Full Text of HB2664 100th General Assembly
HB2664eng 100TH GENERAL ASSEMBLY |
| | HB2664 Engrossed | | LRB100 08773 MLM 18912 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 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 | 9 | | administering a
contract submits a voucher to the Comptroller | 10 | | for
payment to a contractor, that State official or agency | 11 | | shall promptly make
available electronically
the voucher | 12 | | number, the date of the voucher, and
the amount of the voucher.
| 13 | | The State official or agency responsible for administering the | 14 | | contract shall
provide subcontractors and material suppliers, | 15 | | known to the State official or
agency, with instructions on how | 16 | | to access the electronic information. | 17 | | (a-5) When a
contractor receives any payment, the | 18 | | contractor shall
pay each subcontractor and material supplier | 19 | | in proportion to the work
completed by each subcontractor and | 20 | | material supplier its their application or pay estimate , plus | 21 | | interest received under this Act ,
less any retention . When a | 22 | | contractor receives any payment, the contractor shall pay each | 23 | | lower-tiered subcontractor and material supplier and each |
| | | HB2664 Engrossed | - 2 - | LRB100 08773 MLM 18912 b |
|
| 1 | | subcontractor and material supplier shall make payment to its | 2 | | own respective subcontractors and material suppliers. If the | 3 | | contractor receives less than the full payment
due under the | 4 | | public construction contract, the contractor shall be
| 5 | | obligated to disburse on a pro rata basis those funds received, | 6 | | plus interest received under this Act, with the
contractor, | 7 | | subcontractors and material suppliers each receiving a | 8 | | prorated
portion based on the amount of payment each has | 9 | | earned . When, however, the State official or agency public | 10 | | owner
does not release the full payment due under the contract | 11 | | because there are
specific areas of work or materials the State | 12 | | agency or official has determined contractor is rejecting or | 13 | | because
the contractor has otherwise determined such areas are | 14 | | not suitable for
payment, then those specific subcontractors or | 15 | | material suppliers involved shall not
be paid for that portion | 16 | | of work rejected or deemed not suitable for
payment and all | 17 | | other subcontractors and suppliers shall be paid based upon the | 18 | | amount of payment each has earned in full , plus interest | 19 | | received under this Act.
| 20 | | (a-10) For construction contracts with the Department of | 21 | | Transportation, the contractor, subcontractor, or material | 22 | | supplier, regardless of tier, shall not offset, decrease, or | 23 | | diminish payment or payments that are due to its subcontractors | 24 | | or material suppliers without reasonable cause. | 25 | | A contractor, who refuses to make prompt payment, in whole | 26 | | or in part, shall provide to the subcontractor or material |
| | | HB2664 Engrossed | - 3 - | LRB100 08773 MLM 18912 b |
|
| 1 | | supplier and the public owner or its agent, a written notice of | 2 | | that refusal. The written notice shall be made by a contractor | 3 | | no later than 5 calendar days after payment is received by the | 4 | | contractor. The written notice shall identify the Department of | 5 | | Transportation's contract, any subcontract or material | 6 | | purchase agreement, a detailed reason for refusal, the value of | 7 | | the payment to be withheld, and the specific remedial actions | 8 | | required of the subcontractor or material supplier so that | 9 | | payment may be made. Written notice of refusal may be given in | 10 | | a form and method which is acceptable to the parties and public | 11 | | owner. | 12 | | (b) If the contractor, without reasonable cause, fails to | 13 | | make full payment of amounts due under subsection (a) to its
| 14 | | his subcontractors and material suppliers within 15 calendar | 15 | | days after
receipt of
payment from the State official or agency | 16 | | under the public construction contract , the contractor shall | 17 | | pay to its
his subcontractors and material suppliers, in | 18 | | addition to the payment due
them, interest in the amount of
2% | 19 | | per month, calculated from the
expiration of the 15-day period | 20 | | until fully paid. This subsection shall further
also apply to | 21 | | any payments made by subcontractors and material suppliers to
| 22 | | their subcontractors and material suppliers and to all payments | 23 | | made to
lower tier subcontractors and material suppliers | 24 | | throughout the contracting
chain.
| 25 | | (1) If a contractor, without reasonable cause, fails to | 26 | | make payment in
full as
provided in subsection (a-5) (a) |
| | | HB2664 Engrossed | - 4 - | LRB100 08773 MLM 18912 b |
|
| 1 | | within 15 calendar days after receipt of payment under the
| 2 | | public
construction contract, any subcontractor or | 3 | | material supplier to whom payments
are owed
may file a | 4 | | written notice and request for administrative hearing with | 5 | | the State official or agency setting forth the
amount owed | 6 | | by
the contractor and the contractor's failure to timely | 7 | | pay the amount owed. The written notice and request for | 8 | | administrative hearing shall identify the public | 9 | | construction contract, the contractor, and the amount | 10 | | owed, and shall contain a sworn statement or attestation to | 11 | | verify the accuracy of the notice. The notice and request | 12 | | for administrative hearing shall be filed with the State | 13 | | official for the public construction contract, with a copy | 14 | | of the notice concurrently provided to the contractor. | 15 | | Notice to the State official may be made by certified or | 16 | | registered mail, messenger service, or personal service, | 17 | | and must include proof of delivery to the State official.
