Illinois General Assembly - Full Text of HB2722
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Full Text of HB2722  101st General Assembly




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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 Public Construction Bond Act is amended by
5changing Sections 1 and 2 as follows:
6    (30 ILCS 550/1)  (from Ch. 29, par. 15)
7    Sec. 1. Except as otherwise provided by this Act, all
8officials, boards, commissions, or agents of this State, or of
9any political subdivision thereof, in making contracts for
10public work of any kind costing over $50,000 to be performed
11for the State, or of any political subdivision thereof, shall
12require every contractor for the work to furnish, supply and
13deliver a bond to the State, or to the political subdivision
14thereof entering into the contract, as the case may be, with
15good and sufficient sureties. The surety on the bond shall be a
16company that is licensed by the Department of Insurance
17authorizing it to execute surety bonds and the company shall
18have a financial strength rating of at least A- as rated by
19A.M. Best Company, Inc., Moody's Investors Service, Standard &
20Poor's Corporation, or a similar rating agency. The amount of
21the bond shall be fixed by the officials, boards, commissions,
22commissioners or agents, and the bond, among other conditions,
23shall be conditioned for the completion of the contract, for



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1the payment of material, apparatus, fixtures, and machinery
2used in the work and for all labor performed in the work,
3whether by subcontractor or otherwise.
4    If the contract is for emergency repairs as provided in the
5Illinois Procurement Code, proof of payment for all labor,
6materials, apparatus, fixtures, and machinery may be furnished
7in lieu of the bond required by this Section.
8    Each such bond is deemed to contain the following
9provisions whether such provisions are inserted in such bond or
11    "The principal and sureties on this bond agree that all the
12undertakings, covenants, terms, conditions and agreements of
13the contract or contracts entered into between the principal
14and the State or any political subdivision thereof will be
15performed and fulfilled and to pay all persons, firms and
16corporations having contracts with the principal or with
17subcontractors, all just claims due them under the provisions
18of such contracts for labor performed or materials furnished in
19the performance of the contract on account of which this bond
20is given, when such claims are not satisfied out of the
21contract price of the contract on account of which this bond is
22given, after final settlement between the officer, board,
23commission or agent of the State or of any political
24subdivision thereof and the principal has been made.".
25    Each bond securing contracts between the Capital
26Development Board or any board of a public institution of



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1higher education and a contractor shall contain the following
2provisions, whether the provisions are inserted in the bond or
4    "Upon the default of the principal with respect to
5undertakings, covenants, terms, conditions, and agreements,
6the termination of the contractor's right to proceed with the
7work, and written notice of that default and termination by the
8State or any political subdivision to the surety ("Notice"),
9the surety shall promptly remedy the default by taking one of
10the following actions:
11        (1) The surety shall complete the work pursuant to a
12    written takeover agreement, using a completing contractor
13    jointly selected by the surety and the State or any
14    political subdivision; or
15        (2) The surety shall pay a sum of money to the obligee,
16    up to the penal sum of the bond, that represents the
17    reasonable cost to complete the work that exceeds the
18    unpaid balance of the contract sum.
19    The surety shall respond to the Notice within 15 working
20days of receipt indicating the course of action that it intends
21to take or advising that it requires more time to investigate
22the default and select a course of action. If the surety
23requires more than 15 working days to investigate the default
24and select a course of action or if the surety elects to
25complete the work with a completing contractor that is not
26prepared to commence performance within 15 working days after



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1receipt of Notice, and if the State or any political
2subdivision determines it is in the best interest of the State
3to maintain the progress of the work, the State or any
4political subdivision may continue to work until the completing
5contractor is prepared to commence performance. Unless
6otherwise agreed to by the procuring agency, in no case may the
7surety take longer than 30 working days to advise the State or
8political subdivision on the course of action it intends to
9take. The surety shall be liable for reasonable costs incurred
10by the State or any political subdivision to maintain the
11progress to the extent the costs exceed the unpaid balance of
12the contract sum, subject to the penal sum of the bond.".
13    The surety bond required by this Section may be acquired
14from the company, agent or broker of the contractor's choice.
15The bond and sureties shall be subject to the right of
16reasonable approval or disapproval, including suspension, by
17the State or political subdivision thereof concerned. In the
18case of State construction contracts, a contractor shall not be
19required to post a cash bond or letter of credit in addition to
20or as a substitute for the surety bond required by this
22    When other than motor fuel tax funds, federal-aid funds, or
23other funds received from the State are used, a political
24subdivision may allow the contractor to provide a
25non-diminishing irrevocable bank letter of credit, in lieu of
26the bond required by this Section, on contracts under $100,000



