HB5260 Enrolled LRB094 16231 RSP 51475 b

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 State Prompt Payment Act is amended by
5 changing Sections 3-2 and 7 as follows:
 
6     (30 ILCS 540/3-2)  (from Ch. 127, par. 132.403-2)
7     Sec. 3-2. Beginning July 1, 1993, in any instance where a
8 State official or agency is late in payment of a vendor's bill
9 or invoice for goods or services furnished to the State, as
10 defined in Section 1, properly approved in accordance with
11 rules promulgated under Section 3-3, the State official or
12 agency shall pay interest to the vendor in accordance with the
13 following:
14         (1) Any bill approved for payment under this Section
15     must be paid or the payment issued to the payee within 60
16     days of receipt of a proper bill or invoice. If payment is
17     not issued to the payee within this 60 day period, an
18     interest penalty of 1.0% of any amount approved and unpaid
19     shall be added for each month or fraction thereof after the
20     end of this 60 day period, until final payment is made.
21         (1.1) A State agency shall review in a timely manner
22     each bill or invoice after its receipt. If the State agency
23     determines that the bill or invoice contains a defect
24     making it unable to process the payment request, the agency
25     shall notify the vendor requesting payment as soon as
26     possible after discovering the defect pursuant to rules
27     promulgated under Section 3-3; provided, however, that the
28     notice for construction related bills or invoices must be
29     given not later than 30 days after the bill or invoice was
30     first submitted. The notice shall identify the defect and
31     any additional information necessary to correct the
32     defect. If one or more items on a construction related bill

 

 

HB5260 Enrolled - 2 - LRB094 16231 RSP 51475 b

1     or invoice are disapproved, but not the entire bill or
2     invoice, then the portion that is not disapproved shall be
3     paid.
4         (2) Where a State official or agency is late in payment
5     of a vendor's bill or invoice properly approved in
6     accordance with this Act, and different late payment terms
7     are not reduced to writing as a contractual agreement, the
8     State official or agency shall automatically pay interest
9     penalties required by this Section amounting to $50 or more
10     to the appropriate vendor. Each agency shall be responsible
11     for determining whether an interest penalty is owed and for
12     paying the interest to the vendor. For interest of at least
13     $5 but less than $50, the vendor must initiate a written
14     request for the interest penalty when such interest is due
15     and payable. The Department of Central Management Services
16     and the State Comptroller shall jointly promulgate rules
17     establishing the conditions under which interest of less
18     than $5 may be claimed and paid. In the event an individual
19     has paid a vendor for services in advance, the provisions
20     of this Section shall apply until payment is made to that
21     individual.
22 (Source: P.A. 92-384, eff. 7-1-02.)
 
23     (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
24     Sec. 7. Payments to subcontractors and material suppliers.
25     (a) When a State official or agency responsible for
26 administering a contract submits a voucher to the Comptroller
27 for payment to a contractor, that State official or agency
28 shall promptly make available electronically the voucher
29 number, the date of the voucher, and the amount of the voucher.
30 The State official or agency responsible for administering the
31 contract shall provide subcontractors and material suppliers,
32 known to the State official or agency, with instructions on how
33 to access the electronic information. When a contractor
34 receives any payment, the contractor shall pay each
35 subcontractor and material supplier in proportion to the work

 

 

HB5260 Enrolled - 3 - LRB094 16231 RSP 51475 b

1 completed by each subcontractor and material supplier their
2 application, plus interest received under this Act, less any
3 retention. If the contractor receives less than the full
4 payment due under the public construction contract, the
5 contractor shall be obligated to disburse on a pro rata basis
6 those funds received, plus interest received under this Act,
7 with the contractor, subcontractors and material suppliers
8 each receiving a prorated portion based on the amount of
9 payment. When, however, the public owner does not release the
10 full payment due under the contract because there are specific
11 areas of work or materials the contractor is rejecting or
12 because the contractor has otherwise determined such areas are
13 not suitable for payment, then those specific subcontractors or
14 suppliers involved shall not be paid for that portion of work
15 rejected or deemed not suitable for payment and all other
16 subcontractors and suppliers shall be paid in full, plus
17 interest received under this Act.
18     (b) If the contractor, without reasonable cause, fails to
19 make full payment of amounts due under subsection (a) to his
20 subcontractors and material suppliers within 15 days after
21 receipt of payment under the public construction contract, the
22 contractor shall pay to his subcontractors and material
23 suppliers, in addition to the payment due them, interest in the
24 amount of 2% per month, calculated from the expiration of the
25 15-day period until fully paid. This subsection shall also
26 apply to any payments made by subcontractors and material
27 suppliers to their subcontractors and material suppliers and to
28 all payments made to lower tier subcontractors and material
29 suppliers throughout the contracting chain.
30         (1) If a contractor, without reasonable cause, fails to
31     make payment in full as provided in subsection (a) within
32     15 days after receipt of payment under the public
33     construction contract, any subcontractor or material
34     supplier to whom payments are owed may file a written
35     notice with the State official or agency setting forth the
36     amount owed by the contractor and the contractor's failure

