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Public Act 100-1089


 

Public Act 1089 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-1089
 
SB3560 EnrolledLRB100 17563 RJF 32733 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
adding Sections 3-3.5, 8, 9, 10, and 11 as follows:
 
    (30 ILCS 540/3-3.5 new)
    Sec. 3-3.5. Vendor payment contracts. Any contract
executed under the Vendor Payment Program specified in Section
900.125 of Title 74 of the Illinois Administrative Code prior
to June 30, 2018 shall remain in effect until those contracts
have expired. Those parties with existing contracts shall
comply with additional reporting requirements established
under this amendatory Act of the 100th General Assembly or
rules adopted hereunder.
 
    (30 ILCS 540/8 new)
    Sec. 8. Vendor Payment Program.
    (a) As used in this Section:
        "Applicant" means any entity seeking to be designated
    as a qualified purchaser.
        "Application period" means the time period when the
    Program is accepting applications as determined by the
    Department of Central Management Services.
        "Assigned penalties" means penalties payable by the
    State in accordance with this Act that are assigned to the
    qualified purchaser of an assigned receivable.
        "Assigned receivable" means the base invoice amount of
    a qualified account receivable and any associated assigned
    penalties due, currently and in the future, in accordance
    with this Act.
        "Assignment agreement" means an agreement executed and
    delivered by a participating vendor and a qualified
    purchaser, in which the participating vendor will assign
    one or more qualified accounts receivable to the qualified
    purchaser and make certain representations and warranties
    in respect thereof.
        "Base invoice amount" means the unpaid principal
    amount of the invoice associated with an assigned
    receivable.
        "Department" means the Department of Central
    Management Services.
        "Medical assistance program" means any program which
    provides medical assistance under Article V of the Illinois
    Public Aid Code, including Medicaid.
        "Participating vendor" means a vendor whose
    application for the sale of a qualified account receivable
    is accepted for purchase by a qualified purchaser under the
    Program terms.
        "Program" means a Vendor Payment Program.
        "Prompt payment penalties" means penalties payable by
    the State in accordance with this Act.
        "Purchase price" means 100% of the base invoice amount
    associated with an assigned receivable minus: (1) any
    deductions against the assigned receivable arising from
    State offsets; and (2) if and to the extent exercised by a
    qualified purchaser, other deductions for amounts owed by
    the participating vendor to the qualified purchaser for
    State offsets applied against other accounts receivable
    assigned by the participating vendor to the qualified
    purchaser under the Program.
        "Qualified account receivable" means an account
    receivable due and payable by the State that is outstanding
    for 90 days or more, is eligible to accrue prompt payment
    penalties under this Act and is verified by the relevant
    State agency. A qualified account receivable shall not
    include any account receivable related to medical
    assistance program (including Medicaid) payments or any
    other accounts receivable, the transfer or assignment of
    which is prohibited by, or otherwise prevented by,
    applicable law.
        "Qualified purchaser" means any entity that, during
    any application period, is approved by the Department of
    Central Management Services to participate in the Program
    on the basis of certain qualifying criteria as determined
    by the Department.
        "State offsets" means any amount deducted from
    payments made by the State in respect of any qualified
    account receivable due to the State's exercise of any
    offset or other contractual rights against a participating
    vendor. For the purpose of this Section, "State offsets"
    include statutorily required administrative fees imposed
    under the State Comptroller Act.
        "Sub-participant" means any individual or entity that
    intends to purchase assigned receivables, directly or
    indirectly, by or through an applicant or qualified
    purchaser for the purposes of the Program.
        "Sub-participant certification" means an instrument
    executed and delivered to the Department of Central
    Management Services by a sub-participant, in which the
    sub-participant certifies its agreement, among others, to
    be bound by the terms and conditions of the Program as a
    condition to its participation in the Program as a
    sub-participant.
    (b) This Section reflects the provisions of Section 900.125
of Title 74 of the Illinois Administrative Code prior to
January 1, 2018. The requirements of this Section establish the
criteria for participation by participating vendors and
qualified purchasers in a Vendor Payment Program. Information
regarding the Vendor Payment Program may be found at the
Internet website for the Department of Central Management
Services.
    (c) The State Comptroller and the Department of Central
Management Services are authorized to establish and implement
the Program under Section 3-3. This Section applies to all
qualified accounts receivable not otherwise excluded from
receiving prompt payment interest under Section 900.120 of
Title 74 of the Illinois Administrative Code. This Section
shall not apply to the purchase of any accounts receivable
related to payments made under a medical assistance program,
including Medicaid payments, or any other purchase of accounts
receivable that is otherwise prohibited by law.
