Illinois General Assembly - Full Text of HB5260
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Full Text of HB5260  94th General Assembly

HB5260sam001 94TH GENERAL ASSEMBLY

Sen. Terry Link

Filed: 3/9/2006

 

 


 

 


 
09400HB5260sam001 LRB094 16231 RSP 56931 a

1
AMENDMENT TO HOUSE BILL 5260

2     AMENDMENT NO. ______. Amend House Bill 5260 by replacing
3 everything after the enacting clause with the following:
 
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

 

 

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1     shall notify the vendor requesting payment as soon as
2     possible after discovering the defect pursuant to rules
3     promulgated under Section 3-3; provided, however, that the
4     notice for construction related bills or invoices must be
5     given not later than 30 days after the bill or invoice was
6     first submitted. The notice shall identify the defect and
7     any additional information necessary to correct the
8     defect. If one or more items on a construction related bill
9     or invoice are disapproved, but not the entire bill or
10     invoice, then the portion that is not disapproved shall be
11     paid.
12         (2) Where a State official or agency is late in payment
13     of a vendor's bill or invoice properly approved in
14     accordance with this Act, and different late payment terms
15     are not reduced to writing as a contractual agreement, the
16     State official or agency shall automatically pay interest
17     penalties required by this Section amounting to $50 or more
18     to the appropriate vendor. Each agency shall be responsible
19     for determining whether an interest penalty is owed and for
20     paying the interest to the vendor. For interest of at least
21     $5 but less than $50, the vendor must initiate a written
22     request for the interest penalty when such interest is due
23     and payable. The Department of Central Management Services
24     and the State Comptroller shall jointly promulgate rules
25     establishing the conditions under which interest of less
26     than $5 may be claimed and paid. In the event an individual
27     has paid a vendor for services in advance, the provisions
28     of this Section shall apply until payment is made to that
29     individual.
30 (Source: P.A. 92-384, eff. 7-1-02.)
 
31     (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
32     Sec. 7. Payments to subcontractors and material suppliers.
33     (a) When a State official or agency responsible for

 

 

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1 administering a contract submits a voucher to the Comptroller
2 for payment to a contractor, that State official or agency
3 shall promptly make available electronically the voucher
4 number, the date of the voucher, and the amount of the voucher.
5 The State official or agency responsible for administering the
6 contract shall provide subcontractors and material suppliers,
7 known to the State official or agency, with instructions on how
8 to access the electronic information. When a contractor
9 receives any payment, the contractor shall pay each
10 subcontractor and material supplier in proportion to the work
11 completed by each subcontractor and material supplier their
12 application, plus interest received under this Act, less any
13 retention. If the contractor receives less than the full
14 payment due under the public construction contract, the
15 contractor shall be obligated to disburse on a pro rata basis
16 those funds received, plus interest received under this Act,
17 with the contractor, subcontractors and material suppliers
18 each receiving a prorated portion based on the amount of
19 payment. When, however, the public owner does not release the
20 full payment due under the contract because there are specific
21 areas of work or materials the contractor is rejecting or
22 because the contractor has otherwise determined such areas are
23 not suitable for payment, then those specific subcontractors or
24 suppliers involved shall not be paid for that portion of work
25 rejected or deemed not suitable for payment and all other
26 subcontractors and suppliers shall be paid in full, plus
27 interest received under this Act.
28     (b) If the contractor, without reasonable cause, fails to
29 make full payment of amounts due under subsection (a) to his
30 subcontractors and material suppliers within 15 days after
31 receipt of payment under the public construction contract, the
32 contractor shall pay to his subcontractors and material
33 suppliers, in addition to the payment due them, interest in the
34 amount of 2% per month, calculated from the expiration of the

 

 

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

 

 

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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 (Source: P.A. 94-672, eff. 1-1-06.)
 
8     Section 10. The Local Government Prompt Payment Act is
9 amended by changing Sections 3 and 9 as follows:
 
10     (50 ILCS 505/3)  (from Ch. 85, par. 5603)
11     Sec. 3. The appropriate local governmental official or
12 agency receiving goods or services must approve or disapprove a
13 bill from a vendor or contractor for goods or services
14 furnished the local governmental agency within 30 days after
15 the receipt of such bill or within 30 days after the date on
16 which the goods or services were received, whichever is later.
17 If one or more items on a construction related bill or invoice
18 are disapproved, but not the entire bill or invoice, then the
19 portion that is not disapproved shall be paid. When safety or
20 quality assurance testing of goods by the local governmental
21 agency is necessary before the approval or disapproval of a
22 bill and such testing cannot be completed within 30 days after
23 receipt of the goods, approval or disapproval of the bill must
24 be made immediately upon completion of the testing or within 60
25 days after receipt of the goods, whichever occurs first.
26 Written notice shall be mailed to the vendor or contractor
27 immediately if a bill is disapproved.
28 (Source: P.A. 87-773.)
 
29     (50 ILCS 505/9)  (from Ch. 85, par. 5609)
30     Sec. 9. Payments to subcontractors and material suppliers;
31 failure to make timely payments; additional amount due. When a

 

 

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1 contractor receives any payment, the contractor shall pay each
2 subcontractor and material supplier in proportion to the work
3 completed by each subcontractor and material supplier their
4 application less any retention. If the contractor receives less
5 than the full payment due under the public construction
6 contract, the contractor shall be obligated to disburse on a
7 pro rata basis those funds received, with the contractor,
8 subcontractors and material suppliers each receiving a
9 prorated portion based on the amount of payment. All interest
10 payments received pursuant to Section 4 also shall be disbursed
11 to subcontractors and material suppliers to whom payment has
12 been delayed, on a pro rata basis. When, however, the public
13 owner does not release the full payment due under the contract
14 because there are specific areas of work or materials the
15 contractor is rejecting or because the contractor has otherwise
16 determined such areas are not suitable for payment, then those
17 specific subcontractors or suppliers involved shall not be paid
18 for that portion of the work rejected or deemed not suitable
19 for payment and all other subcontractors and suppliers shall be
20 paid in full.
21     If the contractor, without reasonable cause, fails to make
22 any payment to his subcontractors and material suppliers within
23 15 days after receipt of payment under the public construction
24 contract, the contractor shall pay to his subcontractors and
25 material suppliers, in addition to the payment due them,
26 interest in the amount of 2% per month, calculated from the
27 expiration of the 15-day period until fully paid. This Section
28 subsection shall also apply to any payments made by
29 subcontractors and material suppliers to their subcontractors
30 and material suppliers and to all payments made to lower tier
31 subcontractors and material suppliers throughout the
32 contracting chain.
33 (Source: P.A. 87-773.)
 

 

 

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1     Section 99. Effective date. This Act takes effect July 1,
2 2007.".