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


Rep. Camille Y. Lilly

Filed: 5/22/2019





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2    AMENDMENT NO. ______. Amend Senate Bill 104 by replacing
3everything after the enacting clause with the following:
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)



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



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1    As used in this Act, "a proper bill or invoice" means a
2bill or invoice, including, but not limited to, an invoice
3issued under a contractual grant agreement, that includes the
4information necessary for processing the payment as may be
5specified by a State agency and in rules adopted in accordance
6with this Act. Beginning on and after July 1, 2021, "a proper
7bill or invoice" shall also include the names of all
8subcontractors or subconsultants to be paid from the bill or
9invoice and the amounts due to each of them, if any.
10(Source: P.A. 100-549, eff. 1-1-18.)
11    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
12    Sec. 7. Payments to subcontractors and material suppliers.
13    (a) When a State official or agency responsible for
14administering a contract submits a voucher to the Comptroller
15for payment to a contractor, that State official or agency
16shall promptly make available electronically the voucher
17number, the date of the voucher, and the amount of the voucher.
18The State official or agency responsible for administering the
19contract shall provide subcontractors and material suppliers,
20known to the State official or agency, with instructions on how
21to access the electronic information.
22    (a-5) When a contractor receives any payment, the
23contractor shall pay each subcontractor and material supplier
24electronically within 10 business days or 15 calendar days,
25whichever occurs earlier, or, if paid by a printed check, the



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1printed check must be postmarked within 10 business days or 15
2calendar days, whichever occurs earlier, after receiving
3payment in proportion to the work completed by each
4subcontractor and material supplier its application or pay
5estimate, plus interest received under this Act. When a
6contractor receives any payment, the contractor shall pay each
7lower-tiered subcontractor and material supplier and each
8subcontractor and material supplier shall make payment to its
9own respective subcontractors and material suppliers. If the
10contractor receives less than the full payment due under the
11public construction contract, the contractor shall be
12obligated to disburse on a pro rata basis those funds received,
13plus interest received under this Act, with the contractor,
14subcontractors and material suppliers each receiving a
15prorated portion based on the amount of payment each has
16earned. When, however, the State official or agency does not
17release the full payment due under the contract because there
18are specific areas of work or materials the State agency or
19official has determined are not suitable for payment, then
20those specific subcontractors or material suppliers involved
21shall not be paid for that portion of work rejected or deemed
22not suitable for payment and all other subcontractors and
23suppliers shall be paid based upon the amount of payment each
24has earned, plus interest received under this Act.
25    (a-10) For construction contracts with the Department of
26Transportation, the contractor, subcontractor, or material



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1supplier, regardless of tier, shall not offset, decrease, or
2diminish payment or payments that are due to its subcontractors
3or material suppliers without reasonable cause.
4    A contractor, who refuses to make prompt payment within 10
5business days or 15 calendar days, whichever occurs earlier,
6after receiving payment, in whole or in part, shall provide to
7the subcontractor or material supplier and the public owner or
8its agent, a written notice of that refusal. The written notice
9shall be made by a contractor no later than 5 calendar days
10after payment is received by the contractor. The written notice
11shall identify the Department of Transportation's contract,
12any subcontract or material purchase agreement, a detailed
13reason for refusal, the value of the payment to be withheld,
14and the specific remedial actions required of the subcontractor
15or material supplier so that payment may be made. Written
16notice of refusal may be given in a form and method which is
17acceptable to the parties and public owner.
18    (b) If the contractor, without reasonable cause, fails to
19make full payment of amounts due under subsection (a) to its
20subcontractors and material suppliers within 10 business days
21or 15 calendar days, whichever occurs earlier, 15 calendar days
22after receipt of payment from the State official or agency, the
23contractor shall pay to its subcontractors and material
24suppliers, in addition to the payment due them, interest in the
25amount of 2% per month, calculated from the expiration of the
2610-business-day period or the 15-calendar-day 15-day period