    (d) Under the Program, qualified purchasers may purchase
from participating vendors certain qualified accounts
receivable owed by the State to the participating vendors. A
participating vendor shall not simultaneously apply to sell the
same qualified account receivable to more than one qualified
purchaser. In consideration of the payment of the purchase
price, a participating vendor shall assign to the qualified
purchaser all of its rights to payment of the qualified account
receivable, including all current and future prompt payment
penalties due to that qualified account receivable in
accordance with this Act.
    (e) A vendor may apply to participate in the Program if:
        (1) the vendor is owed an account receivable by the
    State for which prompt payment penalties have commenced
    accruing;
        (2) the vendor's account receivable is eligible to
    accrue prompt payment penalty interest under this Act;
        (3) the vendor's account receivable is not for payments
    under a medical assistance program; and
        (4) the vendor's account receivable is not prohibited
    by, or otherwise prevented by, applicable law from being
    transferred or assigned under this Section.
    (f) The Department shall review and approve or disapprove
each applicant seeking a qualified purchaser designation.
Factors to be considered by the Department in determining
whether an applicant shall be designated as a qualified
purchaser include, but are not limited to, the following:
        (1) the qualified purchaser's agreement to commit a
    minimum purchase amount as established from time to time by
    the Department based upon the current needs of the Program
    and the qualified purchaser's demonstrated ability to fund
    its commitment;
        (2) the demonstrated ability of a qualified
    purchaser's sub-participants to fund their portions of a
    qualified purchaser's minimum purchase commitment;
        (3) the ability of a qualified purchaser and its
    sub-participants to meet standards of responsibility
    substantially in accordance with the requirements of the
    Standards of Responsibility found in subsection (b) of
    Section 1.2046 of Title 44 of the Illinois Administrative
    Code concerning government contracts, procurement, and
    property management;
        (4) the agreement of each qualified purchaser, at its
    sole cost and expense, to administer and facilitate the
    operation of the Program with respect to that qualified
    purchaser, including, without limitation, assisting
    potential participating vendors with the application and
    assignment process;
        (5) the agreement of each qualified purchaser, at its
    sole cost and expense, to establish a website that is
    determined by the Department to be sufficient to administer
    the Program in accordance with the terms and conditions of
    the Program;
        (6) the agreement of each qualified purchaser, at its
    sole cost and expense, to market the Program to potential
    participating vendors;
        (7) the agreement of each qualified purchaser, at its
    sole cost and expense, to educate participating vendors
    about the benefits and risks associated with participation
    in the Program;
        (8) the agreement of each qualified purchaser, at its
    sole cost and expense, to deposit funds into, release funds
    from, and otherwise maintain all required accounts in
    accordance with the terms and conditions of the Program.
    Subject to the Program terms, all required accounts shall
    be maintained and controlled by the qualified purchaser at
    the qualified purchaser's sole cost and at no cost, whether
    in the form of fees or otherwise, to the participating
    vendors;
        (9) the agreement of each qualified purchaser, at its
    sole cost and expense, to submit a monthly written report,
    in an acceptable electronic format, to the State
    Comptroller or its designee and the Department or its
    designee, within 10 days after the end of each month,
    which, unless otherwise specified by the Department, at a
    minimum, shall contain:
            (A) a listing of each assigned receivable
        purchased by that qualified purchaser during the
        month, specifying the base invoice amount and invoice
        date of that assigned receivable and the name of the
        participating vendor, State contract number, voucher
        number, and State agency associated with that assigned
        receivable;
            (B) a listing of each assigned receivable with
        respect to which the qualified purchaser has received
        payment of the base invoice amount from the State
        during that month, including the amount of and date on
        which that payment was made and the name of the
        participating vendor, State contract number, voucher
        number, and State agency associated with the assigned
        receivable, and identifying the relevant application
        period for each assigned receivable;
            (C) a listing of any payments of assigned penalties
        received from the State during the month, including the
        amount of and date on which the payment was made, the
        name of the participating vendor, the voucher number
        for the assigned penalty receivable, and the
        associated assigned receivable, including the State
        contract number, voucher number, and State agency
        associated with the assigned receivable, and
        identifying the relevant application period for each
        assigned receivable;
            (D) the aggregate number and dollar value of
        assigned receivables purchased by the qualified
        purchaser from the date on which that qualified
        purchaser commenced participating in the Program
        through the last day of the month;