 

 

HB5260 Enrolled - 4 - LRB094 16231 RSP 51475 b

1     to timely pay the amount owed.
2         (2) The State official or agency, within 15 days after
3     receipt of a subcontractor's or material supplier's
4     written notice of the failure to receive payment from the
5     contractor, shall hold a hearing convened by an
6     administrative law judge to determine whether the
7     contractor withheld payment, without reasonable cause,
8     from the subcontractors and material suppliers and what
9     amount, if any, is due to the subcontractors and material
10     suppliers. The State official or agency shall provide
11     appropriate notice to the parties of the date, time, and
12     location of the hearing. Each contractor, subcontractor,
13     and material supplier has the right to be represented by
14     counsel at the hearing and to cross-examine witnesses and
15     challenge documents.
16         (3) If there is a finding by the administrative law
17     judge that the contractor failed to make payment in full,
18     without reasonable cause, as provided in subsection (a),
19     then the administrative law judge shall, in writing, direct
20     the contractor to pay the amount owed to the subcontractors
21     and material suppliers plus interest within 15 days after
22     the finding.
23         (4) If a contractor fails to make full payment within
24     15 days after the administrative law judge's finding, then
25     the contractor shall be barred from entering into a State
26     public construction contract for a period of one year
27     beginning on the date of the administrative law judge's
28     finding.
29 (Source: P.A. 94-672, eff. 1-1-06.)
 
30     Section 10. The Local Government Prompt Payment Act is
31 amended by changing Sections 3 and 9 as follows:
 
32     (50 ILCS 505/3)  (from Ch. 85, par. 5603)
33     Sec. 3. The appropriate local governmental official or
34 agency receiving goods or services must approve or disapprove a

 

 

HB5260 Enrolled - 5 - LRB094 16231 RSP 51475 b

1 bill from a vendor or contractor for goods or services
2 furnished the local governmental agency within 30 days after
3 the receipt of such bill or within 30 days after the date on
4 which the goods or services were received, whichever is later.
5 If one or more items on a construction related bill or invoice
6 are disapproved, but not the entire bill or invoice, then the
7 portion that is not disapproved shall be paid. When safety or
8 quality assurance testing of goods by the local governmental
9 agency is necessary before the approval or disapproval of a
10 bill and such testing cannot be completed within 30 days after
11 receipt of the goods, approval or disapproval of the bill must
12 be made immediately upon completion of the testing or within 60
13 days after receipt of the goods, whichever occurs first.
14 Written notice shall be mailed to the vendor or contractor
15 immediately if a bill is disapproved.
16 (Source: P.A. 87-773.)
 
17     (50 ILCS 505/9)  (from Ch. 85, par. 5609)
18     Sec. 9. Payments to subcontractors and material suppliers;
19 failure to make timely payments; additional amount due. When a
20 contractor receives any payment, the contractor shall pay each
21 subcontractor and material supplier in proportion to the work
22 completed by each subcontractor and material supplier their
23 application less any retention. If the contractor receives less
24 than the full payment due under the public construction
25 contract, the contractor shall be obligated to disburse on a
26 pro rata basis those funds received, with the contractor,
27 subcontractors and material suppliers each receiving a
28 prorated portion based on the amount of payment. All interest
29 payments received pursuant to Section 4 also shall be disbursed
30 to subcontractors and material suppliers to whom payment has
31 been delayed, on a pro rata basis. When, however, the public
32 owner does not release the full payment due under the contract
33 because there are specific areas of work or materials the
34 contractor is rejecting or because the contractor has otherwise
35 determined such areas are not suitable for payment, then those

 

 

HB5260 Enrolled - 6 - LRB094 16231 RSP 51475 b

1 specific subcontractors or suppliers involved shall not be paid
2 for that portion of the work rejected or deemed not suitable
3 for payment and all other subcontractors and suppliers shall be
4 paid in full.
5     If the contractor, without reasonable cause, fails to make
6 any payment to his subcontractors and material suppliers within
7 15 days after receipt of payment under the public construction
8 contract, the contractor shall pay to his subcontractors and
9 material suppliers, in addition to the payment due them,
10 interest in the amount of 2% per month, calculated from the
11 expiration of the 15-day period until fully paid. This Section
12 subsection shall also apply to any payments made by
13 subcontractors and material suppliers to their subcontractors
14 and material suppliers and to all payments made to lower tier
15 subcontractors and material suppliers throughout the
16 contracting chain.
17 (Source: P.A. 87-773.)
 
18     Section 99. Effective date. This Act takes effect July 1,
19 2007.