;
20100-863, eff. 8-14-18.)