Full Text of SB0104 101st General Assembly
SB0104enr 101ST GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning finance.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The State Prompt Payment Act is amended by | 5 | | changing 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 | 8 | | authorized to
provide for payment from State funds, by virtue | 9 | | of any appropriation of the
General Assembly, for goods or | 10 | | services furnished to the State.
| 11 | | For purposes of this Act, "goods or
services furnished to | 12 | | the State" include but are not limited to (i) covered health
| 13 | | care provided to eligible members and their covered dependents | 14 | | in accordance
with the State Employees Group Insurance Act of | 15 | | 1971, including coverage
through a physician-owned health | 16 | | maintenance organization under Section 6.1 of
that Act, (ii) | 17 | | prevention, intervention, or treatment services and supports | 18 | | for persons with developmental disabilities, mental health | 19 | | services, alcohol and substance abuse services, rehabilitation | 20 | | services, and early intervention services provided by a vendor, | 21 | | and (iii) prevention, intervention, or treatment services and | 22 | | supports for youth provided by a vendor by virtue of a | 23 | | contractual 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 | 2 | | and services, including community-based organizations that are | 3 | | licensed to provide prevention, intervention, or treatment | 4 | | services and supports for persons with developmental | 5 | | disabilities, mental illness, and substance abuse problems, or | 6 | | that provides prevention, intervention, or treatment services | 7 | | and supports for youth.
| 8 | | For the purposes of this Act, "appropriate State official | 9 | | or agency" is
defined as the Director or Chief Executive or his | 10 | | designee of that State
agency or department or facility of such | 11 | | agency or department.
With respect to covered health care | 12 | | provided to eligible members and
their dependents in accordance | 13 | | with the State Employees Group Insurance Act
of 1971, | 14 | | "appropriate State official or agency" also includes an
| 15 | | administrator of a program of health benefits under that Act.
| 16 | | As used in this Act, "eligible member" means a member who | 17 | | is eligible for
health benefits under the State Employees Group | 18 | | Insurance Act of 1971, and
"member" and "dependent" have the | 19 | | meanings ascribed to those terms in that Act.
| 20 | | As used in this Act, "a proper bill or invoice" means a | 21 | | bill or invoice, including, but not limited to, an invoice | 22 | | issued under a contractual grant agreement,
that
includes the
| 23 | | information necessary for processing the payment as may be | 24 | | specified by a State
agency and in rules adopted in accordance | 25 | | with this Act. Beginning on and after July 1, 2021, "a proper | 26 | | bill or invoice" shall also include the names of all |
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| 1 | | subcontractors or subconsultants to be paid from the bill or | 2 | | invoice 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 | 7 | | administering a
contract submits a voucher to the Comptroller | 8 | | for
payment to a contractor, that State official or agency | 9 | | shall promptly make
available electronically
the voucher | 10 | | number, the date of the voucher, and
the amount of the voucher.
| 11 | | The State official or agency responsible for administering the | 12 | | contract shall
provide subcontractors and material suppliers, | 13 | | known to the State official or
agency, with instructions on how | 14 | | to access the electronic information. | 15 | | (a-5) When a
contractor receives any payment, the | 16 | | contractor shall
pay each subcontractor and material supplier | 17 | | electronically within 10 business days or 15 calendar days, | 18 | | whichever occurs earlier, or, if paid by a printed check, the | 19 | | printed check must be postmarked within 10 business days or 15 | 20 | | calendar days, whichever occurs earlier, after receiving | 21 | | payment in proportion to the work
completed by each | 22 | | subcontractor and material supplier its application or pay | 23 | | estimate, plus interest received under this Act. When a | 24 | | contractor receives any payment, the contractor shall pay each | 25 | | lower-tiered subcontractor and material supplier and each |
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| 1 | | subcontractor and material supplier shall make payment to its | 2 | | own respective subcontractors and material suppliers. If the | 3 | | contractor receives less than the full payment
due under the | 4 | | public construction contract, the contractor shall be
| 5 | | obligated to disburse on a pro rata basis those funds received, | 6 | | plus interest received under this Act, with the
contractor, | 7 | | subcontractors and material suppliers each receiving a | 8 | | prorated
portion based on the amount of payment each has | 9 | | earned. When, however, the State official or agency
does not | 10 | | release the full payment due under the contract because there | 11 | | are
specific areas of work or materials the State agency or | 12 | | official has determined are not suitable for
payment, then | 13 | | those specific subcontractors or material suppliers involved | 14 | | shall not
be paid for that portion of work rejected or deemed | 15 | | not suitable for
payment and all other subcontractors and | 16 | | suppliers shall be paid based upon the amount of payment each | 17 | | has earned, plus interest received under this Act.
