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| Public Act 094-0972 |
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AN ACT concerning finance.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The State Prompt Payment Act is amended by | ||||
changing Sections 3-2 and 7 as follows:
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(30 ILCS 540/3-2) (from Ch. 127, par. 132.403-2)
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Sec. 3-2. Beginning July 1, 1993, in any instance where a | ||||
State official or
agency is late in payment of a vendor's bill | ||||
or invoice for goods or services
furnished to the State, as | ||||
defined in Section 1, properly approved in
accordance with | ||||
rules promulgated under Section 3-3, the State official or
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agency shall pay interest to the vendor in accordance with the | ||||
following:
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(1) Any bill approved for payment under this Section | ||||
must be paid
or the payment issued to the payee within 60 | ||||
days of receipt
of a proper bill or invoice.
If payment is | ||||
not issued to the payee within this 60 day
period, an
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interest penalty of 1.0% of any amount approved and unpaid | ||||
shall be added
for each month or fraction thereof after the | ||||
end of this 60 day period,
until final payment is made.
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(1.1) A State agency shall review in a timely manner | ||||
each bill or
invoice after its receipt. If the
State agency | ||||
determines that the bill or invoice contains a defect | ||||
making it
unable to process the payment request, the agency
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shall notify the vendor requesting payment as soon as | ||||
possible after
discovering the
defect pursuant to rules | ||||
promulgated under Section 3-3; provided, however, that the | ||||
notice for construction related bills or invoices must be | ||||
given not later than 30 days after the bill or invoice was | ||||
first submitted. The notice shall
identify the defect and | ||||
any additional information
necessary to correct the | ||||
defect. If one or more items on a construction related bill | ||||
or invoice are disapproved, but not the entire bill or | ||
invoice, then the portion that is not disapproved shall be | ||
paid.
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(2) Where a State official or agency is late in payment | ||
of a
vendor's bill or invoice properly approved in | ||
accordance with this Act, and
different late payment terms | ||
are not reduced to writing as a contractual
agreement, the | ||
State official or agency shall automatically pay interest
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penalties required by this Section amounting to $50 or more | ||
to the appropriate
vendor. Each agency shall be responsible | ||
for determining whether an interest
penalty
is
owed and
for | ||
paying the interest to the vendor.
For interest of at least | ||
$5 but less than $50, the vendor must
initiate a written | ||
request for the interest penalty when such interest is due
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and payable. The Department of Central Management Services | ||
and the State
Comptroller shall jointly promulgate rules | ||
establishing the conditions under
which interest of less | ||
than $5 may be claimed and paid. In the event an
individual | ||
has paid a vendor for services in advance, the provisions | ||
of this
Section shall apply until payment is made to that | ||
individual.
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(Source: P.A. 92-384, eff. 7-1-02.)
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(30 ILCS 540/7)
(from Ch. 127, par. 132.407)
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Sec. 7. Payments to subcontractors and material suppliers. | ||
(a) When a State official or agency responsible for | ||
administering a
contract submits a voucher to the Comptroller | ||
for
payment to a contractor, that State official or agency | ||
shall promptly make
available electronically
the voucher | ||
number, the date of the voucher, and
the amount of the voucher.
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The State official or agency responsible for administering the | ||
contract shall
provide subcontractors and material suppliers, | ||
known to the State official or
agency, with instructions on how | ||
to access the electronic information. When a
contractor | ||
receives any payment, the contractor shall
pay each | ||
subcontractor and material supplier in proportion to the work
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completed by each subcontractor and material supplier their | ||
application, plus interest received under this Act,
less any | ||
retention. If the contractor receives less than the full | ||
payment
due under the public construction contract, the | ||
contractor shall be
obligated to disburse on a pro rata basis | ||
those funds received, plus interest received under this Act, | ||
with the
contractor, subcontractors and material suppliers | ||
each receiving a prorated
portion based on the amount of | ||
payment. When, however, the public owner
does not release the | ||
full payment due under the contract because there are
specific | ||
areas of work or materials the contractor is rejecting or | ||
because
the contractor has otherwise determined such areas are | ||
not suitable for
payment, then those specific subcontractors or | ||
suppliers involved shall not
be paid for that portion of work | ||
rejected or deemed not suitable for
payment and all other | ||
subcontractors and suppliers shall be paid in full, plus | ||
interest received under this Act.
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(b) If the contractor, without reasonable cause, fails to | ||
make full payment of amounts due under subsection (a) to
his | ||
subcontractors and material suppliers within 15 days after
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receipt of
payment under the public construction contract, the | ||
contractor shall pay to
his subcontractors and material | ||
suppliers, in addition to the payment due
them, interest in the | ||
amount of
2% per month, calculated from the
expiration of the | ||
15-day period until fully paid. This subsection shall
also | ||
apply to any payments made by subcontractors and material | ||
suppliers to
their subcontractors and material suppliers and to | ||
all payments made to
lower tier subcontractors and material | ||
suppliers throughout the contracting
chain.
