Full Text of HB2722 101st General Assembly
HB2722 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 HB2722 Introduced , by Rep. Jennifer Gong-Gershowitz SYNOPSIS AS INTRODUCED: |
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30 ILCS 550/1 | from Ch. 29, par. 15 |
30 ILCS 550/2 | from Ch. 29, par. 16 |
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Amends the Public Construction Bond Act. Provides for bonds issued under the Act to be used for, among other conditions, the payment of apparatus, fixtures, and machinery used in the completion of a contract. Provides that the terms "material", "labor", "apparatus", "fixtures", and "machinery" include those rented items that are on the construction site and those rented tools that are used or consumed on the construction site in the performance of the contract on account of which the bond is given. Makes conforming changes.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 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 Public Construction Bond Act is amended by | 5 | | changing 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 | 8 | | officials, boards,
commissions, or agents of this State, or of | 9 | | any political subdivision thereof, in making contracts for | 10 | | public work of
any kind costing over $50,000 to be performed | 11 | | for the State, or of any political subdivision thereof,
shall | 12 | | require every contractor for the work to furnish, supply and | 13 | | deliver
a bond to the State, or to the political subdivision | 14 | | thereof entering into
the contract, as the case may be, with | 15 | | good and sufficient sureties. The surety on the bond shall be a | 16 | | company that is licensed by the Department of Insurance | 17 | | authorizing it to execute surety bonds and the company shall | 18 | | have a financial strength rating of at least A- as rated by | 19 | | A.M. Best Company, Inc., Moody's Investors Service, Standard & | 20 | | Poor's Corporation, or a similar rating agency. The
amount of | 21 | | the bond shall be fixed by the officials, boards, commissions,
| 22 | | commissioners or agents, and the bond, among other conditions,
| 23 | | shall be
conditioned for the completion of the contract, for |
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| 1 | | the payment of material , apparatus, fixtures, and machinery
| 2 | | used in the work and for all labor performed in the work, | 3 | | whether by
subcontractor or otherwise.
| 4 | | If the contract is for emergency repairs as provided in the | 5 | | Illinois
Procurement
Code, proof of payment for all labor, | 6 | | materials, apparatus, fixtures, and
machinery may be
furnished | 7 | | in lieu of the bond required by this Section.
| 8 | | Each such bond is deemed to contain the following | 9 | | provisions whether
such provisions are inserted in such bond or | 10 | | not:
| 11 | | "The principal and sureties on this bond agree that all the
| 12 | | undertakings, covenants, terms, conditions and agreements of | 13 | | the contract
or contracts entered into between the principal | 14 | | and the State or any
political subdivision thereof will be | 15 | | performed and fulfilled and to pay
all persons, firms and | 16 | | corporations having contracts with the principal or
with | 17 | | subcontractors, all just claims due them under the provisions | 18 | | of such
contracts for labor performed or materials furnished in | 19 | | the performance of
the contract on account of which this bond | 20 | | is given, when such claims are
not satisfied out of the | 21 | | contract price of the contract on account of which
this bond is | 22 | | given, after final settlement between the officer, board,
| 23 | | commission or agent of the State or of any political | 24 | | subdivision thereof
and the principal has been made.". | 25 | | Each bond securing contracts between the Capital | 26 | | Development Board or any board of a public institution of |
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| 1 | | higher education and a contractor shall contain the following | 2 | | provisions, whether the provisions are inserted in the bond or | 3 | | not: | 4 | | "Upon the default of the principal with respect to | 5 | | undertakings, covenants, terms, conditions, and agreements, | 6 | | the termination of the contractor's right to proceed with the | 7 | | work, and written notice of that default and termination by the | 8 | | State or any political subdivision to the surety ("Notice"), | 9 | | the surety shall promptly remedy the default by taking one of | 10 | | the 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 | 20 | | days of receipt indicating the course of action that it intends | 21 | | to take or advising that it requires more time to investigate | 22 | | the default and select a course of action. If the surety | 23 | | requires more than 15 working days to investigate the default | 24 | | and select a course of action or if the surety elects to | 25 | | complete the work with a completing contractor that is not | 26 | | prepared to commence performance within 15 working days after |
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| 1 | | receipt of Notice, and if the State or any political | 2 | | subdivision determines it is in the best interest of the State | 3 | | to maintain the progress of the work, the State or any | 4 | | political subdivision may continue to work until the completing | 5 | | contractor is prepared to commence performance. Unless | 6 | | otherwise agreed to by the procuring agency, in no case may the | 7 | | surety take longer than 30 working days to advise the State or | 8 | | political subdivision on the course of action it intends to | 9 | | take. The surety shall be liable for reasonable costs incurred | 10 | | by the State or any political subdivision to maintain the | 11 | | progress to the extent the costs exceed the unpaid balance of | 12 | | the contract sum, subject to the penal sum of the bond.".
| 13 | | The surety bond required by this Section may be acquired | 14 | | from the
company, agent or broker of the contractor's choice. | 15 | | The bond and sureties
shall
be subject to the right of | 16 | | reasonable approval or disapproval, including
suspension, by | 17 | | the State or political subdivision thereof concerned. In the
| 18 | | case of State construction contracts, a contractor shall not be | 19 | | required to
post a cash bond or letter of credit in addition to | 20 | | or as a substitute for the
surety bond required by this | 21 | | Section.
