Full Text of HB4769 98th General Assembly
HB4769enr 98TH 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 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 $50,000 to be performed | 11 | | for the State, or of any political subdivision thereof,
shall | 12 | | require every contractor for the work to furnish, supply and | 13 | | deliver
a bond to the State, or to the political subdivision | 14 | | thereof entering into
the contract, as the case may be, with | 15 | | good and sufficient sureties. The surety on the bond shall be a | 16 | | company that is licensed by the Department of Insurance | 17 | | authorizing it to execute surety bonds and the company shall | 18 | | have a financial strength rating of at least A- as rated by | 19 | | A.M. Best Company, Inc., Moody's Investors Service, Standard & | 20 | | Poor's Corporation, or a similar rating agency. The
amount of | 21 | | the bond shall be fixed by the officials, boards, commissions,
| 22 | | commissioners or agents, and the bond, among other conditions,
| 23 | | shall be
conditioned for the completion of the contract, for |
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| 1 | | the payment of material
used in the work and for all labor | 2 | | performed in the work, whether by
subcontractor or otherwise.
| 3 | | If the contract is for emergency repairs as provided in the | 4 | | Illinois
Procurement
Code, proof of payment for all labor, | 5 | | materials, apparatus, fixtures, and
machinery may be
furnished | 6 | | in lieu of the bond required by this Section.
| 7 | | Each such bond is deemed to contain the following | 8 | | provisions whether
such provisions are inserted in such bond or | 9 | | not:
| 10 | | "The principal and sureties on this bond agree that all the
| 11 | | undertakings, covenants, terms, conditions and agreements of | 12 | | the contract
or contracts entered into between the principal | 13 | | and the State or any
political subdivision thereof will be | 14 | | performed and fulfilled and to pay
all persons, firms and | 15 | | corporations having contracts with the principal or
with | 16 | | subcontractors, all just claims due them under the provisions | 17 | | of such
contracts for labor performed or materials furnished in | 18 | | the performance of
the contract on account of which this bond | 19 | | is given, when such claims are
not satisfied out of the | 20 | | contract price of the contract on account of which
this bond is | 21 | | given, after final settlement between the officer, board,
| 22 | | commission or agent of the State or of any political | 23 | | subdivision thereof
and the principal has been made.". | 24 | | Each bond securing contracts between the Capital | 25 | | Development Board or any board of a public institution of | 26 | | higher education and a contractor shall contain the following |
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| 1 | | provisions, whether the provisions are inserted in the bond or | 2 | | not: | 3 | | "Upon the default of the principal with respect to | 4 | | undertakings, covenants, terms, conditions, and agreements, | 5 | | the termination of the contractor's right to proceed with the | 6 | | work, and written notice of that default and termination by the | 7 | | State or any political subdivision to the surety ("Notice"), | 8 | | the surety shall promptly remedy the default by taking one of | 9 | | the following actions: | 10 | | (1) The surety shall complete the work pursuant to a | 11 | | written takeover agreement, using a completing contractor | 12 | | jointly selected by the surety and the State or any | 13 | | political subdivision; or | 14 | | (2) The surety shall pay a sum of money to the obligee, | 15 | | up to the penal sum of the bond, that represents the | 16 | | reasonable cost to complete the work that exceeds the | 17 | | unpaid balance of the contract sum. | 18 | | The surety shall respond to the Notice within 15 working | 19 | | days of receipt indicating the course of action that it intends | 20 | | to take or advising that it requires more time to investigate | 21 | | the default and select a course of action. If the surety | 22 | | requires more than 15 working days to investigate the default | 23 | | and select a course of action or if the surety elects to | 24 | | complete the work with a completing contractor that is not | 25 | | prepared to commence performance within 15 working days after | 26 | | receipt of Notice, and if the State or any political |
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| 1 | | subdivision determines it is in the best interest of the State | 2 | | to maintain the progress of the work, the State or any | 3 | | political subdivision may continue to work until the completing | 4 | | contractor is prepared to commence performance. Unless | 5 | | otherwise agreed to by the procuring agency, in no case may the | 6 | | surety take longer than 30 working days to advise the State or | 7 | | political subdivision on the course of action it intends to | 8 | | take. The surety shall be liable for reasonable costs incurred | 9 | | by the State or any political subdivision to maintain the | 10 | | progress to the extent the costs exceed the unpaid balance of | 11 | | the contract sum, subject to the penal sum of the bond.".
| 12 | | The surety bond required by this Section may be acquired | 13 | | from the
company, agent or broker of the contractor's choice. | 14 | | The bond and sureties
shall
be subject to the right of | 15 | | reasonable approval or disapproval, including
suspension, by | 16 | | the State or political subdivision thereof concerned. In the
| 17 | | case of State construction contracts, a contractor shall not be | 18 | | required to
post a cash bond or letter of credit in addition to | 19 | | or as a substitute for the
surety bond required by this | 20 | | Section.
| 21 | | When other than motor fuel tax funds, federal-aid funds, or | 22 | | other
funds received from the State are used, a political | 23 | | subdivision may allow
the contractor to provide a | 24 | | non-diminishing irrevocable bank letter of
credit, in lieu of | 25 | | the bond required by this Section, on contracts under
$100,000 | 26 | | to comply with the requirements of this Section. Any such bank
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| 1 | | letter of credit shall contain all provisions required for | 2 | | bonds by this
Section.
| 3 | | (Source: P.A. 98-216, eff. 8-9-13.)
| 4 | | Section 99. Effective date. This Act takes effect upon | 5 | | becoming law.
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