100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB1266

 

Introduced 2/9/2017, by Sen. Martin A. Sandoval

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 540/7  from Ch. 127, par. 132.407

    Amends the Prompt Payment Act. Provides that a contractor may require either a performance bond or retention of payment of a subcontractor as part of the subcontract. Provides that a contractor may not require both.


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A BILL FOR

 

SB1266LRB100 08808 MLM 18949 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Prompt Payment Act is amended by
5changing Section 7 as follows:
 
6    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
7    Sec. 7. Payments to subcontractors and material suppliers.
8    (a) When a State official or agency responsible for
9administering a contract submits a voucher to the Comptroller
10for payment to a contractor, that State official or agency
11shall promptly make available electronically the voucher
12number, the date of the voucher, and the amount of the voucher.
13The State official or agency responsible for administering the
14contract shall provide subcontractors and material suppliers,
15known to the State official or agency, with instructions on how
16to access the electronic information. When a contractor
17receives any payment, the contractor shall pay each
18subcontractor and material supplier in proportion to the work
19completed by each subcontractor and material supplier their
20application, plus interest received under this Act, less any
21retention. If the contractor receives less than the full
22payment due under the public construction contract, the
23contractor shall be obligated to disburse on a pro rata basis

 

 

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1those funds received, plus interest received under this Act,
2with the contractor, subcontractors and material suppliers
3each receiving a prorated portion based on the amount of
4payment. When, however, the public owner does not release the
5full payment due under the contract because there are specific
6areas of work or materials the contractor is rejecting or
7because the contractor has otherwise determined such areas are
8not suitable for payment, then those specific subcontractors or
9suppliers involved shall not be paid for that portion of work
10rejected or deemed not suitable for payment and all other
11subcontractors and suppliers shall be paid in full, plus
12interest received under this Act.
13    A contractor may require either a performance bond or
14retention of payment of a subcontractor as part of the
15subcontract. However, a contractor may not require both.
16    (b) If the contractor, without reasonable cause, fails to
17make full payment of amounts due under subsection (a) to his
18subcontractors and material suppliers within 15 days after
19receipt of payment under the public construction contract, the
20contractor shall pay to his subcontractors and material
21suppliers, in addition to the payment due them, interest in the
22amount of 2% per month, calculated from the expiration of the
2315-day period until fully paid. This subsection shall also
24apply to any payments made by subcontractors and material
25suppliers to their subcontractors and material suppliers and to
26all payments made to lower tier subcontractors and material

 

 

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1suppliers throughout the contracting chain.
2        (1) If a contractor, without reasonable cause, fails to
3    make payment in full as provided in subsection (a) within
4    15 days after receipt of payment under the public
5    construction contract, any subcontractor or material
6    supplier to whom payments are owed may file a written
7    notice with the State official or agency setting forth the
8    amount owed by the contractor and the contractor's failure
9    to timely pay the amount owed.
10        (2) The State official or agency, within 15 days after
11    receipt of a subcontractor's or material supplier's
12    written notice of the failure to receive payment from the
13    contractor, shall hold a hearing convened by an
14    administrative law judge to determine whether the
15    contractor withheld payment, without reasonable cause,
16    from the subcontractors and material suppliers and what
17    amount, if any, is due to the subcontractors and material
18    suppliers. The State official or agency shall provide
19    appropriate notice to the parties of the date, time, and
20    location of the hearing. Each contractor, subcontractor,
21    and material supplier has the right to be represented by
22    counsel at the hearing and to cross-examine witnesses and
23    challenge documents.
24        (3) If there is a finding by the administrative law
25    judge that the contractor failed to make payment in full,
26    without reasonable cause, as provided in subsection (a),

 

 

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1    then the administrative law judge shall, in writing, direct
2    the contractor to pay the amount owed to the subcontractors
3    and material suppliers plus interest within 15 days after
4    the finding.
5        (4) If a contractor fails to make full payment within
6    15 days after the administrative law judge's finding, then
7    the contractor shall be barred from entering into a State
8    public construction contract for a period of one year
9    beginning on the date of the administrative law judge's
10    finding.
11(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)