Full Text of HB0173 101st General Assembly
HB0173ham001 101ST GENERAL ASSEMBLY | Rep. Camille Y. Lilly Filed: 2/27/2019
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| 1 | | AMENDMENT TO HOUSE BILL 173
| 2 | | AMENDMENT NO. ______. Amend House Bill 173 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The State Prompt Payment Act is amended by | 5 | | changing Section 7 as follows:
| 6 | | (30 ILCS 540/7)
(from Ch. 127, par. 132.407)
| 7 | | Sec. 7. Payments to subcontractors and material suppliers. | 8 | | (a) When a State official or agency responsible for | 9 | | administering a
contract submits a voucher to the Comptroller | 10 | | for
payment to a contractor, that State official or agency | 11 | | shall promptly make
available electronically
the voucher | 12 | | number, the date of the voucher, and
the amount of the voucher , | 13 | | and the names of all subcontractors who are to be paid from | 14 | | that pay period in the voucher .
The State official or agency | 15 | | responsible for administering the contract shall
provide | 16 | | subcontractors and material suppliers, known to the State |
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| 1 | | official or
agency, with instructions on how to access the | 2 | | electronic information. | 3 | | (a-5) When a
contractor receives any payment, the | 4 | | contractor shall
pay each subcontractor and material supplier | 5 | | electronically within 72 hours after receiving payment in | 6 | | proportion to the work
completed by each subcontractor and | 7 | | material supplier its application or pay estimate, plus | 8 | | interest received under this Act. When a contractor receives | 9 | | any payment, the contractor shall pay each lower-tiered | 10 | | subcontractor and material supplier and each subcontractor and | 11 | | material supplier shall make payment to its own respective | 12 | | subcontractors and material suppliers. If the contractor | 13 | | receives less than the full payment
due under the public | 14 | | construction contract, the contractor shall be
obligated to | 15 | | disburse on a pro rata basis those funds received, plus | 16 | | interest received under this Act, with the
contractor, | 17 | | subcontractors and material suppliers each receiving a | 18 | | prorated
portion based on the amount of payment each has | 19 | | earned. When, however, the State official or agency
does not | 20 | | release the full payment due under the contract because there | 21 | | are
specific areas of work or materials the State agency or | 22 | | official has determined are not suitable for
payment, then | 23 | | those specific subcontractors or material suppliers involved | 24 | | shall not
be paid for that portion of work rejected or deemed | 25 | | not suitable for
payment and all other subcontractors and | 26 | | suppliers shall be paid based upon the amount of payment each |
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| 1 | | has earned, plus interest received under this Act.
| 2 | | (a-10) For construction contracts with the Department of | 3 | | Transportation, the contractor, subcontractor, or material | 4 | | supplier, regardless of tier, shall not offset, decrease, or | 5 | | diminish payment or payments that are due to its subcontractors | 6 | | or material suppliers without reasonable cause. | 7 | | A contractor, who refuses to make prompt payment | 8 | | electronically within 72 hours after receiving payment , in | 9 | | whole or in part, shall provide to the subcontractor or | 10 | | material supplier and the public owner or its agent, a written | 11 | | notice of that refusal. The written notice shall be made by a | 12 | | contractor no later than 5 calendar days after payment is | 13 | | received by the contractor. The written notice shall identify | 14 | | the Department of Transportation's contract, any subcontract | 15 | | or material purchase agreement, a detailed reason for refusal, | 16 | | the value of the payment to be withheld, and the specific | 17 | | remedial actions required of the subcontractor or material | 18 | | supplier so that payment may be made. Written notice of refusal | 19 | | may be given in a form and method which is acceptable to the | 20 | | parties and public owner. | 21 | | (b) If the contractor, without reasonable cause, fails to | 22 | | make full payment of amounts due under subsection (a) to its
| 23 | | subcontractors and material suppliers within 72 hours 15 | 24 | | calendar days after
receipt of
payment from the State official | 25 | | or agency, the contractor shall pay to its
subcontractors and | 26 | | material suppliers, in addition to the payment due
them, |
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| 1 | | interest in the amount of
2% per month, calculated from the
| 2 | | expiration of the 72-hour 15-day period until fully paid. This | 3 | | subsection shall further
apply to any payments made by | 4 | | subcontractors and material suppliers to
their subcontractors | 5 | | and material suppliers and to all payments made to
lower tier | 6 | | subcontractors and material suppliers throughout the | 7 | | contracting
chain.
| 8 | | (1) If a contractor, without reasonable cause, fails to | 9 | | make payment in
full as
provided in subsection (a-5) within | 10 | | 72 hours 15 calendar days after receipt of payment under | 11 | | the
public
construction contract, any subcontractor or | 12 | | material supplier to whom payments
are owed
may file a | 13 | | written notice and request for administrative hearing with | 14 | | the State official or agency setting forth the
amount owed | 15 | | by
the contractor and the contractor's failure to timely | 16 | | pay the amount owed. The written notice and request for | 17 | | administrative hearing shall identify the public | 18 | | construction contract, the contractor, and the amount | 19 | | owed, and shall contain a sworn statement or attestation to | 20 | | verify the accuracy of the notice. The notice and request | 21 | | for administrative hearing shall be filed with the State | 22 | | official for the public construction contract, with a copy | 23 | | of the notice concurrently provided to the contractor. | 24 | | Notice to the State official may be made by certified or | 25 | | registered mail, messenger service, or personal service, | 26 | | and must include proof of delivery to the State official.
