Bill Text: IL HB1404 | 2013-2014 | 98th General Assembly | Enrolled
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-Enrolled.html
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-Enrolled.html
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1 | AN ACT concerning finance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Public Construction Bond Act is amended by | ||||||
5 | changing Section 1 as follows:
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6 | (30 ILCS 550/1) (from Ch. 29, par. 15)
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7 | Sec. 1. Except as otherwise provided by this Act, all | ||||||
8 | officials, boards,
commissions, or agents of this State , or of | ||||||
9 | any political subdivision thereof, in making contracts for | ||||||
10 | public work of
any kind costing over $50,000 to be performed | ||||||
11 | for the State, or of any political subdivision thereof, and all | ||||||
12 | officials, boards, commissions, or agents of any political | ||||||
13 | subdivision of this State in making contracts for public work | ||||||
14 | of any kind costing over $5,000 to be performed for the | ||||||
15 | political subdivision,
shall require every contractor for the | ||||||
16 | work to furnish, supply and deliver
a bond to the State, or to | ||||||
17 | the political subdivision thereof entering into
the contract, | ||||||
18 | as the case may be, with good and sufficient sureties. The
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19 | amount of the bond shall be fixed by the officials, boards, | ||||||
20 | commissions,
commissioners or agents, and the bond, among other | ||||||
21 | conditions,
shall be
conditioned for the completion of the | ||||||
22 | contract, for the payment of material
used in the work and for | ||||||
23 | all labor performed in the work, whether by
subcontractor or |
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1 | otherwise.
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2 | If the contract is for emergency repairs as provided in the | ||||||
3 | Illinois
Procurement
Code, proof of payment for all labor, | ||||||
4 | materials, apparatus, fixtures, and
machinery may be
furnished | ||||||
5 | in lieu of the bond required by this Section.
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6 | Each such bond is deemed to contain the following | ||||||
7 | provisions whether
such provisions are inserted in such bond or | ||||||
8 | not:
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9 | "The principal and sureties on this bond agree that all the
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10 | undertakings, covenants, terms, conditions and agreements of | ||||||
11 | the contract
or contracts entered into between the principal | ||||||
12 | and the State or any
political subdivision thereof will be | ||||||
13 | performed and fulfilled and to pay
all persons, firms and | ||||||
14 | corporations having contracts with the principal or
with | ||||||
15 | subcontractors, all just claims due them under the provisions | ||||||
16 | of such
contracts for labor performed or materials furnished in | ||||||
17 | the performance of
the contract on account of which this bond | ||||||
18 | is given, when such claims are
not satisfied out of the | ||||||
19 | contract price of the contract on account of which
this bond is | ||||||
20 | given, after final settlement between the officer, board,
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21 | commission or agent of the State or of any political | ||||||
22 | subdivision thereof
and the principal has been made.". | ||||||
23 | Each bond securing contracts between the Capital | ||||||
24 | Development Board or any board of a public institution of | ||||||
25 | higher education and a contractor shall contain the following | ||||||
26 | provisions, whether the provisions are inserted in the bond or |
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1 | not: | ||||||
2 | "Upon the default of the principal with respect to | ||||||
3 | undertakings, covenants, terms, conditions, and agreements, | ||||||
4 | the termination of the contractor's right to proceed with the | ||||||
5 | work, and written notice of that default and termination by the | ||||||
6 | State or any political subdivision to the surety ("Notice"), | ||||||
7 | the surety shall promptly remedy the default by taking one of | ||||||
8 | the 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 | ||||||
18 | days of receipt indicating the course of action that it intends | ||||||
19 | to take or advising that it requires more time to investigate | ||||||
20 | the default and select a course of action. If the surety | ||||||
21 | requires more than 15 working days to investigate the default | ||||||
22 | and select a course of action or if the surety elects to | ||||||
23 | complete the work with a completing contractor that is not | ||||||
24 | prepared to commence performance within 15 working days after | ||||||
25 | receipt of Notice, and if the State or any political | ||||||
26 | subdivision determines it is in the best interest of the State |
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1 | to maintain the progress of the work, the State or any | ||||||
2 | political subdivision may continue to work until the completing | ||||||
3 | contractor is prepared to commence performance. Unless | ||||||
4 | otherwise agreed to by the procuring agency, in no case may the | ||||||
5 | surety take longer than 30 working days to advise the State or | ||||||
6 | political subdivision on the course of action it intends to | ||||||
7 | take. The surety shall be liable for reasonable costs incurred | ||||||
8 | by the State or any political subdivision to maintain the | ||||||
9 | progress to the extent the costs exceed the unpaid balance of | ||||||
10 | the contract sum, subject to the penal sum of the bond.".
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11 | The surety bond required by this Section may be acquired | ||||||
12 | from the
company, agent or broker of the contractor's choice. | ||||||
13 | The bond and sureties
shall
be subject to the right of | ||||||
14 | reasonable approval or disapproval, including
suspension, by | ||||||
15 | the State or political subdivision thereof concerned. In the
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16 | case of State construction contracts, a contractor shall not be | ||||||
17 | required to
post a cash bond or letter of credit in addition to | ||||||
18 | or as a substitute for the
surety bond required by this | ||||||
19 | Section.
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20 | When other than motor fuel tax funds, federal-aid funds, or | ||||||
21 | other
funds received from the State are used, a political | ||||||
22 | subdivision may allow
the contractor to provide a | ||||||
23 | non-diminishing irrevocable bank letter of
credit, in lieu of | ||||||
24 | the bond required by this Section, on contracts under
$100,000 | ||||||
25 | to comply with the requirements of this Section. Any such bank
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26 | letter of credit shall contain all provisions required for |
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1 | bonds by this
Section.
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2 | (Source: P.A. 95-1011, eff. 12-15-08; 96-1000, eff. 7-2-10.)
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3 | Section 99. Effective date. This Act takes effect upon | ||||||
4 | becoming law.
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