            (E) the aggregate number and dollar value of
        assigned receivables purchased by the qualified
        purchaser for which no payment by the State of the base
        invoice amount has yet been received, from the date on
        which the qualified purchaser commenced participating
        in the Program through the last day of the month;
            (F) the aggregate number and dollar value of
        invoices purchased by the qualified purchaser for
        which no voucher has been submitted; and
            (G) any other data the State Comptroller and the
        Department may reasonably request from time to time;
        (10) the agreement of each qualified purchaser to use
    its reasonable best efforts, and for any sub-participant to
    cause a qualified purchaser to use its reasonable best
    efforts, to diligently pursue receipt of assigned
    penalties associated with the assigned receivables,
    including, without limitation, by promptly notifying the
    relevant State agency that an assigned penalty is due and,
    if necessary, seeking payment of assigned penalties
    through the Illinois Court of Claims; and
        (11) the agreement of each qualified purchaser and any
    sub-participant to use their reasonable best efforts to
    implement the Program terms and to perform their
    obligations under the Program in a timely fashion.
    (g) Each qualified purchaser's performance and
implementation of its obligations under subsection (f) shall be
subject to review by the Department and the State Comptroller
at any time to confirm that the qualified purchaser is
undertaking those obligations in a manner consistent with the
terms and conditions of the Program. A qualified purchaser's
failure to so perform its obligations including, without
limitation, its obligations to diligently pursue receipt of
assigned penalties associated with assigned receivables, shall
be grounds for the Department and the State Comptroller to
terminate the qualified purchaser's participation in the
Program under subsection (i). Any such termination shall be
without prejudice to any rights a participating vendor may have
against that qualified purchaser, in law or in equity,
including, without limitation, the right to enforce the terms
of the assignment agreement and of the Program against the
qualified purchaser.
    (h) In determining whether any applicant shall be
designated as a qualified purchaser, the Department shall have
the right to review or approve sub-participants that intend to
purchase assigned receivables, directly or indirectly, by or
through the applicant. The Department reserves the right to
reject or terminate the designation of any applicant as a
qualified purchaser or require an applicant to exclude a
proposed sub-participant in order to become or remain a
qualified purchaser on the basis of a review, whether prior to
or after the designation. Each applicant and each qualified
purchaser has an affirmative obligation to promptly notify the
Department of any change or proposed change in the identity of
the sub-participants that it disclosed to the Department no
later than 3 business days after that change. Each
sub-participant shall be required to execute a sub-participant
certification that will be attached to the corresponding
qualified purchaser designation. Sub-participants shall meet,
at a minimum, the requirements of paragraphs (2), (3), (10),
and (11) of subsection (f).
    (i) The Program, as codified under this Section, shall
continue until terminated or suspended as follows:
        (1) The Program may be terminated or suspended: (A) by
    the State Comptroller, after consulting with the
    Department, by giving 10 days prior written notice to the
    Department and the qualified purchasers in the Program; or
    (B) by the Department, after consulting with the State
    Comptroller, by giving 10 days prior written notice to the
    State Comptroller and the qualified purchasers in the
    Program.
        (2) In the event a qualified purchaser or
    sub-participant breaches or fails to meet any of the terms
    or conditions of the Program, that qualified purchaser or
    sub-participant may be terminated from the Program: (A) by
    the State Comptroller, after consulting with the
    Department. The termination shall be effective immediately
    upon the State Comptroller giving written notice to the
    Department and the qualified purchaser or sub-participant;
    or (B) by the Department, after consulting with the State
    Comptroller. The termination shall be effective
    immediately upon the Department giving written notice to
    the State Comptroller and the qualified purchaser or
    sub-participant.
        (3) A qualified purchaser or sub-participant may
    terminate its participation in the Program, solely with
    respect to its own participation in the Program, in the
    event of any change to this Act from the form that existed
    on the date that the qualified purchaser or the
    sub-participant, as applicable, submitted the necessary
    documentation for admission into the Program if the change
    materially and adversely affects the qualified purchaser's
    or the sub-participant's ability to purchase and receive
    payment on receivables on the terms described in this
    Section.
    If the Program, a qualified purchaser, or a sub-participant
is terminated or suspended under paragraphs (1) or (2) of this
subsection (i), the Program, qualified purchaser, or
sub-participant may be reinstated only by written agreement of
the State Comptroller and the Department. No termination or
suspension under paragraphs (1), (2), or (3) of this subsection
(i) shall alter or affect the qualified purchaser's or
sub-participant's obligations with respect to assigned
receivables purchased by or through the qualified purchaser
prior to the termination.
 
