Public Act 101-0065
 
HB2722 EnrolledLRB101 06801 RJF 51828 b

    AN ACT concerning finance.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Public Construction Bond Act is amended by
changing Sections 1 and 2 as follows:
 
    (30 ILCS 550/1)  (from Ch. 29, par. 15)
    Sec. 1. Except as otherwise provided by this Act, all
officials, boards, commissions, or agents of this State, or of
any political subdivision thereof, in making contracts for
public work of any kind costing over $50,000 to be performed
for the State, or of any political subdivision thereof, shall
require every contractor for the work to furnish, supply and
deliver a bond to the State, or to the political subdivision
thereof entering into the contract, as the case may be, with
good and sufficient sureties. The surety on the bond shall be a
company that is licensed by the Department of Insurance
authorizing it to execute surety bonds and the company shall
have a financial strength rating of at least A- as rated by
A.M. Best Company, Inc., Moody's Investors Service, Standard &
Poor's Corporation, or a similar rating agency. The amount of
the bond shall be fixed by the officials, boards, commissions,
commissioners or agents, and the bond, among other conditions,
shall be conditioned for the completion of the contract, for
the payment of material, apparatus, fixtures, and machinery
used in the work and for all labor performed in the work,
whether by subcontractor or otherwise.
    If the contract is for emergency repairs as provided in the
Illinois Procurement Code, proof of payment for all labor,
materials, apparatus, fixtures, and machinery may be furnished
in lieu of the bond required by this Section.
    Each such bond is deemed to contain the following
provisions whether such provisions are inserted in such bond or
not:
    "The principal and sureties on this bond agree that all the
undertakings, covenants, terms, conditions and agreements of
the contract or contracts entered into between the principal
and the State or any political subdivision thereof will be
performed and fulfilled and to pay all persons, firms and
corporations having contracts with the principal or with
subcontractors, all just claims due them under the provisions
of such contracts for labor performed or materials furnished in
the performance of the contract on account of which this bond
is given, when such claims are not satisfied out of the
contract price of the contract on account of which this bond is
given, after final settlement between the officer, board,
commission or agent of the State or of any political
subdivision thereof and the principal has been made.".
    Each bond securing contracts between the Capital
Development Board or any board of a public institution of
higher education and a contractor shall contain the following
provisions, whether the provisions are inserted in the bond or
not:
    "Upon the default of the principal with respect to
undertakings, covenants, terms, conditions, and agreements,
the termination of the contractor's right to proceed with the
work, and written notice of that default and termination by the
State or any political subdivision to the surety ("Notice"),
the surety shall promptly remedy the default by taking one of
the following actions:
        (1) The surety shall complete the work pursuant to a
    written takeover agreement, using a completing contractor
    jointly selected by the surety and the State or any
    political subdivision; or
        (2) The surety shall pay a sum of money to the obligee,
    up to the penal sum of the bond, that represents the
    reasonable cost to complete the work that exceeds the
    unpaid balance of the contract sum.
    The surety shall respond to the Notice within 15 working
days of receipt indicating the course of action that it intends
to take or advising that it requires more time to investigate
the default and select a course of action. If the surety
requires more than 15 working days to investigate the default
and select a course of action or if the surety elects to
complete the work with a completing contractor that is not
prepared to commence performance within 15 working days after
receipt of Notice, and if the State or any political
subdivision determines it is in the best interest of the State
to maintain the progress of the work, the State or any
political subdivision may continue to work until the completing
contractor is prepared to commence performance. Unless
otherwise agreed to by the procuring agency, in no case may the
surety take longer than 30 working days to advise the State or
political subdivision on the course of action it intends to
take. The surety shall be liable for reasonable costs incurred
by the State or any political subdivision to maintain the
progress to the extent the costs exceed the unpaid balance of
the contract sum, subject to the penal sum of the bond.".
    The surety bond required by this Section may be acquired
from the company, agent or broker of the contractor's choice.
The bond and sureties shall be subject to the right of
reasonable approval or disapproval, including suspension, by
the State or political subdivision thereof concerned. In the
case of State construction contracts, a contractor shall not be
required to post a cash bond or letter of credit in addition to
or as a substitute for the surety bond required by this
Section.
    When other than motor fuel tax funds, federal-aid funds, or
other funds received from the State are used, a political
subdivision may allow the contractor to provide a
non-diminishing irrevocable bank letter of credit, in lieu of
the bond required by this Section, on contracts under $100,000
to comply with the requirements of this Section. Any such bank
letter of credit shall contain all provisions required for
bonds by this Section.
    For the purposes of this Section, 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.
(Source: P.A. 98-216, eff. 8-9-13; 98-1018, eff. 8-22-14.)
 