| 18 | | (a-10) For construction contracts with the Department of | 19 | | Transportation, the contractor, subcontractor, or material | 20 | | supplier, regardless of tier, shall not offset, decrease, or | 21 | | diminish payment or payments that are due to its subcontractors | 22 | | or material suppliers without reasonable cause. | 23 | | A contractor, who refuses to make prompt payment within 10 | 24 | | business days or 15 calendar days, whichever occurs earlier, | 25 | | after receiving payment , in whole or in part, shall provide to | 26 | | the subcontractor or material supplier and the public owner or |
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| 1 | | its agent, a written notice of that refusal. The written notice | 2 | | shall be made by a contractor no later than 5 calendar days | 3 | | after payment is received by the contractor. The written notice | 4 | | shall identify the Department of Transportation's contract, | 5 | | any subcontract or material purchase agreement, a detailed | 6 | | reason for refusal, the value of the payment to be withheld, | 7 | | and the specific remedial actions required of the subcontractor | 8 | | or material supplier so that payment may be made. Written | 9 | | notice of refusal may be given in a form and method which is | 10 | | acceptable to the parties and public owner. | 11 | | (b) If the contractor, without reasonable cause, fails to | 12 | | make full payment of amounts due under subsection (a) to its
| 13 | | subcontractors and material suppliers within 10 business days | 14 | | or 15 calendar days, whichever occurs earlier, 15 calendar days | 15 | | after
receipt of
payment from the State official or agency, the | 16 | | contractor shall pay to its
subcontractors and material | 17 | | suppliers, in addition to the payment due
them, interest in the | 18 | | amount of
2% per month, calculated from the
expiration of the | 19 | | 10-business-day period or the 15-calendar-day 15-day period | 20 | | until fully paid. This subsection shall further
apply to any | 21 | | payments made by subcontractors and material suppliers to
their | 22 | | subcontractors and material suppliers and to all payments made | 23 | | to
lower tier subcontractors and material suppliers throughout | 24 | | the 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 | 23 | | Transportation shall publish on its website a searchable | 24 | | database that allows for queries for each active construction | 25 | | contract by the name of a subcontractor or the pay item such | 26 | | that each pay item is associated with either the prime |
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| 1 | | contractor or a subcontractor. | 2 | | (c) This Section shall not be construed to in any manner | 3 | | diminish, negate, or interfere with the | 4 | | contractor-subcontractor or contractor-material supplier | 5 | | relationship or commercially useful function. | 6 | | (d) This Section shall not preclude, bar, or stay the | 7 | | rights, remedies, and defenses available to the parties by way | 8 | | of the operation of their contract, purchase agreement, the | 9 | | Mechanics Lien Act, or the Public Construction Bond Act. | 10 | | (e) State officials and agencies may adopt rules as may be | 11 | | deemed necessary in order to establish the formal procedures | 12 | | required under this Section. | 13 | | (f) As used in this Section: | 14 | | "Payment" means the discharge of an obligation in money or | 15 | | other valuable consideration or thing delivered in full or | 16 | | partial satisfaction of an obligation to pay. "Payment" shall | 17 | | include interest paid pursuant to this Act. | 18 | | "Reasonable cause" may include, but is not limited to, | 19 | | unsatisfactory workmanship or materials; failure to provide | 20 | | documentation required by the contract, subcontract, or | 21 | | material purchase agreement; claims made against the | 22 | | Department of Transportation or the subcontractor pursuant to | 23 | | subsection (c) of Section 23 of the Mechanics Lien Act or the | 24 | | Public Construction Bond Act; judgments, levies, garnishments, | 25 | | or other court-ordered assessments or offsets in favor of the | 26 | | Department of Transportation or other State agency entered |
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| 1 | | against a subcontractor or material supplier. "Reasonable | 2 | | cause" does not include payments issued to the contractor that | 3 | | create a negative or reduced valuation pay application or pay | 4 | | estimate due to a reduction of contract quantities or work not | 5 | | performed or provided by the subcontractor or material | 6 | | supplier; the interception or withholding of funds for reasons | 7 | | not related to the subcontractor's or material supplier's work | 8 | | on the contract; anticipated claims or assessments of third | 9 | | parties not a party related to the contract or subcontract; | 10 | | asserted claims or assessments of third parties that are not | 11 | | authorized by court order, administrative tribunal, or | 12 | | statute. "Reasonable cause" further does not include the | 13 | | withholding, offset, or reduction of payment, in whole or in | 14 | | part, due to the assessment of liquidated damages or penalties | 15 | | assessed by the Department of Transportation against the | 16 | | contractor, unless the subcontractor's performance or supplied | 17 | | materials were the sole and proximate cause of the liquidated | 18 | | damage or penalty. | 19 | | (Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18; | 20 | | 100-863, eff. 8-14-18.)
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