Bill Amendment: IL HB2664 | 2017-2018 | 100th General Assembly
NOTE: For additional amemendments please see the Bill Drafting List
Bill Title: PROMPT PAYMENT-SUBCONTRACTORS
Status: 2017-08-25 - Public Act . . . . . . . . . 100-0376 [HB2664 Detail]
Download: Illinois-2017-HB2664-House_Amendment_001.html
Bill Title: PROMPT PAYMENT-SUBCONTRACTORS
Status: 2017-08-25 - Public Act . . . . . . . . . 100-0376 [HB2664 Detail]
Download: Illinois-2017-HB2664-House_Amendment_001.html
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1 | AMENDMENT TO HOUSE BILL 2664
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2 | AMENDMENT NO. ______. Amend House Bill 2664 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The State Prompt Payment Act is amended by | ||||||
5 | changing Section 7 as follows:
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6 | (30 ILCS 540/7)
(from Ch. 127, par. 132.407)
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7 | Sec. 7. Payments to subcontractors and material suppliers. | ||||||
8 | (a) When a State official or agency responsible for | ||||||
9 | administering a
contract submits a voucher to the Comptroller | ||||||
10 | for
payment to a contractor, that State official or agency | ||||||
11 | shall promptly make
available electronically
the voucher | ||||||
12 | number, the date of the voucher, and
the amount of the voucher.
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13 | The State official or agency responsible for administering the | ||||||
14 | contract shall
provide subcontractors and material suppliers, | ||||||
15 | known to the State official or
agency, with instructions on how | ||||||
16 | to access the electronic information. |
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1 | (a-5) When a
contractor receives any payment, the | ||||||
2 | contractor shall
pay each subcontractor and material supplier | ||||||
3 | in proportion to the work
completed by each subcontractor and | ||||||
4 | material supplier its their application or pay estimate , plus | ||||||
5 | interest received under this Act ,
less any retention . When a | ||||||
6 | contractor receives any payment, the contractor shall pay each | ||||||
7 | lower-tiered subcontractor and material supplier and each | ||||||
8 | subcontractor and material supplier shall make payment to its | ||||||
9 | own respective subcontractors and material suppliers. If the | ||||||
10 | contractor receives less than the full payment
due under the | ||||||
11 | public construction contract, the contractor shall be
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12 | obligated to disburse on a pro rata basis those funds received, | ||||||
13 | plus interest received under this Act, with the
contractor, | ||||||
14 | subcontractors and material suppliers each receiving a | ||||||
15 | prorated
portion based on the amount of payment each has | ||||||
16 | earned . When, however, the State official or agency public | ||||||
17 | owner
does not release the full payment due under the contract | ||||||
18 | because there are
specific areas of work or materials the State | ||||||
19 | agency or official has determined contractor is rejecting or | ||||||
20 | because
the contractor has otherwise determined such areas are | ||||||
21 | not suitable for
payment, then those specific subcontractors or | ||||||
22 | material suppliers involved shall not
be paid for that portion | ||||||
23 | of work rejected or deemed not suitable for
payment and all | ||||||
24 | other subcontractors and suppliers shall be paid based upon the | ||||||
25 | amount of payment each has earned in full , plus interest | ||||||
26 | received under this Act.