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1until fully paid. This subsection shall further apply to any
2payments made by subcontractors and material suppliers to their
3subcontractors and material suppliers and to all payments made
4to lower tier subcontractors and material suppliers throughout
5the contracting chain.
6        (1) If a contractor, without reasonable cause, fails to
7    make payment in full as provided in subsection (a-5) within
8    10 business days or 15 calendar days, whichever occurs
9    earlier, 15 calendar days after receipt of payment under
10    the public construction contract, any subcontractor or
11    material supplier to whom payments are owed may file a
12    written notice and request for administrative hearing with
13    the State official or agency setting forth the amount owed
14    by the contractor and the contractor's failure to timely
15    pay the amount owed. The written notice and request for
16    administrative hearing shall identify the public
17    construction contract, the contractor, and the amount
18    owed, and shall contain a sworn statement or attestation to
19    verify the accuracy of the notice. The notice and request
20    for administrative hearing shall be filed with the State
21    official for the public construction contract, with a copy
22    of the notice concurrently provided to the contractor.
23    Notice to the State official may be made by certified or
24    registered mail, messenger service, or personal service,
25    and must include proof of delivery to the State official.
26        (2) The State official or agency, within 15 calendar



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



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1    15 days after the administrative law judge's order, then
2    the contractor shall be barred from entering into a State
3    public construction contract for a period of one year
4    beginning on the date of the administrative law judge's
5    order.
6        (5) If, on 2 or more occasions within a 3-calendar-year
7    period, there is a finding by an administrative law judge
8    that the contractor failed to make payment in full, without
9    reasonable cause, and a written order was issued to a
10    contractor under paragraph (3) of this subsection (b), then
11    the contractor shall be barred from entering into a State
12    public construction contract for a period of 6 months
13    beginning on the date of the administrative law judge's
14    second written order, even if the payments required under
15    the orders were made in full.
16        (6) If a contractor fails to make full payment as
17    ordered under paragraph (4) of this subsection (b), the
18    subcontractor or material supplier may, within 30 days of
19    the date of that order, petition the State agency for an
20    order for reasonable attorney's fees and costs incurred in
21    the prosecution of the action under this subsection (b).
22    Upon that petition and taking of additional evidence, as
23    may be required, the administrative law judge may issue a
24    supplemental order directing the contractor to pay those
25    reasonable attorney's fees and costs.
26        (7) The written order of the administrative law judge



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1    shall be final and appealable under the Administrative
2    Review Law.
3    (b-5) On or before July 2021, the Department of
4Transportation shall publish on its website a searchable
5database that allows for queries for each active construction
6contract by the name of a subcontractor or the pay item such
7that each pay item is associated with either the prime
8contractor or a subcontractor.
9    (c) This Section shall not be construed to in any manner
10diminish, negate, or interfere with the
11contractor-subcontractor or contractor-material supplier
12relationship or commercially useful function.
13    (d) This Section shall not preclude, bar, or stay the
14rights, remedies, and defenses available to the parties by way
15of the operation of their contract, purchase agreement, the
16Mechanics Lien Act, or the Public Construction Bond Act.
17    (e) State officials and agencies may adopt rules as may be
18deemed necessary in order to establish the formal procedures
19required under this Section.
20    (f) As used in this Section:
21    "Payment" means the discharge of an obligation in money or
22other valuable consideration or thing delivered in full or
23partial satisfaction of an obligation to pay. "Payment" shall
24include interest paid pursuant to this Act.
25    "Reasonable cause" may include, but is not limited to,
26unsatisfactory workmanship or materials; failure to provide



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1documentation required by the contract, subcontract, or
2material purchase agreement; claims made against the
3Department of Transportation or the subcontractor pursuant to
4subsection (c) of Section 23 of the Mechanics Lien Act or the
5Public Construction Bond Act; judgments, levies, garnishments,
6or other court-ordered assessments or offsets in favor of the
7Department of Transportation or other State agency entered
8against a subcontractor or material supplier. "Reasonable
9cause" does not include payments issued to the contractor that
10create a negative or reduced valuation pay application or pay
11estimate due to a reduction of contract quantities or work not
12performed or provided by the subcontractor or material
13supplier; the interception or withholding of funds for reasons
14not related to the subcontractor's or material supplier's work
15on the contract; anticipated claims or assessments of third
16parties not a party related to the contract or subcontract;
17asserted claims or assessments of third parties that are not
18authorized by court order, administrative tribunal, or
19statute. "Reasonable cause" further does not include the
20withholding, offset, or reduction of payment, in whole or in
21part, due to the assessment of liquidated damages or penalties
22assessed by the Department of Transportation against the
23contractor, unless the subcontractor's performance or supplied
24materials were the sole and proximate cause of the liquidated
25damage or penalty.
26(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18;



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1100-863, eff. 8-14-18.)".