| 22 | | When other than motor fuel tax funds, federal-aid funds, or | 23 | | other
funds received from the State are used, a political | 24 | | subdivision may allow
the contractor to provide a | 25 | | non-diminishing irrevocable bank letter of
credit, in lieu of | 26 | | the bond required by this Section, on contracts under
$100,000 |
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| 1 | | to comply with the requirements of this Section. Any such bank
| 2 | | letter of credit shall contain all provisions required for | 3 | | bonds by this
Section.
| 4 | | For the purposes of this Section, the terms "material", | 5 | | "labor", "apparatus", "fixtures", and "machinery" include | 6 | | those rented items that are on the construction site and those | 7 | | rented tools that are used or consumed on the construction site | 8 | | in the performance of the contract on account of which the bond | 9 | | is 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, | 13 | | fixtures, machinery, or performing labor, either
as an | 14 | | individual or as a sub-contractor, hereinafter referred to as | 15 | | Claimant, for any contractor, with the
State, or a political | 16 | | subdivision thereof where bond or letter of
credit shall be | 17 | | executed as provided in this Act, shall have the right to
sue | 18 | | on such bond or letter of credit in the name of the State, or | 19 | | the
political subdivision thereof entering into such contract, | 20 | | as the case may
be, for his use and benefit, and in such suit | 21 | | the plaintiff shall file a
copy of such bond or letter of | 22 | | credit, certified by the party or parties in
whose charge such | 23 | | bond or letter of credit shall be, which copy shall,
unless | 24 | | execution thereof be denied under oath, be prima facie evidence | 25 | | of
the execution and delivery of the original; provided, |
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| 1 | | however, that this
Act shall not be taken to in any way make | 2 | | the State, or the political
subdivision thereof entering into | 3 | | such contract, as the case
may be, liable to such | 4 | | sub-contractor, materialman or laborer to any
greater extent | 5 | | than it was liable under the law as it stood before the
| 6 | | adoption of this Act. | 7 | | Provided, however, that any Claimant having a claim
for | 8 | | labor , and material , apparatus, fixtures, and machinery | 9 | | furnished to the State shall have no such right of action
| 10 | | unless it shall have filed a verified notice of said claim with | 11 | | the
officer, board, bureau or department awarding the contract, | 12 | | within 180
days after the date of the last item of work or the | 13 | | furnishing of the
last item of materials , apparatus, fixtures, | 14 | | and machinery , and shall have furnished a copy of such verified
| 15 | | notice to the contractor within 10 days of the filing of the | 16 | | notice with
the agency awarding the contract. | 17 | | When any Claimant has a claim for labor , and material , | 18 | | apparatus, fixtures, and machinery furnished to a political | 19 | | subdivision, the Claimant shall have no right of action unless | 20 | | it shall have filed a verified notice of that claim with the | 21 | | Clerk or Secretary of the political subdivision within 180 days | 22 | | after the date of the last item of work or furnishing of the | 23 | | last item of materials , apparatus, fixtures, and machinery , and | 24 | | shall have filed a copy of that verified notice upon the | 25 | | contractor in a like manner as provided herein within 10 days | 26 | | after the filing of the notice with the Clerk or Secretary. |
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| 1 | | The Claimant may file said verified notice by using | 2 | | personal service or by depositing the verified notice in the | 3 | | United States Mail, postage prepaid, certified or restricted | 4 | | delivery return receipt requested limited to addressee only. | 5 | | The verified notice shall be deemed filed on the date personal | 6 | | service occurs or the date when the verified notice is mailed | 7 | | in the form and manner provided in this Section.
| 8 | | The claim shall be verified and shall contain
(1) the name | 9 | | and address of the claimant; the business address of the
| 10 | | Claimant within this State and if the Claimant shall be a | 11 | | foreign
corporation having no place of business within the | 12 | | State, the notice
shall state the principal place of business | 13 | | of said corporation and in
the case of a partnership, the | 14 | | notice shall state the names and
residences of each of the | 15 | | partners; (2) the name of the contractor for
the government; | 16 | | (3) the name of the person, firm or corporation by whom
the | 17 | | Claimant was employed or to whom he or it furnished materials , | 18 | | apparatus, fixtures, or machinery ; (4)
a brief description of | 19 | | the public
improvement; (5) a description of the Claimant's | 20 | | contract as it pertains to the public improvement, describing | 21 | | the work done by the Claimant and stating the total amount due | 22 | | and unpaid as of the date of verified notice.
| 23 | | No defect in the notice herein provided for shall deprive | 24 | | the
Claimant of his right of action under this article unless | 25 | | it shall
affirmatively appear that such defect has prejudiced | 26 | | the rights of an
interested party asserting the same.
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| 1 | | Provided, further, that no action shall be brought later | 2 | | than one year after the date of the
furnishing of the last item | 3 | | of work , or materials , apparatus, fixtures, or machinery by the | 4 | | Claimant. Such action shall be
brought only in the circuit | 5 | | court of this State in the judicial circuit in
which the | 6 | | contract is to be performed.
| 7 | | The remedy provided in this Section is in addition to and | 8 | | independent of
any other rights and remedies provided at law or | 9 | | in equity. A waiver of rights
under the Mechanics Lien Act | 10 | | shall not constitute a waiver of rights under this
Section | 11 | | unless specifically stated in the waiver.
| 12 | | For the purposes of this Section, the terms "material", | 13 | | "labor", "apparatus", "fixtures", and "machinery" include | 14 | | those rented items that are on the construction site and those | 15 | | rented tools that are used or consumed on the construction site | 16 | | in the performance of the contract on account of which the bond | 17 | | is given. | 18 | | (Source: P.A. 99-673, eff. 1-1-17 .)
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