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1 | (a-10) For construction contracts with the Department of | ||||||
2 | Transportation, the contractor, subcontractor, or material | ||||||
3 | supplier, regardless of tier, shall not offset, decrease, or | ||||||
4 | diminish payment or payments that are due to its subcontractors | ||||||
5 | or material suppliers without reasonable cause. | ||||||
6 | A contractor, who refuses to make prompt payment, in whole | ||||||
7 | or in part, shall provide to the subcontractor or material | ||||||
8 | supplier and the public owner or its agent, a written notice of | ||||||
9 | that refusal. The written notice shall be made by a contractor | ||||||
10 | no later than 5 calendar days after payment is received by the | ||||||
11 | contractor. The written notice shall identify the Department of | ||||||
12 | Transportation's contract, any subcontract or material | ||||||
13 | purchase agreement, a detailed reason for refusal, the value of | ||||||
14 | the payment to be withheld, and the specific remedial actions | ||||||
15 | required of the subcontractor or material supplier so that | ||||||
16 | payment may be made. Written notice of refusal may be given in | ||||||
17 | a form and method which is acceptable to the parties and public | ||||||
18 | owner. | ||||||
19 | (b) If the contractor, without reasonable cause, fails to | ||||||
20 | make full payment of amounts due under subsection (a) to its
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21 | his subcontractors and material suppliers within 15 calendar | ||||||
22 | days after
receipt of
payment from the State official or agency | ||||||
23 | under the public construction contract , the contractor shall | ||||||
24 | pay to its
his subcontractors and material suppliers, in | ||||||
25 | addition to the payment due
them, interest in the amount of
2% | ||||||
26 | per month, calculated from the
expiration of the 15-day period |
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1 | until fully paid. This subsection shall further
also apply to | ||||||
2 | any payments made by subcontractors and material suppliers to
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3 | their subcontractors and material suppliers and to all payments | ||||||
4 | made to
lower tier subcontractors and material suppliers | ||||||
5 | throughout the contracting
chain.
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6 | (1) If a contractor, without reasonable cause, fails to | ||||||
7 | make payment in
full as
provided in subsection (a-5) (a) | ||||||
8 | within 15 calendar days after receipt of payment under the
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9 | public
construction contract, any subcontractor or | ||||||
10 | material supplier to whom payments
are owed
may file a | ||||||
11 | written notice and request for administrative hearing with | ||||||
12 | the State official or agency setting forth the
amount owed | ||||||
13 | by
the contractor and the contractor's failure to timely | ||||||
14 | pay the amount owed. The written notice and request for | ||||||
15 | administrative hearing shall identify the public | ||||||
16 | construction contract, the contractor, and the amount | ||||||
17 | owed, and shall contain a sworn statement or attestation to | ||||||
18 | verify the accuracy of the notice. The notice and request | ||||||
19 | for administrative hearing shall be filed with the State | ||||||
20 | official for the public construction contract, with a copy | ||||||
21 | of the notice concurrently provided to the contractor. | ||||||
22 | Notice to the State official may be made by certified or | ||||||
23 | registered mail, messenger service, or personal service, | ||||||
24 | and must include proof of delivery to the State official.
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25 | (2) The State official or agency, within 15 calendar | ||||||
26 | days after receipt of a
subcontractor's
or material |
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1 | supplier's written notice and request for administrative | ||||||
2 | hearing of the failure to receive payment from
the | ||||||
3 | contractor ,
shall hold a hearing convened by an | ||||||
4 | administrative law judge to determine whether the | ||||||
5 | contractor withheld payment,
without
reasonable cause, | ||||||
6 | from the subcontractors or and material suppliers and what
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7 | amount, if any,
is due to the subcontractors or and | ||||||
8 | material suppliers , and the reasonable cause or causes | ||||||
9 | asserted by the contractor . The State official or
agency | ||||||
10 | shall
provide appropriate notice to the parties of the | ||||||
11 | date, time, and location of
the hearing. Each contractor, | ||||||
12 | subcontractor, or and material supplier has the right to be | ||||||
13 | represented by counsel at a the hearing and to | ||||||
14 | cross-examine witnesses and challenge documents. Upon the | ||||||
15 | request of the subcontractor or material supplier and a | ||||||
16 | showing of good cause, reasonable continuances may be | ||||||
17 | granted by the administrative law judge.
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18 | (3) Upon If there is a finding by the administrative | ||||||
19 | law judge that the contractor failed
to make
payment in | ||||||
20 | full, without reasonable cause, as provided in subsection | ||||||
21 | (a-10) (a) , then
the administrative law judge shall, in | ||||||
22 | writing, order direct the contractor to pay the amount
owed | ||||||
23 | to the
subcontractors or and material suppliers plus | ||||||
24 | interest within 15 calendar days after the order
finding .
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25 | (4) If a contractor fails to make full payment as | ||||||
26 | ordered under paragraph (3) of this subsection (b) within |
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1 | 15 days after the
administrative law judge's order finding , | ||||||
2 | then the contractor shall be barred from
entering into a | ||||||
3 | State
public construction contract for a period of one year | ||||||
4 | beginning on the date of
the administrative law judge's | ||||||
5 | order finding .
