Bill Text: IL HB2664 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the State Prompt Payment Act. Provides that if a contractor is assessed liquidated damages by the State, the contractor is still responsible to each subcontractor under the subcontracts. For contracts with the Department of Transportation, provides that if a contractor is assessed a liquidated damages penalty equal to or exceeding the total amount of the contract and the contractor is unable to pay its subcontractors, the Department of Transportation shall verify completion of the work performed by the subcontractor and, upon successful verification, pay the subcontractor the amount owed on the subcontract with the contractor.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Passed) 2017-08-25 - Public Act . . . . . . . . . 100-0376 [HB2664 Detail]

Download: Illinois-2017-HB2664-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB2664 Introduced , by Rep. William Davis SYNOPSIS AS INTRODUCED:
30 ILCS 540/7 from Ch. 127, par. 132.407
Amends the State Prompt Payment Act. Provides that if a contractor is assessed liquidated damages by the State, the contractor is still responsible to each subcontractor under the subcontracts. For contracts with the Department of Transportation, provides that if a contractor is assessed a liquidated damages penalty equal to or exceeding the total amount of the contract and the contractor is unable to pay its subcontractors, the Department of Transportation shall verify completion of the work performed by the subcontractor and, upon successful verification, pay the subcontractor the amount owed on the subcontract with the contractor.
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A BILL FOR
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AN ACT concerning finance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. 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

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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. If the contractor is assessed liquidated damages by
the State, the contractor is still responsible to each
subcontractor under the subcontracts. 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.
For a contract with the Department of Transportation, if a
contractor is assessed a liquidated damages penalty equal to or
exceeding the total amount of the contract and the contractor
is unable to pay its subcontractors, the Department of
Transportation shall verify completion of the work performed by
the subcontractor and, upon successful verification, pay the
subcontractor the amount owed on the subcontract with the
contractor.
(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

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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

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