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(1) If a contractor, without reasonable cause, fails to | ||
make payment in
full as
provided in subsection (a) within | ||
15 days after receipt of payment under the
public
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construction contract, any subcontractor or material | ||
supplier to whom payments
are owed
may file a written | ||
notice with the State official or agency setting forth the
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amount owed by
the contractor and the contractor's failure | ||
to timely pay the amount owed.
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(2) The State official or agency, within 15 days after | ||
receipt of a
subcontractor's
or material supplier's | ||
written notice of the failure to receive payment from
the | ||
contractor,
shall hold a hearing convened by an | ||
administrative law judge to determine whether the | ||
contractor withheld payment,
without
reasonable cause, | ||
from the subcontractors and material suppliers and what
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amount, if any,
is due to the subcontractors and material | ||
suppliers. The State official or
agency shall
provide | ||
appropriate notice to the parties of the date, time, and | ||
location of
the hearing. Each contractor, subcontractor, | ||
and material supplier has the right to be represented by | ||
counsel at the hearing and to cross-examine witnesses and | ||
challenge documents.
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(3) If there is a finding by the administrative law | ||
judge that the contractor failed
to make
payment in full, | ||
without reasonable cause, as provided in subsection (a), | ||
then
the administrative law judge shall, in writing, direct | ||
the contractor to pay the amount
owed to the
subcontractors | ||
and material suppliers plus interest within 15 days after | ||
the
finding.
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(4) If a contractor fails to make full payment within | ||
15 days after the
administrative law judge's finding, then | ||
the contractor shall be barred from
entering into a State
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public construction contract for a period of one year | ||
beginning on the date of
the administrative law judge's | ||
finding.
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(Source: P.A. 94-672, eff. 1-1-06.)
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Section 10. The Local Government Prompt Payment Act is | ||
amended by changing Sections 3 and 9 as follows:
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(50 ILCS 505/3) (from Ch. 85, par. 5603)
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Sec. 3. The appropriate local governmental official or | ||
agency
receiving goods or services must approve or disapprove a | ||
bill from a vendor
or contractor for goods or services | ||
furnished the local governmental agency
within 30 days after | ||
the receipt of such bill or within 30 days after the
date on | ||
which the goods or services were received, whichever is later.
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If one or more items on a construction related bill or invoice | ||
are disapproved, but not the entire bill or invoice, then the | ||
portion that is not disapproved shall be paid. When safety or | ||
quality assurance testing of goods by the local governmental
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agency is necessary before the approval or disapproval of a | ||
bill and such
testing cannot be completed within 30 days after | ||
receipt of the goods,
approval or disapproval of the bill must | ||
be made immediately upon
completion of the testing or within 60 | ||
days after receipt of the goods,
whichever occurs first. | ||
Written notice shall be mailed to the vendor or
contractor | ||
immediately if a bill is disapproved.
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(Source: P.A. 87-773.)
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(50 ILCS 505/9) (from Ch. 85, par. 5609)
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Sec. 9. Payments to subcontractors and material suppliers; | ||
failure to make timely payments; additional amount due.
When a | ||
contractor receives any payment, the contractor shall
pay each | ||
subcontractor and material supplier in proportion to the work
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completed by each subcontractor and material supplier their | ||
application
less any retention. If the contractor receives less | ||
than the full payment
due under the public construction | ||
contract, the contractor shall be
obligated to disburse on a | ||
pro rata basis those funds received, with the
contractor, | ||
subcontractors and material suppliers each receiving a | ||
prorated
portion based on the amount of payment. All interest | ||
payments received pursuant to Section 4 also shall be disbursed | ||
to subcontractors and material suppliers to whom payment has | ||
been delayed, on a pro rata basis. When, however, the public | ||
owner
does not release the full payment due under the contract | ||
because there are
specific areas of work or materials the | ||
contractor is rejecting or because
the contractor has otherwise | ||
determined such areas are not suitable for
payment, then those | ||
specific subcontractors or suppliers involved shall not
be paid | ||
for that portion of the work rejected or deemed not suitable | ||
for
payment and all other subcontractors and suppliers shall be | ||
paid in full.
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If the contractor, without reasonable cause, fails to make | ||
any payment to
his subcontractors and material suppliers within | ||
15 days after receipt of
payment under the public construction | ||
contract, the contractor shall pay to
his subcontractors and | ||
material suppliers, in addition to the payment due
them, | ||
interest in the amount of 2% per month, calculated from the
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expiration of the 15-day period until fully paid. This Section
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subsection shall
also apply to any payments made by | ||
subcontractors and material suppliers to
their subcontractors | ||
and material suppliers and to all payments made to
lower tier | ||
subcontractors and material suppliers throughout the | ||
contracting
chain.
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(Source: P.A. 87-773.)
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Section 99. Effective date. This Act takes effect July 1, | ||
2007.
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