Full Text of HB5035 102nd General Assembly
HB5035enr 102ND 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, apparatus, fixtures, and machinery
| 2 | | used in the work and for all labor performed in the work, | 3 | | whether by
subcontractor or otherwise.
| 4 | | If the contract is for emergency repairs as provided in | 5 | | the Illinois
Procurement
Code, proof of payment for all labor, | 6 | | materials, apparatus, fixtures, and
machinery may be
furnished | 7 | | in lieu of the bond required by this Section.
| 8 | | Each such bond is deemed to contain the following | 9 | | provisions whether
such provisions are inserted in such bond | 10 | | or not:
| 11 | | "The principal and sureties on this bond agree that all | 12 | | the
undertakings, covenants, terms, conditions and agreements | 13 | | of the contract
or contracts entered into between the | 14 | | principal and the State or any
political subdivision thereof | 15 | | will be performed and fulfilled and to pay
all persons, firms | 16 | | and corporations having contracts with the principal or
with | 17 | | subcontractors, all just claims due them under the provisions | 18 | | of such
contracts for labor performed or materials furnished | 19 | | in the performance of
the contract on account of which this | 20 | | bond is given, when such claims are
not satisfied out of the | 21 | | contract price of the contract on account of which
this bond is | 22 | | given, after final settlement between the officer, board,
| 23 | | commission or agent of the State or of any political | 24 | | subdivision thereof
and the principal has been made.". | 25 | | Each bond securing contracts between the Capital | 26 | | Development Board or any board of a public institution of |
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| 1 | | higher education and a contractor shall contain the following | 2 | | provisions, whether the provisions are inserted in the bond or | 3 | | not: | 4 | | "Upon the default of the principal with respect to | 5 | | undertakings, covenants, terms, conditions, and agreements, | 6 | | the termination of the contractor's right to proceed with the | 7 | | work, and written notice of that default and termination by | 8 | | the State or any political subdivision to the surety | 9 | | ("Notice"), the surety shall promptly remedy the default by | 10 | | taking one of the following actions: | 11 | | (1) The surety shall complete the work pursuant to a | 12 | | written takeover agreement, using a completing contractor | 13 | | jointly selected by the surety and the State or any | 14 | | political subdivision; or | 15 | | (2) The surety shall pay a sum of money to the obligee, | 16 | | up to the penal sum of the bond, that represents the | 17 | | reasonable cost to complete the work that exceeds the | 18 | | unpaid balance of the contract sum. | 19 | | The surety shall respond to the Notice within 15 working | 20 | | days of receipt indicating the course of action that it | 21 | | intends to take or advising that it requires more time to | 22 | | investigate the default and select a course of action. If the | 23 | | surety requires more than 15 working days to investigate the | 24 | | default and select a course of action or if the surety elects | 25 | | to complete the work with a completing contractor that is not | 26 | | prepared to commence performance within 15 working days after |
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| 1 | | receipt of Notice, and if the State or any political | 2 | | subdivision determines it is in the best interest of the State | 3 | | to maintain the progress of the work, the State or any | 4 | | political subdivision may continue to work until the | 5 | | completing contractor is prepared to commence performance. | 6 | | Unless otherwise agreed to by the procuring agency, in no case | 7 | | may the surety take longer than 30 working days to advise the | 8 | | State or political subdivision on the course of action it | 9 | | intends to take. The surety shall be liable for reasonable | 10 | | costs incurred by the State or any political subdivision to | 11 | | maintain the progress to the extent the costs exceed the | 12 | | unpaid balance of the contract sum, subject to the penal sum of | 13 | | the bond.".
| 14 | | The surety bond required by this Section may be acquired | 15 | | from the
company, agent or broker of the contractor's choice. | 16 | | The bond and sureties
shall
be subject to the right of | 17 | | reasonable approval or disapproval, including
suspension, by | 18 | | the State or political subdivision thereof concerned. Except | 19 | | as otherwise provided in this Section, in In the
case of State | 20 | | construction contracts, a contractor shall not be required to
| 21 | | post a cash bond or letter of credit in addition to or as a | 22 | | substitute for the
surety bond required by this Section.
| 23 | | When other than motor fuel tax funds, federal-aid funds, | 24 | | or other
funds received from the State are used, a political | 25 | | subdivision may allow
the contractor to provide a | 26 | | non-diminishing irrevocable bank letter of
credit, in lieu of |
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| 1 | | the bond required by this Section, on contracts under
$100,000 | 2 | | to comply with the requirements of this Section. Any such bank
| 3 | | letter of credit shall contain all provisions required for | 4 | | bonds by this
Section.
| 5 | | In order to reduce barriers to entry for diverse and small | 6 | | businesses, the Department of Transportation may implement a | 7 | | 5-year pilot program to allow a contractor to provide a | 8 | | non-diminishing irrevocable bank letter of credit in lieu of | 9 | | the bond required by this Section on contracts under $500,000. | 10 | | Projects selected by the Department of Transportation for this | 11 | | pilot program must be classified by the Department as low-risk | 12 | | scope of work contracts. The Department shall adopt rules to | 13 | | define the criteria for pilot project selection and | 14 | | implementation of the pilot program. | 15 | | For the purposes of this Section, the terms "material", | 16 | | "labor", "apparatus", "fixtures", and "machinery" include | 17 | | those rented items that are on the construction site and those | 18 | | rented tools that are used or consumed on the construction | 19 | | site in the performance of the contract on account of which the | 20 | | bond is given. | 21 | | (Source: P.A. 101-65, eff. 1-1-20 .)
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