    (30 ILCS 540/9 new)
    Sec. 9. Vendor Payment Program financial backer
disclosure.
    (a) Within 60 days after the effective date of this
amendatory Act of the 100th General Assembly, at the time of
application, and annually on July 1 of each year, each
qualified purchaser shall submit to the Department and the
State Comptroller the following information about each person,
director, owner, officer, association, financial backer,
partnership, other entity, corporation, or trust with an
indirect or direct financial interest in each qualified
purchaser:
        (1) percent ownership;
        (2) type of ownership;
        (3) first name, middle name, last name, maiden name (if
    applicable), including aliases or former names;
        (4) mailing address;
        (5) type of business entity, if applicable;
        (6) dates and jurisdiction of business formation or
    incorporation, if applicable;
        (7) names of controlling shareholders, class of stock,
    percentage ownership;
        (8) any indirect earnings resulting from the Program;
    and
        (9) any earnings associated with the Program to any
    parties not previously disclosed.
    (b) Within 60 days after the effective date of this
amendatory Act of the 100th General Assembly, at the time of
application, and annually on July 1 of each year, each trust
associated with the qualified purchaser shall submit to the
Department and the State Comptroller the following
information:
        (1) names, addresses, dates of birth, and percentages
    of interest of all beneficiaries;
        (2) any indirect earnings resulting from the Program;
    and
        (3) any earnings associated with the Program to any
    parties not previously disclosed.
    (c) Each qualified purchaser must submit a statement to the
State Comptroller and the Department of Central Management
Services disclosing whether such qualified purchaser or any
related person, director, owner, officer, or financial backer
has previously or currently retained or contracted with any
registered lobbyist, lawyer, accountant, or other consultant
to prepare the disclosure required under this Section.
 
    (30 ILCS 540/10 new)
    Sec. 10. Vendor Payment Program audit. The Office of the
Auditor General shall perform a performance audit of the
Program established under Section 8. The audit shall include,
but not be limited to, a review of the administration of the
Program and compliance with requirements applicable to
participating vendors, qualified purchasers, qualified
accounts receivable, and financial backer disclosures. The
audit shall cover the Program's operations for fiscal years
2019 and 2020. Upon its completion and release, the Auditor
General's report shall be posted on the Internet website of the
Auditor General.
 
    (30 ILCS 540/11 new)
    Sec. 11. Vendor Payment Program accountability portal. The
Department of Central Management Services and the State
Comptroller shall publish on their respective Internet
websites: (1) the monthly report information submitted under
paragraph 9 of subsection (f) of Section 8; and (2) the
information required to be submitted under Section 9.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 8/24/2018