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Public Act 100-0376


 

Public Act 0376 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-0376
 
HB2664 EnrolledLRB100 08773 MLM 18912 b

    AN ACT concerning finance.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The State Prompt Payment Act is amended by
changing Section 7 as follows:
 
    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
    Sec. 7. Payments to subcontractors and material suppliers.
    (a) When a State official or agency responsible for
administering a contract submits a voucher to the Comptroller
for payment to a contractor, that State official or agency
shall promptly make available electronically the voucher
number, the date of the voucher, and the amount of the voucher.
The State official or agency responsible for administering the
contract shall provide subcontractors and material suppliers,
known to the State official or agency, with instructions on how
to access the electronic information.
    (a-5) When a contractor receives any payment, the
contractor shall pay each subcontractor and material supplier
in proportion to the work completed by each subcontractor and
material supplier its their application or pay estimate, plus
interest received under this Act, less any retention. When a
contractor receives any payment, the contractor shall pay each
lower-tiered subcontractor and material supplier and each
subcontractor and material supplier shall make payment to its
own respective subcontractors and material suppliers. If the
contractor receives less than the full payment due under the
public construction contract, the contractor shall be
obligated to disburse on a pro rata basis those funds received,
plus interest received under this Act, with the contractor,
subcontractors and material suppliers each receiving a
prorated portion based on the amount of payment each has
earned. When, however, the State official or agency public
owner does not release the full payment due under the contract
because there are specific areas of work or materials the State
agency or official has determined contractor is rejecting or
because the contractor has otherwise determined such areas are
not suitable for payment, then those specific subcontractors or
material suppliers involved shall not be paid for that portion
of work rejected or deemed not suitable for payment and all
other subcontractors and suppliers shall be paid based upon the
amount of payment each has earned in full, plus interest
received under this Act.
    (a-10) For construction contracts with the Department of
Transportation, the contractor, subcontractor, or material
supplier, regardless of tier, shall not offset, decrease, or
diminish payment or payments that are due to its subcontractors
or material suppliers without reasonable cause.
    A contractor, who refuses to make prompt payment, in whole
or in part, shall provide to the subcontractor or material
supplier and the public owner or its agent, a written notice of
that refusal. The written notice shall be made by a contractor
no later than 5 calendar days after payment is received by the
contractor. The written notice shall identify the Department of
Transportation's contract, any subcontract or material
purchase agreement, a detailed reason for refusal, the value of
the payment to be withheld, and the specific remedial actions
required of the subcontractor or material supplier so that
payment may be made. Written notice of refusal may be given in
a form and method which is acceptable to the parties and public
owner.
    (b) If the contractor, without reasonable cause, fails to
make full payment of amounts due under subsection (a) to its
his subcontractors and material suppliers within 15 calendar
days after receipt of payment from the State official or agency
under the public construction contract, the contractor shall
pay to its his subcontractors and material suppliers, in
addition to the payment due them, interest in the amount of 2%
per month, calculated from the expiration of the 15-day period
until fully paid. This subsection shall further also apply to
any payments made by subcontractors and material suppliers to
their subcontractors and material suppliers and to all payments
made to lower tier subcontractors and material suppliers
throughout the contracting chain.
        (1) If a contractor, without reasonable cause, fails to
    make payment in full as provided in subsection (a-5) (a)
    within 15 calendar days after receipt of payment under the
    public construction contract, any subcontractor or
    material supplier to whom payments are owed may file a
    written notice and request for administrative hearing with
    the State official or agency setting forth the amount owed
    by the contractor and the contractor's failure to timely
    pay the amount owed. The written notice and request for
    administrative hearing shall identify the public
    construction contract, the contractor, and the amount
    owed, and shall contain a sworn statement or attestation to
    verify the accuracy of the notice. The notice and request
    for administrative hearing shall be filed with the State
    official for the public construction contract, with a copy
    of the notice concurrently provided to the contractor.
    Notice to the State official may be made by certified or
    registered mail, messenger service, or personal service,
    and must include proof of delivery to the State official.
        (2) The State official or agency, within 15 calendar
    days after receipt of a subcontractor's or material
