Full Text of HB2482 103rd General Assembly
HB2482 103RD GENERAL ASSEMBLY |
| | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 HB2482 Introduced 2/15/2023, by Rep. Kam Buckner SYNOPSIS AS INTRODUCED: |
| 30 ILCS 550/1 | from Ch. 29, par. 15 |
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Amends the Public Construction Bond Act. Provides that public construction bonds are required only for those public work construction contracts that are valued over $5,000,000. Authorizes any official, board,
commission, agent of the State, or any political subdivision of the State to create a self-insured risk pool for contracts of $5,000,000 or less. Defines "self insured risk pool".
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| | A BILL FOR |
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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 Public Construction Bond Act is amended by | 5 | | changing Section 1 as follows:
| 6 | | (30 ILCS 550/1) (from Ch. 29, par. 15)
| 7 | | Sec. 1. Except as otherwise provided by this Act, all | 8 | | officials, boards,
commissions, or agents of this State, or of | 9 | | any political subdivision thereof, in making contracts for | 10 | | public work of
any kind costing over $5,000,000 $50,000 to be | 11 | | performed for the State, or of any political subdivision | 12 | | thereof,
shall require every contractor for the work to | 13 | | furnish, supply and deliver
a bond to the State, or to the | 14 | | political subdivision thereof entering into
the contract, as | 15 | | the case may be, with good and sufficient sureties. The surety | 16 | | on the bond shall be a company that is licensed by the | 17 | | Department of Insurance authorizing it to execute surety bonds | 18 | | and the company shall have a financial strength rating of at | 19 | | least A- as rated by A.M. Best Company, Inc., Moody's | 20 | | Investors Service, Standard & Poor's Corporation, or a similar | 21 | | rating agency. The
amount of the bond shall be fixed by the | 22 | | officials, boards, commissions,
commissioners or agents, and | 23 | | the bond, among other conditions,
shall be
conditioned for the |
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| 1 | | completion of the contract, for the payment of material, | 2 | | apparatus, fixtures, and machinery
used in the work and for | 3 | | all labor performed in the work, whether by
subcontractor or | 4 | | otherwise.
| 5 | | If the contract is for emergency repairs as provided in | 6 | | the Illinois
Procurement
Code, proof of payment for all labor, | 7 | | materials, apparatus, fixtures, and
machinery may be
furnished | 8 | | in lieu of the bond required by this Section.
| 9 | | Each such bond is deemed to contain the following | 10 | | provisions whether
such provisions are inserted in such bond | 11 | | or not:
| 12 | | "The principal and sureties on this bond agree that all | 13 | | the
undertakings, covenants, terms, conditions and agreements | 14 | | of the contract
or contracts entered into between the | 15 | | principal and the State or any
political subdivision thereof | 16 | | will be performed and fulfilled and to pay
all persons, firms | 17 | | and corporations having contracts with the principal or
with | 18 | | subcontractors, all just claims due them under the provisions | 19 | | of such
contracts for labor performed or materials furnished | 20 | | in the performance of
the contract on account of which this | 21 | | bond is given, when such claims are
not satisfied out of the | 22 | | contract price of the contract on account of which
this bond is | 23 | | given, after final settlement between the officer, board,
| 24 | | commission or agent of the State or of any political | 25 | | subdivision thereof
and the principal has been made.". | 26 | | Each bond securing contracts between the Capital |
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| 1 | | Development Board or any board of a public institution of | 2 | | higher education and a contractor shall contain the following | 3 | | provisions, whether the provisions are inserted in the bond or | 4 | | not: | 5 | | "Upon the default of the principal with respect to | 6 | | undertakings, covenants, terms, conditions, and agreements, | 7 | | the termination of the contractor's right to proceed with the | 8 | | work, and written notice of that default and termination by | 9 | | the State or any political subdivision to the surety | 10 | | ("Notice"), the surety shall promptly remedy the default by | 11 | | taking one of the following actions: | 12 | | (1) The surety shall complete the work pursuant to a | 13 | | written takeover agreement, using a completing contractor | 14 | | jointly selected by the surety and the State or any | 15 | | political subdivision; or | 16 | | (2) The surety shall pay a sum of money to the obligee, | 17 | | up to the penal sum of the bond, that represents the | 18 | | reasonable cost to complete the work that exceeds the | 19 | | unpaid balance of the contract sum. | 20 | | The surety shall respond to the Notice within 15 working | 21 | | days of receipt indicating the course of action that it | 22 | | intends to take or advising that it requires more time to | 23 | | investigate the default and select a course of action. If the | 24 | | surety requires more than 15 working days to investigate the | 25 | | default and select a course of action or if the surety elects | 26 | | to complete the work with a completing contractor that is not |
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| 1 | | prepared to commence performance within 15 working days after | 2 | | receipt of Notice, and if the State or any political | 3 | | subdivision determines it is in the best interest of the State | 4 | | to maintain the progress of the work, the State or any | 5 | | political subdivision may continue to work until the | 6 | | completing contractor is prepared to commence performance. | 7 | | Unless otherwise agreed to by the procuring agency, in no case | 8 | | may the surety take longer than 30 working days to advise the | 9 | | State or political subdivision on the course of action it | 10 | | intends to take. The surety shall be liable for reasonable | 11 | | costs incurred by the State or any political subdivision to | 12 | | maintain the progress to the extent the costs exceed the | 13 | | unpaid balance of the contract sum, subject to the penal sum of | 14 | | the bond.".