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6 | (5) If, on 2 or more occasions within a 3-calendar-year | ||||||
7 | period, there is a finding by an administrative law judge | ||||||
8 | that the contractor failed to make payment in full, without | ||||||
9 | reasonable cause, and a written order was issued to a | ||||||
10 | contractor under paragraph (3) of this subsection (b), then | ||||||
11 | the contractor shall be barred from entering into a State | ||||||
12 | public construction contract for a period of 6 months | ||||||
13 | beginning on the date of the administrative law judge's | ||||||
14 | second written order, even if the payments required under | ||||||
15 | the orders were made in full. | ||||||
16 | (6) If a contractor fails to make full payment as | ||||||
17 | ordered under paragraph (4) of this subsection (b), the | ||||||
18 | subcontractor or material supplier may, within 30 days of | ||||||
19 | the date of that order, petition the State agency for an | ||||||
20 | order for reasonable attorney's fees and costs incurred in | ||||||
21 | the prosecution of the action under this subsection (b). | ||||||
22 | Upon that petition and taking of additional evidence, as | ||||||
23 | may be required, the administrative law judge may issue a | ||||||
24 | supplemental order directing the contractor to pay those | ||||||
25 | reasonable attorney's fees and costs. | ||||||
26 | (7) The written order of the administrative law judge |
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1 | shall be final and appealable under the Administrative | ||||||
2 | Review Law. | ||||||
3 | (c) This Section shall not be construed to in any manner | ||||||
4 | diminish, negate, or interfere with the | ||||||
5 | contractor-subcontractor or contractor-material supplier | ||||||
6 | relationship or commercially useful function. | ||||||
7 | (d) This Section shall not preclude, bar, or stay the | ||||||
8 | rights, remedies, and defenses available to the parties by way | ||||||
9 | of the operation of their contract, purchase agreement, the | ||||||
10 | Mechanics Lien Act, or the Public Construction Bond Act. | ||||||
11 | (e) State officials and agencies may adopt rules as may be | ||||||
12 | deemed necessary in order to establish the formal procedures | ||||||
13 | required under this Section. | ||||||
14 | (f) As used in this Section, | ||||||
15 | "Payment" means the discharge of an obligation in money or | ||||||
16 | other valuable consideration or thing delivered in full or | ||||||
17 | partial satisfaction of an obligation to pay. "Payment" shall | ||||||
18 | include interest paid pursuant to this Act. | ||||||
19 | "Reasonable cause" may include, but is not limited to, | ||||||
20 | unsatisfactory workmanship or materials; failure to provide | ||||||
21 | documentation required by the contract, subcontract, or | ||||||
22 | material purchase agreement; claims made against the | ||||||
23 | Department of Transportation or the subcontractor pursuant to | ||||||
24 | subsection (c) of Section 23 of the Mechanics Lien Act or the | ||||||
25 | Public Construction Bond Act; judgments, levies, garnishments, | ||||||
26 | or other court-ordered assessments or offsets in favor of the |
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1 | Department of Transportation or other State agency entered | ||||||
2 | against a subcontractor or material supplier. "Reasonable | ||||||
3 | cause" does not include payments issued to the contractor that | ||||||
4 | create a negative or reduced valuation pay application or pay | ||||||
5 | estimate due to a reduction of contract quantities or work not | ||||||
6 | performed or provided by the subcontractor or material | ||||||
7 | supplier; the interception or withholding of funds for reasons | ||||||
8 | not related to the subcontractor's or material supplier's work | ||||||
9 | on the contract; anticipated claims or assessments of third | ||||||
10 | parties not a party related to the contract or subcontract; | ||||||
11 | asserted claims or assessments of third parties that are not | ||||||
12 | authorized by court order, administrative tribunal, or | ||||||
13 | statute. "Reasonable cause" further does not include the | ||||||
14 | withholding, offset, or reduction of payment, in whole or in | ||||||
15 | part, due to the assessment of liquidated damages or penalties | ||||||
16 | assessed by the Department of Transportation against the | ||||||
17 | contractor, unless the subcontractor's performance or supplied | ||||||
18 | materials were the sole and proximate cause of the liquidated | ||||||
19 | damage or penalty. | ||||||
20 | (Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07 .)".
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