Full Text of SB1890 95th General Assembly
SB1890 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB1890
Introduced 1/10/2008, by Sen. William R. Haine SYNOPSIS AS INTRODUCED: |
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30 ILCS 550/1 |
from Ch. 29, par. 15 |
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Amends the Public Construction Bond Act. Requires surety bonds on public construction projects costing over $100,000 (now, over $5,000). With respect to bonds securing contracts between the Capital Development Board or a public institution of higher education and a contractor, requires that within 15 days after notice to the surety that the principal is in default, the surety must (i) complete the work using a contractor selected jointly with the obligee or (ii) provide the obligee the amount needed to complete the work, in excess of the unpaid contract balance and up to the penal sum of the bond. Effective immediately.
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| FISCAL NOTE ACT MAY APPLY | |
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A BILL FOR
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SB1890 |
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LRB095 14226 JAM 40095 b |
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| AN ACT concerning finance.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Public Construction Bond Act is amended by | 5 |
| changing Section 1 as follows:
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| (30 ILCS 550/1) (from Ch. 29, par. 15)
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| Sec. 1. Except as otherwise provided by this Act, all | 8 |
| officials, boards,
commissions or agents of this State, or of
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| any political subdivision thereof in making contracts for | 10 |
| public work of
any kind costing over $100,000 $5,000 to be | 11 |
| performed for the State, or a political
subdivision thereof
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| shall require every contractor for the work to furnish, supply | 13 |
| and deliver
a bond to the State, or to the political | 14 |
| subdivision thereof entering into
the contract, as the case may | 15 |
| be, with good and sufficient sureties. The
amount of the bond | 16 |
| shall be fixed by the officials, boards, commissions,
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| commissioners or agents, and the bond, among other conditions,
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| shall be
conditioned for the completion of the contract, for | 19 |
| the payment of material
used in the work and for all labor | 20 |
| performed in the work, whether by
subcontractor or otherwise.
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| If the contract is for emergency repairs as provided in the | 22 |
| Illinois
Procurement
Code, proof of payment for all labor, | 23 |
| materials, apparatus, fixtures, and
machinery may be
furnished |
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LRB095 14226 JAM 40095 b |
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| in lieu of the bond required by this Section.
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| Each such bond is deemed to contain the following | 3 |
| provisions whether
such provisions are inserted in such bond or | 4 |
| not:
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| "The principal and sureties on this bond agree that all the
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| undertakings, covenants, terms, conditions and agreements of | 7 |
| the contract
or contracts entered into between the principal | 8 |
| and the State or any
political subdivision thereof will be | 9 |
| performed and fulfilled and to pay
all persons, firms and | 10 |
| corporations having contracts with the principal or
with | 11 |
| subcontractors, all just claims due them under the provisions | 12 |
| of such
contracts for labor performed or materials furnished in | 13 |
| the performance of
the contract on account of which this bond | 14 |
| is given, when such claims are
not satisfied out of the | 15 |
| contract price of the contract on account of which
this bond is | 16 |
| given, after final settlement between the officer, board,
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| commission or agent of the State or of any political | 18 |
| subdivision thereof
and the principal has been made. | 19 |
| Each bond securing contracts between the Capital | 20 |
| Development Board or any board of a public institution of | 21 |
| higher education and a contractor shall contain the following | 22 |
| provisions, whether the provisions are inserted in the bond or | 23 |
| not: | 24 |
| "Upon the default of the principal with respect to | 25 |
| undertakings, covenants, terms, conditions, and agreements, | 26 |
| the termination of the contractor's right to proceed with the |
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LRB095 14226 JAM 40095 b |
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| work, and written notice of that default and termination by the | 2 |
| State or any political subdivision to the surety ("Notice"), | 3 |
| the surety shall promptly remedy the default by taking one of | 4 |
| the following actions: | 5 |
| (1) The surety shall complete the work pursuant to a | 6 |
| written takeover agreement, using a completing contractor | 7 |
| jointly selected by the surety and the State or any | 8 |
| political subdivision; or | 9 |
| (2) The surety shall pay a sum of money to the obligee, | 10 |
| up to the penal sum of the bond, that represents the | 11 |
| reasonable cost to complete the work that exceeds the | 12 |
| unpaid balance of the contract sum. | 13 |
| The surety shall respond to the Notice within 15 working | 14 |
| days of receipt indicating the course of action that it intends | 15 |
| to take. If the surety elects to complete the work with a | 16 |
| completing contractor and if the State or any political | 17 |
| subdivision determines it is in the best interest of the State | 18 |
| to maintain the progress of the work, the State or any | 19 |
| political subdivision may continue to work until the completing | 20 |
| contractor is prepared to commence performance. The surety | 21 |
| shall be liable for reasonable costs incurred by the State or | 22 |
| any political subdivision to maintain the progress to the | 23 |
| extent the costs exceed the unpaid balance of the contract sum, | 24 |
| subject to the penal sum of the bond.".
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| The surety bond required by this Section may be acquired | 26 |
| from the
company, agent or broker of the contractor's choice. |
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LRB095 14226 JAM 40095 b |
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| The bond and sureties
shall
be subject to the right of | 2 |
| reasonable approval or disapproval, including
suspension, by | 3 |
| the State or political subdivision thereof concerned. In the
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| case of State construction contracts, a contractor shall not be | 5 |
| required to
post a cash bond or letter of credit in addition to | 6 |
| or as a substitute for the
surety bond required by this | 7 |
| Section.
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| When other than motor fuel tax funds, federal-aid funds, or | 9 |
| other
funds received from the State are used, a political | 10 |
| subdivision may allow
the contractor to provide a | 11 |
| non-diminishing irrevocable bank letter of
credit, in lieu of | 12 |
| the bond required by this Section, on contracts under
$100,000 | 13 |
| to comply with the requirements of this Section. Any such bank
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| letter of credit shall contain all provisions required for | 15 |
| bonds by this
Section.
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| (Source: P.A. 93-221, eff. 1-1-04.)
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| Section 99. Effective date. This Act takes effect upon | 18 |
| becoming law.
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