Public Act 095-1011
 		





SB1890 Enrolled
LRB095 14226 JAM 40095 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 Section 1 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 $5,000 to be 
performed for the State, and all officials, boards, 
commissions, or agents of any political subdivision of this 
State in making contracts for public work of any kind costing 
over $5,000 to be performed for the political subdivision, or a 
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
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
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.

(Source: P.A. 93-221, eff. 1-1-04.)

 

    Section 99. Effective date. This Act takes effect upon 
becoming law.