    (30 ILCS 550/2)  (from Ch. 29, par. 16)
    Sec. 2. Every person furnishing material, apparatus,
fixtures, machinery, or performing labor, either as an
individual or as a sub-contractor, hereinafter referred to as
Claimant, for any contractor, with the State, or a political
subdivision thereof where bond or letter of credit shall be
executed as provided in this Act, shall have the right to sue
on such bond or letter of credit in the name of the State, or
the political subdivision thereof entering into such contract,
as the case may be, for his use and benefit, and in such suit
the plaintiff shall file a copy of such bond or letter of
credit, certified by the party or parties in whose charge such
bond or letter of credit shall be, which copy shall, unless
execution thereof be denied under oath, be prima facie evidence
of the execution and delivery of the original; provided,
however, that this Act shall not be taken to in any way make
the State, or the political subdivision thereof entering into
such contract, as the case may be, liable to such
sub-contractor, materialman or laborer to any greater extent
than it was liable under the law as it stood before the
adoption of this Act.
    Provided, however, that any Claimant having a claim for
labor, and material, apparatus, fixtures, and machinery
furnished to the State shall have no such right of action
unless it shall have filed a verified notice of said claim with
the officer, board, bureau or department awarding the contract,
within 180 days after the date of the last item of work or the
furnishing of the last item of materials, apparatus, fixtures,
and machinery, and shall have furnished a copy of such verified
notice to the contractor within 10 days of the filing of the
notice with the agency awarding the contract.
    When any Claimant has a claim for labor, and material,
apparatus, fixtures, and machinery furnished to a political
subdivision, the Claimant shall have no right of action unless
it shall have filed a verified notice of that claim with the
Clerk or Secretary of the political subdivision within 180 days
after the date of the last item of work or furnishing of the
last item of materials, apparatus, fixtures, and machinery, and
shall have filed a copy of that verified notice upon the
contractor in a like manner as provided herein within 10 days
after the filing of the notice with the Clerk or Secretary.
    The Claimant may file said verified notice by using
personal service or by depositing the verified notice in the
United States Mail, postage prepaid, certified or restricted
delivery return receipt requested limited to addressee only.
The verified notice shall be deemed filed on the date personal
service occurs or the date when the verified notice is mailed
in the form and manner provided in this Section.
    The claim shall be verified and shall contain (1) the name
and address of the claimant; the business address of the
Claimant within this State and if the Claimant shall be a
foreign corporation having no place of business within the
State, the notice shall state the principal place of business
of said corporation and in the case of a partnership, the
notice shall state the names and residences of each of the
partners; (2) the name of the contractor for the government;
(3) the name of the person, firm or corporation by whom the
Claimant was employed or to whom he or it furnished materials,
apparatus, fixtures, or machinery; (4) a brief description of
the public improvement; (5) a description of the Claimant's
contract as it pertains to the public improvement, describing
the work done by the Claimant and stating the total amount due
and unpaid as of the date of verified notice.
    No defect in the notice herein provided for shall deprive
the Claimant of his right of action under this article unless
it shall affirmatively appear that such defect has prejudiced
the rights of an interested party asserting the same.
    Provided, further, that no action shall be brought later
than one year after the date of the furnishing of the last item
of work, or materials, apparatus, fixtures, or machinery by the
Claimant. Such action shall be brought only in the circuit
court of this State in the judicial circuit in which the
contract is to be performed.
    The remedy provided in this Section is in addition to and
independent of any other rights and remedies provided at law or
in equity. A waiver of rights under the Mechanics Lien Act
shall not constitute a waiver of rights under this Section
unless specifically stated in the waiver.
    For the purposes of this Section, 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.
(Source: P.A. 99-673, eff. 1-1-17.)