    supplier's written notice and request for administrative
    hearing of the failure to receive payment from the
    contractor, shall hold a hearing convened by an
    administrative law judge to determine whether the
    contractor withheld payment, without reasonable cause,
    from the subcontractors or and material suppliers and what
    amount, if any, is due to the subcontractors or and
    material suppliers, and the reasonable cause or causes
    asserted by the contractor. The State official or agency
    shall provide appropriate notice to the parties of the
    date, time, and location of the hearing. Each contractor,
    subcontractor, or and material supplier has the right to be
    represented by counsel at a the hearing and to
    cross-examine witnesses and challenge documents. Upon the
    request of the subcontractor or material supplier and a
    showing of good cause, reasonable continuances may be
    granted by the administrative law judge.
        (3) Upon If there is a finding by the administrative
    law judge that the contractor failed to make payment in
    full, without reasonable cause, as provided in subsection
    (a-10) (a), then the administrative law judge shall, in
    writing, order direct the contractor to pay the amount owed
    to the subcontractors or and material suppliers plus
    interest within 15 calendar days after the order finding.
        (4) If a contractor fails to make full payment as
    ordered under paragraph (3) of this subsection (b) within
    15 days after the administrative law judge's order finding,
    then the contractor shall be barred from entering into a
    State public construction contract for a period of one year
    beginning on the date of the administrative law judge's
    order finding.
        (5) If, on 2 or more occasions within a 3-calendar-year
    period, there is a finding by an administrative law judge
    that the contractor failed to make payment in full, without
    reasonable cause, and a written order was issued to a
    contractor under paragraph (3) of this subsection (b), then
    the contractor shall be barred from entering into a State
    public construction contract for a period of 6 months
    beginning on the date of the administrative law judge's
    second written order, even if the payments required under
    the orders were made in full.
        (6) If a contractor fails to make full payment as
    ordered under paragraph (4) of this subsection (b), the
    subcontractor or material supplier may, within 30 days of
    the date of that order, petition the State agency for an
    order for reasonable attorney's fees and costs incurred in
    the prosecution of the action under this subsection (b).
    Upon that petition and taking of additional evidence, as
    may be required, the administrative law judge may issue a
    supplemental order directing the contractor to pay those
    reasonable attorney's fees and costs.
        (7) The written order of the administrative law judge
    shall be final and appealable under the Administrative
    Review Law.
    (c) This Section shall not be construed to in any manner
diminish, negate, or interfere with the
contractor-subcontractor or contractor-material supplier
relationship or commercially useful function.
    (d) This Section shall not preclude, bar, or stay the
rights, remedies, and defenses available to the parties by way
of the operation of their contract, purchase agreement, the
Mechanics Lien Act, or the Public Construction Bond Act.
    (e) State officials and agencies may adopt rules as may be
deemed necessary in order to establish the formal procedures
required under this Section.
    (f) As used in this Section,
    "Payment" means the discharge of an obligation in money or
other valuable consideration or thing delivered in full or
partial satisfaction of an obligation to pay. "Payment" shall
include interest paid pursuant to this Act.
    "Reasonable cause" may include, but is not limited to,
unsatisfactory workmanship or materials; failure to provide
documentation required by the contract, subcontract, or
material purchase agreement; claims made against the
Department of Transportation or the subcontractor pursuant to
subsection (c) of Section 23 of the Mechanics Lien Act or the
Public Construction Bond Act; judgments, levies, garnishments,
or other court-ordered assessments or offsets in favor of the
Department of Transportation or other State agency entered
against a subcontractor or material supplier. "Reasonable
cause" does not include payments issued to the contractor that
create a negative or reduced valuation pay application or pay
estimate due to a reduction of contract quantities or work not
performed or provided by the subcontractor or material
supplier; the interception or withholding of funds for reasons
not related to the subcontractor's or material supplier's work
on the contract; anticipated claims or assessments of third
parties not a party related to the contract or subcontract;
asserted claims or assessments of third parties that are not
authorized by court order, administrative tribunal, or
statute. "Reasonable cause" further does not include the
withholding, offset, or reduction of payment, in whole or in
part, due to the assessment of liquidated damages or penalties
assessed by the Department of Transportation against the
contractor, unless the subcontractor's performance or supplied
materials were the sole and proximate cause of the liquidated
damage or penalty.
(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)

Effective Date: 1/1/2018