| 18 | | (2) The State official or agency, within 15 calendar | 19 | | days after receipt of a
subcontractor's
or material | 20 | | supplier's written notice and request for administrative | 21 | | hearing of the failure to receive payment from
the | 22 | | contractor ,
shall hold a hearing convened by an | 23 | | administrative law judge to determine whether the | 24 | | contractor withheld payment,
without
reasonable cause, | 25 | | from the subcontractors or and material suppliers and what
| 26 | | amount, if any,
is due to the subcontractors or and |
| | | HB2664 Engrossed | - 5 - | LRB100 08773 MLM 18912 b |
|
| 1 | | material suppliers , and the reasonable cause or causes | 2 | | asserted by the contractor . The State official or
agency | 3 | | shall
provide appropriate notice to the parties of the | 4 | | date, time, and location of
the hearing. Each contractor, | 5 | | subcontractor, or and material supplier has the right to be | 6 | | represented by counsel at a the hearing and to | 7 | | cross-examine witnesses and challenge documents. Upon the | 8 | | request of the subcontractor or material supplier and a | 9 | | showing of good cause, reasonable continuances may be | 10 | | granted by the administrative law judge.
| 11 | | (3) Upon If there is a finding by the administrative | 12 | | law judge that the contractor failed
to make
payment in | 13 | | full, without reasonable cause, as provided in subsection | 14 | | (a-10) (a) , then
the administrative law judge shall, in | 15 | | writing, order direct the contractor to pay the amount
owed | 16 | | to the
subcontractors or and material suppliers plus | 17 | | interest within 15 calendar days after the order
finding .
| 18 | | (4) If a contractor fails to make full payment as | 19 | | ordered under paragraph (3) of this subsection (b) within | 20 | | 15 days after the
administrative law judge's order finding , | 21 | | then the contractor shall be barred from
entering into a | 22 | | State
public construction contract for a period of one year | 23 | | beginning on the date of
the administrative law judge's | 24 | | order finding .
| 25 | | (5) If, on 2 or more occasions within a 3-calendar-year | 26 | | period, there is a finding by an administrative law judge |
| | | HB2664 Engrossed | - 6 - | LRB100 08773 MLM 18912 b |
|
| 1 | | that the contractor failed to make payment in full, without | 2 | | reasonable cause, and a written order was issued to a | 3 | | contractor under paragraph (3) of this subsection (b), then | 4 | | the contractor shall be barred from entering into a State | 5 | | public construction contract for a period of 6 months | 6 | | beginning on the date of the administrative law judge's | 7 | | second written order, even if the payments required under | 8 | | the orders were made in full. | 9 | | (6) If a contractor fails to make full payment as | 10 | | ordered under paragraph (4) of this subsection (b), the | 11 | | subcontractor or material supplier may, within 30 days of | 12 | | the date of that order, petition the State agency for an | 13 | | order for reasonable attorney's fees and costs incurred in | 14 | | the prosecution of the action under this subsection (b). | 15 | | Upon that petition and taking of additional evidence, as | 16 | | may be required, the administrative law judge may issue a | 17 | | supplemental order directing the contractor to pay those | 18 | | reasonable attorney's fees and costs. | 19 | | (7) The written order of the administrative law judge | 20 | | shall be final and appealable under the Administrative | 21 | | Review Law. | 22 | | (c) This Section shall not be construed to in any manner | 23 | | diminish, negate, or interfere with the | 24 | | contractor-subcontractor or contractor-material supplier | 25 | | relationship or commercially useful function. | 26 | | (d) This Section shall not preclude, bar, or stay the |
| | | HB2664 Engrossed | - 7 - | LRB100 08773 MLM 18912 b |
|
| 1 | | rights, remedies, and defenses available to the parties by way | 2 | | of the operation of their contract, purchase agreement, the | 3 | | Mechanics Lien Act, or the Public Construction Bond Act. | 4 | | (e) State officials and agencies may adopt rules as may be | 5 | | deemed necessary in order to establish the formal procedures | 6 | | required under this Section. | 7 | | (f) As used in this Section, | 8 | | "Payment" means the discharge of an obligation in money or | 9 | | other valuable consideration or thing delivered in full or | 10 | | partial satisfaction of an obligation to pay. "Payment" shall | 11 | | include interest paid pursuant to this Act. | 12 | | "Reasonable cause" may include, but is not limited to, | 13 | | unsatisfactory workmanship or materials; failure to provide | 14 | | documentation required by the contract, subcontract, or | 15 | | material purchase agreement; claims made against the | 16 | | Department of Transportation or the subcontractor pursuant to | 17 | | subsection (c) of Section 23 of the Mechanics Lien Act or the | 18 | | Public Construction Bond Act; judgments, levies, garnishments, | 19 | | or other court-ordered assessments or offsets in favor of the | 20 | | Department of Transportation or other State agency entered | 21 | | against a subcontractor or material supplier. "Reasonable | 22 | | cause" does not include payments issued to the contractor that | 23 | | create a negative or reduced valuation pay application or pay | 24 | | estimate due to a reduction of contract quantities or work not | 25 | | performed or provided by the subcontractor or material | 26 | | supplier; the interception or withholding of funds for reasons |
| | | HB2664 Engrossed | - 8 - | LRB100 08773 MLM 18912 b |
|
| 1 | | not related to the subcontractor's or material supplier's work | 2 | | on the contract; anticipated claims or assessments of third | 3 | | parties not a party related to the contract or subcontract; | 4 | | asserted claims or assessments of third parties that are not | 5 | | authorized by court order, administrative tribunal, or | 6 | | statute. "Reasonable cause" further does not include the | 7 | | withholding, offset, or reduction of payment, in whole or in | 8 | | part, due to the assessment of liquidated damages or penalties | 9 | | assessed by the Department of Transportation against the | 10 | | contractor, unless the subcontractor's performance or supplied | 11 | | materials were the sole and proximate cause of the liquidated | 12 | | damage or penalty. | 13 | | (Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07 .)
|
|