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| 1 | | (2) The State official or agency, within 15 calendar | 2 | | days after receipt of a
subcontractor's
or material | 3 | | supplier's written notice and request for administrative | 4 | | hearing,
shall hold a hearing convened by an administrative | 5 | | law judge to determine whether the contractor withheld | 6 | | payment,
without
reasonable cause, from the subcontractors | 7 | | or material suppliers and what
amount, if any,
is due to | 8 | | the subcontractors or material suppliers, and the | 9 | | reasonable cause or causes asserted by the contractor. The | 10 | | State official or
agency shall
provide appropriate notice | 11 | | to the parties of the date, time, and location of
the | 12 | | hearing. Each contractor, subcontractor, or material | 13 | | supplier has the right to be represented by counsel at a | 14 | | hearing and to cross-examine witnesses and challenge | 15 | | documents. Upon the request of the subcontractor or | 16 | | material supplier and a showing of good cause, reasonable | 17 | | continuances may be granted by the administrative law | 18 | | judge.
| 19 | | (3) Upon a finding by the administrative law judge that | 20 | | the contractor failed
to make
payment in full, without | 21 | | reasonable cause, as provided in subsection (a-10), then
| 22 | | the administrative law judge shall, in writing, order the | 23 | | contractor to pay the amount
owed to the
subcontractors or | 24 | | material suppliers plus interest within 15 calendar days | 25 | | after the order.
| 26 | | (4) If a contractor fails to make full payment as |
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| 1 | | ordered under paragraph (3) of this subsection (b) within | 2 | | 15 days after the
administrative law judge's order, then | 3 | | the contractor shall be barred from
entering into a State
| 4 | | public construction contract for a period of one year | 5 | | beginning on the date of
the administrative law judge's | 6 | | order.
| 7 | | (5) If, on 2 or more occasions within a 3-calendar-year | 8 | | period, there is a finding by an administrative law judge | 9 | | that the contractor failed to make payment in full, without | 10 | | reasonable cause, and a written order was issued to a | 11 | | contractor under paragraph (3) of this subsection (b), then | 12 | | the contractor shall be barred from entering into a State | 13 | | public construction contract for a period of 6 months | 14 | | beginning on the date of the administrative law judge's | 15 | | second written order, even if the payments required under | 16 | | the orders were made in full. | 17 | | (6) If a contractor fails to make full payment as | 18 | | ordered under paragraph (4) of this subsection (b), the | 19 | | subcontractor or material supplier may, within 30 days of | 20 | | the date of that order, petition the State agency for an | 21 | | order for reasonable attorney's fees and costs incurred in | 22 | | the prosecution of the action under this subsection (b). | 23 | | Upon that petition and taking of additional evidence, as | 24 | | may be required, the administrative law judge may issue a | 25 | | supplemental order directing the contractor to pay those | 26 | | reasonable attorney's fees and costs. |
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| 1 | | (7) The written order of the administrative law judge | 2 | | shall be final and appealable under the Administrative | 3 | | Review Law. | 4 | | (c) This Section shall not be construed to in any manner | 5 | | diminish, negate, or interfere with the | 6 | | contractor-subcontractor or contractor-material supplier | 7 | | relationship or commercially useful function. | 8 | | (d) This Section shall not preclude, bar, or stay the | 9 | | rights, remedies, and defenses available to the parties by way | 10 | | of the operation of their contract, purchase agreement, the | 11 | | Mechanics Lien Act, or the Public Construction Bond Act. | 12 | | (e) State officials and agencies may adopt rules as may be | 13 | | deemed necessary in order to establish the formal procedures | 14 | | required under this Section. | 15 | | (f) As used in this Section: | 16 | | "Payment" means the discharge of an obligation in money or | 17 | | other valuable consideration or thing delivered in full or | 18 | | partial satisfaction of an obligation to pay. "Payment" shall | 19 | | include interest paid pursuant to this Act. | 20 | | "Reasonable cause" may include, but is not limited to, | 21 | | unsatisfactory workmanship or materials; failure to provide | 22 | | documentation required by the contract, subcontract, or | 23 | | material purchase agreement; claims made against the | 24 | | Department of Transportation or the subcontractor pursuant to | 25 | | subsection (c) of Section 23 of the Mechanics Lien Act or the | 26 | | Public Construction Bond Act; judgments, levies, garnishments, |
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| 1 | | or other court-ordered assessments or offsets in favor of the | 2 | | Department of Transportation or other State agency entered | 3 | | against a subcontractor or material supplier. "Reasonable | 4 | | cause" does not include payments issued to the contractor that | 5 | | create a negative or reduced valuation pay application or pay | 6 | | estimate due to a reduction of contract quantities or work not | 7 | | performed or provided by the subcontractor or material | 8 | | supplier; the interception or withholding of funds for reasons | 9 | | not related to the subcontractor's or material supplier's work | 10 | | on the contract; anticipated claims or assessments of third | 11 | | parties not a party related to the contract or subcontract; | 12 | | asserted claims or assessments of third parties that are not | 13 | | authorized by court order, administrative tribunal, or | 14 | | statute. "Reasonable cause" further does not include the | 15 | | withholding, offset, or reduction of payment, in whole or in | 16 | | part, due to the assessment of liquidated damages or penalties | 17 | | assessed by the Department of Transportation against the | 18 | | contractor, unless the subcontractor's performance or supplied | 19 | | materials were the sole and proximate cause of the liquidated | 20 | | damage or penalty. | 21 | | (Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18; | 22 | | 100-863, eff. 8-14-18.)".
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