SB3235 97TH GENERAL ASSEMBLY

LRB097 15540 PJG 60670 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3235

Introduced 2/1/2012, by Sen. Martin A. Sandoval

SYNOPSIS AS INTRODUCED:

30 ILCS 500/20-120
30 ILCS 540/7	from Ch. 127, par. 132.407

Amends the Illinois Procurement Code. Provides that the Department of Transportation shall, by rule, implement a pilot program under which select construction contracts shall contain provisions that if a subcontractor has performed in accordance with the provisions of the subcontract and the work has been accepted by the Department, the Department shall pay the subcontractor directly. Provides that the program shall apply only to state-funded contracts under $10 million in value and to those contracts with subcontracts that contain provisions corresponding to pay items that are exclusively and completely performed by the subcontractor. Provides that the program shall be implemented by January 1, 2013 and shall expire on January 1, 2014. Amends the State Prompt Payment Act. Provides that certain provisions concerning payments to subcontractors do not apply to payments to a subcontractor for work performed under a subcontract entered into with a construction contractor if the contract contains a provision that the State agency shall pay the subcontractor directly. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning finance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Procurement Code is amended by changing Section 20-120 as follows:

(30 ILCS 500/20-120)

Sec. 20-120. Subcontractors.

(a) Any contract granted under this Code shall state whether the services of a subcontractor will or may be used. The contract shall include the names and addresses of all known subcontractors with subcontracts with an annual value of more than $25,000 and the expected amount of money each will receive under the contract. For procurements subject to the authority of the chief procurement officer appointed pursuant to subsection (a)(2) of Section 10-20, the contract shall include only the names and addresses of all known subcontractors of the primary contractor with subcontracts with an annual value of more than $25,000. The contractor shall provide the chief procurement officer or State purchasing officer a copy of any subcontract with an annual value of more than $25,000 so identified within 20 days after the execution of the State contract or after execution of the subcontract, whichever is later. A subcontractor, or contractor on behalf of a subcontractor, may identify information that is deemed proprietary or confidential. If the chief procurement officer determines the information is not relevant to the primary contract, the chief procurement officer may excuse the inclusion of the information. If the chief procurement officer determines the information is proprietary or could harm the business interest of the subcontractor, the chief procurement officer may, in his or her discretion, redact the information. Redacted information shall not become part of the public record.

(b) If at any time during the term of a contract, a contractor adds or changes any subcontractors, he or she shall promptly notify, in writing, the chief procurement officer, State purchasing officer, or their designee of the names and addresses and the expected amount of money each new or replaced subcontractor will receive. The contractor shall provide to the responsible chief procurement officer a copy of the subcontract within 20 days after the execution of the subcontract.

(c) In addition to any other requirements of this Code, a subcontract subject to this Section must include all of the subcontractor's certifications required by Article 50 of the Code.

(c-5) The Department of Transportation shall, by rule, implement a pilot program under which select construction contracts granted under this Code and all subcontracts pursuant to those contracts shall contain provisions that if a subcontractor has performed in accordance with the provisions of his or her subcontract and the work has been accepted by the Department, the Department shall pay the amount due the subcontractor directly to the subcontractor pursuant to the proper bill or invoice provided by the contractor to the Department in accordance with the provisions of the State Prompt Payment Act. If a construction contract granted under this Code contains a provision that the Department shall pay the subcontractor directly, the contractor shall deliver to the Department a proper bill or invoice, as defined in the State Prompt Payment Act, for each subcontractor with whom the contractor has a subcontract. The pilot program shall apply only to state-funded contracts under $10 million in value and to those contracts with subcontracts that contain provisions corresponding to pay items that are exclusively and completely performed by the subcontractor. The Secretary of Transportation may exempt any contract from the pilot program if the Secretary determines that the particular contract and its related subcontracts are administratively burdensome. The pilot program shall be implemented by January 1, 2013 and shall expire on January 1, 2014. The Department and the Comptroller shall report to the General Assembly the results of the pilot program with recommendations on whether or not to continue the program and any suggested improvements to the program.

(d) This Section applies to procurements solicited on or after the effective date of this amendatory Act of the 96th General Assembly.

(Source: P.A. 96-795, eff. 7-1-10 (see Section 5 of P.A. 96-793 for the effective date of P.A. 96-795); 96-920, eff. 7-1-10.)

Section 10. The State Prompt Payment Act is amended by changing Section 7 as follows:

(30 ILCS 540/7) (from Ch. 127, par. 132.407)

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. 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 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.

(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 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.

(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 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 amount owed by the contractor and the contractor's failure to timely pay the amount owed.

(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 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.

(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.

(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 public construction contract for a period of one year beginning on the date of the administrative law judge's finding.

(c) The provisions of this Section do not apply to payments to a subcontractor for work performed under a subcontract entered into with a construction contractor if the contract contains a provision that the State agency shall pay the subcontractor directly as required under a pilot program implemented by the Department of Transportation.

(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)

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