Bill Text: IL HB1404 | 2013-2014 | 98th General Assembly | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Public Construction Bond Act. Requires surety bonds on public construction projects by any political subdivision of the State costing over $50,000 (now, over $5,000). Makes surety bond requirements for any political subdivision of the State the same as those for the State. Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2013-08-09 - Public Act . . . . . . . . . 98-0216 [HB1404 Detail]

Download: Illinois-2013-HB1404-Engrossed.html



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1 AN ACT concerning finance.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Public Construction Bond Act is amended by
5changing Section 1 as follows:
6 (30 ILCS 550/1) (from Ch. 29, par. 15)
7 Sec. 1. Except as otherwise provided by this Act, all
8officials, boards, commissions, or agents of this State, or of
9any political subdivision thereof, in making contracts for
10public work of any kind costing over $50,000 to be performed
11for the State, or of any political subdivision thereof, and all
12officials, boards, commissions, or agents of any political
13subdivision of this State in making contracts for public work
14of any kind costing over $5,000 to be performed for the
15political subdivision, shall require every contractor for the
16work to furnish, supply and deliver a bond to the State, or to
17the political subdivision thereof entering into the contract,
18as the case may be, with good and sufficient sureties. The
19amount of the bond shall be fixed by the officials, boards,
20commissions, commissioners or agents, and the bond, among other
21conditions, shall be conditioned for the completion of the
22contract, for the payment of material used in the work and for
23all labor performed in the work, whether by subcontractor or

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1otherwise.
2 If the contract is for emergency repairs as provided in the
3Illinois Procurement Code, proof of payment for all labor,
4materials, apparatus, fixtures, and machinery may be furnished
5in lieu of the bond required by this Section.
6 Each such bond is deemed to contain the following
7provisions whether such provisions are inserted in such bond or
8not:
9 "The principal and sureties on this bond agree that all the
10undertakings, covenants, terms, conditions and agreements of
11the contract or contracts entered into between the principal
12and the State or any political subdivision thereof will be
13performed and fulfilled and to pay all persons, firms and
14corporations having contracts with the principal or with
15subcontractors, all just claims due them under the provisions
16of such contracts for labor performed or materials furnished in
17the performance of the contract on account of which this bond
18is given, when such claims are not satisfied out of the
19contract price of the contract on account of which this bond is
20given, after final settlement between the officer, board,
21commission or agent of the State or of any political
22subdivision thereof and the principal has been made.".
23 Each bond securing contracts between the Capital
24Development Board or any board of a public institution of
25higher education and a contractor shall contain the following
26provisions, whether the provisions are inserted in the bond or

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1not:
2 "Upon the default of the principal with respect to
3undertakings, covenants, terms, conditions, and agreements,
4the termination of the contractor's right to proceed with the
5work, and written notice of that default and termination by the
6State or any political subdivision to the surety ("Notice"),
7the surety shall promptly remedy the default by taking one of
8the following actions:
9 (1) The surety shall complete the work pursuant to a
10 written takeover agreement, using a completing contractor
11 jointly selected by the surety and the State or any
12 political subdivision; or
13 (2) The surety shall pay a sum of money to the obligee,
14 up to the penal sum of the bond, that represents the
15 reasonable cost to complete the work that exceeds the
16 unpaid balance of the contract sum.
17 The surety shall respond to the Notice within 15 working
18days of receipt indicating the course of action that it intends
19to take or advising that it requires more time to investigate
20the default and select a course of action. If the surety
21requires more than 15 working days to investigate the default
22and select a course of action or if the surety elects to
23complete the work with a completing contractor that is not
24prepared to commence performance within 15 working days after
25receipt of Notice, and if the State or any political
26subdivision determines it is in the best interest of the State

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1to maintain the progress of the work, the State or any
2political subdivision may continue to work until the completing
3contractor is prepared to commence performance. Unless
4otherwise agreed to by the procuring agency, in no case may the
5surety take longer than 30 working days to advise the State or
6political subdivision on the course of action it intends to
7take. The surety shall be liable for reasonable costs incurred
8by the State or any political subdivision to maintain the
9progress to the extent the costs exceed the unpaid balance of
10the contract sum, subject to the penal sum of the bond.".
11 The surety bond required by this Section may be acquired
12from the company, agent or broker of the contractor's choice.
13The bond and sureties shall be subject to the right of
14reasonable approval or disapproval, including suspension, by
15the State or political subdivision thereof concerned. In the
16case of State construction contracts, a contractor shall not be
17required to post a cash bond or letter of credit in addition to
18or as a substitute for the surety bond required by this
19Section.
20 When other than motor fuel tax funds, federal-aid funds, or
21other funds received from the State are used, a political
22subdivision may allow the contractor to provide a
23non-diminishing irrevocable bank letter of credit, in lieu of
24the bond required by this Section, on contracts under $100,000
25to comply with the requirements of this Section. Any such bank
26letter of credit shall contain all provisions required for

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1bonds by this Section.
2(Source: P.A. 95-1011, eff. 12-15-08; 96-1000, eff. 7-2-10.)
3 Section 99. Effective date. This Act takes effect upon
4becoming law.
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