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1to comply with the requirements of this Section. Any such bank
2letter of credit shall contain all provisions required for
3bonds by this Section.
4    For the purposes of this Section, the terms "material",
5"labor", "apparatus", "fixtures", and "machinery" include
6those rented items that are on the construction site and those
7rented tools that are used or consumed on the construction site
8in the performance of the contract on account of which the bond
9is given.
10(Source: P.A. 98-216, eff. 8-9-13; 98-1018, eff. 8-22-14.)
11    (30 ILCS 550/2)  (from Ch. 29, par. 16)
12    Sec. 2. Every person furnishing material, apparatus,
13fixtures, machinery, or performing labor, either as an
14individual or as a sub-contractor, hereinafter referred to as
15Claimant, for any contractor, with the State, or a political
16subdivision thereof where bond or letter of credit shall be
17executed as provided in this Act, shall have the right to sue
18on such bond or letter of credit in the name of the State, or
19the political subdivision thereof entering into such contract,
20as the case may be, for his use and benefit, and in such suit
21the plaintiff shall file a copy of such bond or letter of
22credit, certified by the party or parties in whose charge such
23bond or letter of credit shall be, which copy shall, unless
24execution thereof be denied under oath, be prima facie evidence
25of the execution and delivery of the original; provided,



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1however, that this Act shall not be taken to in any way make
2the State, or the political subdivision thereof entering into
3such contract, as the case may be, liable to such
4sub-contractor, materialman or laborer to any greater extent
5than it was liable under the law as it stood before the
6adoption of this Act.
7    Provided, however, that any Claimant having a claim for
8labor, and material, apparatus, fixtures, and machinery
9furnished to the State shall have no such right of action
10unless it shall have filed a verified notice of said claim with
11the officer, board, bureau or department awarding the contract,
12within 180 days after the date of the last item of work or the
13furnishing of the last item of materials, apparatus, fixtures,
14and machinery, and shall have furnished a copy of such verified
15notice to the contractor within 10 days of the filing of the
16notice with the agency awarding the contract.
17    When any Claimant has a claim for labor, and material,
18apparatus, fixtures, and machinery furnished to a political
19subdivision, the Claimant shall have no right of action unless
20it shall have filed a verified notice of that claim with the
21Clerk or Secretary of the political subdivision within 180 days
22after the date of the last item of work or furnishing of the
23last item of materials, apparatus, fixtures, and machinery, and
24shall have filed a copy of that verified notice upon the
25contractor in a like manner as provided herein within 10 days
26after the filing of the notice with the Clerk or Secretary.



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1    The Claimant may file said verified notice by using
2personal service or by depositing the verified notice in the
3United States Mail, postage prepaid, certified or restricted
4delivery return receipt requested limited to addressee only.
5The verified notice shall be deemed filed on the date personal
6service occurs or the date when the verified notice is mailed
7in the form and manner provided in this Section.
8    The claim shall be verified and shall contain (1) the name
9and address of the claimant; the business address of the
10Claimant within this State and if the Claimant shall be a
11foreign corporation having no place of business within the
12State, the notice shall state the principal place of business
13of said corporation and in the case of a partnership, the
14notice shall state the names and residences of each of the
15partners; (2) the name of the contractor for the government;
16(3) the name of the person, firm or corporation by whom the
17Claimant was employed or to whom he or it furnished materials,
18apparatus, fixtures, or machinery; (4) a brief description of
19the public improvement; (5) a description of the Claimant's
20contract as it pertains to the public improvement, describing
21the work done by the Claimant and stating the total amount due
22and unpaid as of the date of verified notice.
23    No defect in the notice herein provided for shall deprive
24the Claimant of his right of action under this article unless
25it shall affirmatively appear that such defect has prejudiced
26the rights of an interested party asserting the same.



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1    Provided, further, that no action shall be brought later
2than one year after the date of the furnishing of the last item
3of work, or materials, apparatus, fixtures, or machinery by the
4Claimant. Such action shall be brought only in the circuit
5court of this State in the judicial circuit in which the
6contract is to be performed.
7    The remedy provided in this Section is in addition to and
8independent of any other rights and remedies provided at law or
9in equity. A waiver of rights under the Mechanics Lien Act
10shall not constitute a waiver of rights under this Section
11unless specifically stated in the waiver.
12    For the purposes of this Section, the terms "material",
13"labor", "apparatus", "fixtures", and "machinery" include
14those rented items that are on the construction site and those
15rented tools that are used or consumed on the construction site
16in the performance of the contract on account of which the bond
17is given.
18(Source: P.A. 99-673, eff. 1-1-17.)