| 15 | | The surety bond required by this Section may be acquired | 16 | | from the
company, agent or broker of the contractor's choice. | 17 | | The bond and sureties
shall
be subject to the right of | 18 | | reasonable approval or disapproval, including
suspension, by | 19 | | the State or political subdivision thereof concerned. Except | 20 | | as otherwise provided in this Section, in the
case of State | 21 | | construction contracts, a contractor shall not be required to
| 22 | | post a cash bond or letter of credit in addition to or as a | 23 | | substitute for the
surety bond required by this Section.
| 24 | | When other than motor fuel tax funds, federal-aid funds, | 25 | | or other
funds received from the State are used, a political | 26 | | subdivision may allow
the contractor to provide a |
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| 1 | | non-diminishing irrevocable bank letter of
credit, in lieu of | 2 | | the bond required by this Section, on contracts under
$100,000 | 3 | | to comply with the requirements of this Section. Any such bank
| 4 | | letter of credit shall contain all provisions required for | 5 | | bonds by this
Section.
| 6 | | In order to reduce barriers to entry for diverse and small | 7 | | businesses, the Department of Transportation may implement a | 8 | | 5-year pilot program to allow a contractor to provide a | 9 | | non-diminishing irrevocable bank letter of credit in lieu of | 10 | | the bond required by this Section on contracts under $500,000. | 11 | | Projects selected by the Department of Transportation for this | 12 | | pilot program must be classified by the Department as low-risk | 13 | | scope of work contracts. The Department shall adopt rules to | 14 | | define the criteria for pilot project selection and | 15 | | implementation of the pilot program. | 16 | | Beginning on the effective date of this amendatory Act of | 17 | | the 103rd General Assembly, any official, board,
commission, | 18 | | agent of this State, or any political subdivision of this | 19 | | State may create a self-insured risk pool to cover any claims | 20 | | or damages arising under a public works construction contract | 21 | | valued at $5,000,000 or less as a consequence of a | 22 | | contractor's failure to perform for the State, or of any | 23 | | political subdivision thereof, work in accordance with the | 24 | | terms of that contract. | 25 | | In For the purposes of this Section : | 26 | | "Material", , the terms "material", "labor", |
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| 1 | | "apparatus", "fixtures", and "machinery" include those | 2 | | rented items that are on the construction site and those | 3 | | rented tools that are used or consumed on the construction | 4 | | site in the performance of the contract on account of | 5 | | which the bond is given. | 6 | | "Self-insured risk pool" means a legal entity through | 7 | | which officials, boards,
commissions, agents of this | 8 | | State, or political subdivisions of the State can | 9 | | collectively purchase claims administration services and | 10 | | excess insurance to provide coverage for claims and | 11 | | damages arising as a consequence of a contractor's failure | 12 | | to perform for the State, or of any political subdivision | 13 | | thereof, work in accordance with the terms of a public | 14 | | works construction contract valued at $5,000,000 or less. | 15 | | (Source: P.A. 101-65, eff. 1-1-20; 102-968, eff. 1-1-23 .)
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