97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3235

 

Introduced 2/1/2012, by Sen. Martin A. Sandoval

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 500/20-120
30 ILCS 540/7  from Ch. 127, par. 132.407

    Amends the Illinois Procurement Code. Provides that the Department of Transportation shall, by rule, implement a pilot program under which select construction contracts shall contain provisions that if a subcontractor has performed in accordance with the provisions of the subcontract and the work has been accepted by the Department, the Department shall pay the subcontractor directly. Provides that the program shall apply only to state-funded contracts under $10 million in value and to those contracts with subcontracts that contain provisions corresponding to pay items that are exclusively and completely performed by the subcontractor. Provides that the program shall be implemented by January 1, 2013 and shall expire on January 1, 2014. Amends the State Prompt Payment Act. Provides that certain provisions concerning payments to subcontractors do not apply to payments to a subcontractor for work performed under a subcontract entered into with a construction contractor if the contract contains a provision that the State agency shall pay the subcontractor directly. Effective immediately.


LRB097 15540 PJG 60670 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3235LRB097 15540 PJG 60670 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 Illinois Procurement Code is amended by
5changing Section 20-120 as follows:
 
6    (30 ILCS 500/20-120)
7    Sec. 20-120. Subcontractors.
8    (a) Any contract granted under this Code shall state
9whether the services of a subcontractor will or may be used.
10The contract shall include the names and addresses of all known
11subcontractors with subcontracts with an annual value of more
12than $25,000 and the expected amount of money each will receive
13under the contract. For procurements subject to the authority
14of the chief procurement officer appointed pursuant to
15subsection (a)(2) of Section 10-20, the contract shall include
16only the names and addresses of all known subcontractors of the
17primary contractor with subcontracts with an annual value of
18more than $25,000. The contractor shall provide the chief
19procurement officer or State purchasing officer a copy of any
20subcontract with an annual value of more than $25,000 so
21identified within 20 days after the execution of the State
22contract or after execution of the subcontract, whichever is
23later. A subcontractor, or contractor on behalf of a

 

 

SB3235- 2 -LRB097 15540 PJG 60670 b

1subcontractor, may identify information that is deemed
2proprietary or confidential. If the chief procurement officer
3determines the information is not relevant to the primary
4contract, the chief procurement officer may excuse the
5inclusion of the information. If the chief procurement officer
6determines the information is proprietary or could harm the
7business interest of the subcontractor, the chief procurement
8officer may, in his or her discretion, redact the information.
9Redacted information shall not become part of the public
10record.
11    (b) If at any time during the term of a contract, a
12contractor adds or changes any subcontractors, he or she shall
13promptly notify, in writing, the chief procurement officer,
14State purchasing officer, or their designee of the names and
15addresses and the expected amount of money each new or replaced
16subcontractor will receive. The contractor shall provide to the
17responsible chief procurement officer a copy of the subcontract
18within 20 days after the execution of the subcontract.
19    (c) In addition to any other requirements of this Code, a
20subcontract subject to this Section must include all of the
21subcontractor's certifications required by Article 50 of the
22Code.
23    (c-5) The Department of Transportation shall, by rule,
24implement a pilot program under which select construction
25contracts granted under this Code and all subcontracts pursuant
26to those contracts shall contain provisions that if a

 

 

SB3235- 3 -LRB097 15540 PJG 60670 b

1subcontractor has performed in accordance with the provisions
2of his or her subcontract and the work has been accepted by the
3Department, the Department shall pay the amount due the
4subcontractor directly to the subcontractor pursuant to the
5proper bill or invoice provided by the contractor to the
6Department in accordance with the provisions of the State
7Prompt Payment Act. If a construction contract granted under
8this Code contains a provision that the Department shall pay
9the subcontractor directly, the contractor shall deliver to the
10Department a proper bill or invoice, as defined in the State
11Prompt Payment Act, for each subcontractor with whom the
12contractor has a subcontract. The pilot program shall apply
13only to state-funded contracts under $10 million in value and
14to those contracts with subcontracts that contain provisions
15corresponding to pay items that are exclusively and completely
16performed by the subcontractor. The Secretary of
17Transportation may exempt any contract from the pilot program
18if the Secretary determines that the particular contract and
19its related subcontracts are administratively burdensome. The
20pilot program shall be implemented by January 1, 2013 and shall
21expire on January 1, 2014. The Department and the Comptroller
22shall report to the General Assembly the results of the pilot
23program with recommendations on whether or not to continue the
24program and any suggested improvements to the program.
25    (d) This Section applies to procurements solicited on or
26after the effective date of this amendatory Act of the 96th

 

 

SB3235- 4 -LRB097 15540 PJG 60670 b

1General Assembly.
2(Source: P.A. 96-795, eff. 7-1-10 (see Section 5 of P.A. 96-793
3for the effective date of P.A. 96-795); 96-920, eff. 7-1-10.)
 
4    Section 10. 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
24those funds received, plus interest received under this Act,

 

 

SB3235- 5 -LRB097 15540 PJG 60670 b

1with the contractor, subcontractors and material suppliers
2each receiving a prorated portion based on the amount of
3payment. When, however, the public owner does not release the
4full payment due under the contract because there are specific
5areas of work or materials the contractor is rejecting or
6because the contractor has otherwise determined such areas are
7not suitable for payment, then those specific subcontractors or
8suppliers involved shall not be paid for that portion of work
9rejected or deemed not suitable for payment and all other
10subcontractors and suppliers shall be paid in full, plus
11interest received under this Act.
12    (b) If the contractor, without reasonable cause, fails to
13make full payment of amounts due under subsection (a) to his
14subcontractors and material suppliers within 15 days after
15receipt of payment under the public construction contract, the
16contractor shall pay to his subcontractors and material
17suppliers, in addition to the payment due them, interest in the
18amount of 2% per month, calculated from the expiration of the
1915-day period until fully paid. This subsection shall also
20apply to any payments made by subcontractors and material
21suppliers to their subcontractors and material suppliers and to
22all payments made to lower tier subcontractors and material
23suppliers throughout the contracting chain.
24        (1) If a contractor, without reasonable cause, fails to
25    make payment in full as provided in subsection (a) within
26    15 days after receipt of payment under the public

 

 

SB3235- 6 -LRB097 15540 PJG 60670 b

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

 

 

SB3235- 7 -LRB097 15540 PJG 60670 b

1        (4) If a contractor fails to make full payment within
2    15 days after the administrative law judge's finding, then
3    the contractor shall be barred from entering into a State
4    public construction contract for a period of one year
5    beginning on the date of the administrative law judge's
6    finding.
7    (c) The provisions of this Section do not apply to payments
8to a subcontractor for work performed under a subcontract
9entered into with a construction contractor if the contract
10contains a provision that the State agency shall pay the
11subcontractor directly as required under a pilot program
12implemented by the Department of Transportation.
13(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.