Bill Text: IL HB3486 | 2015-2016 | 99th General Assembly | Introduced

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Bill Title: Amends the Civil Administrative Code of Illinois. Provides that a small business subcontractor may enter into an agreement with the Department of Transportation to receive direct payments from the Department on a construction project. Amends the Procurement Code. Provides that any construction project under the authority of the chief procurement officer valued at $195,000 or less shall be designated for a small business set-aside. Amends the State Prompt Payment Act. Provides that when a State official or agency responsible for administering a contract submits a voucher to the Comptroller for payment to a small business subcontractor who enters into a contract, that State official or agency shall make available electronically the voucher information. Provides that if a contractor with the Department or a small business subcontractor claims that additional payment is due under the terms of the contract, and the Department of Transportation has not agreed that payment is due, the contractor or subcontractor desiring to pursue additional compensation shall file a claim according to the requirements and procedures specified by the Department. Provides that if the claim, after consideration by the Department, is found to have merit, the Department will make an equitable adjustment.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2015-02-26 - Referred to Rules Committee [HB3486 Detail]

Download: Illinois-2015-HB3486-Introduced.html

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99TH GENERAL ASSEMBLY State of Illinois 2015 and 2016 HB3486 Introduced , by Rep. William Davis SYNOPSIS AS INTRODUCED:
20 ILCS 2705/2705-615 new
30 ILCS 500/45-45
30 ILCS 540/7 from Ch. 127, par. 132.407
30 ILCS 540/8 new
Amends the Civil Administrative Code of Illinois. Provides that a small business subcontractor may enter into an agreement with the Department of Transportation to receive direct payments from the Department on a construction project. Amends the Procurement Code. Provides that any construction project under the authority of the chief procurement officer valued at $195,000 or less shall be designated for a small business set-aside. Amends the State Prompt Payment Act. Provides that when a State official or agency responsible for administering a contract submits a voucher to the Comptroller for payment to a small business subcontractor who enters into a contract, that State official or agency shall make available electronically the voucher information. Provides that if a contractor with the Department or a small business subcontractor claims that additional payment is due under the terms of the contract, and the Department of Transportation has not agreed that payment is due, the contractor or subcontractor desiring to pursue additional compensation shall file a claim according to the requirements and procedures specified by the Department. Provides that if the claim, after consideration by the Department, is found to have merit, the Department will make an equitable adjustment.
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FISCAL NOTE ACT MAY APPLY
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 Department of Transportation Law of the
Civil Administrative Code of Illinois is amended by adding
Section 2705-615 as follows:
(20 ILCS 2705/2705-615 new)
Sec. 2705-615. Small business; Disadvantaged Business
Enterprise; subcontractor direct payments.
(a) A small business subcontractor may enter into an
agreement with the Department to receive direct payments from
the Department on a construction project if the following
conditions have been met:
(1) the subcontractor is listed on the Chief
Procurement Office's Small Business Vendors Directory;
(2) the subcontractor is listed on the Department of
Transportation Disadvantaged Business Enterprise
Directory; and
(3) the Department has reviewed the contract and
determined that it meets the requirements for fairness and
responsiveness to the Department's bid specifications.
(b) Any contract entered pursuant to this Section shall
include the following terms:

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(1) Any mobilization payment in the contract shall be
capped at the same percentage as the mobilization payment
in the contract between the Department and the prime
contractor. "Mobilization payment" means an advance
payment to a contractor that enables the contractor to
purchase necessary machinery and tools for a project or its
customary meaning in the context of the contract. The
mobilization payments shall be set at a per year basis.
Mobilization Payments on a multi-year project shall be paid
on an annual basis.
(2) If the prime contractor and the Department agree to
an accelerated pay schedule, the Department must agree to
the new pay schedule for the subcontractor as well.
Section 10. The Illinois Procurement Code is amended by
changing Section 45-45 as follows:
(30 ILCS 500/45-45)
Sec. 45-45. Small businesses.
(a) Set-asides. Each chief procurement officer has
authority to designate as small business set-asides a fair
proportion of construction, supply, and service contracts for
award to small businesses in Illinois. Any construction project
under the authority of the chief procurement officer appointed
pursuant to paragraph (2) of subsection (a) of Section 10-20
valued at $195,000 or less shall be designated for a small

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business set-aside. Advertisements for bids or offers for those
contracts shall specify designation as small business
set-asides. In awarding the contracts, only bids or offers from
qualified small businesses shall be considered.
(b) Small business. "Small business" means a business that
is independently owned and operated and that is not dominant in
its field of operation. The chief procurement officer shall
establish a detailed definition by rule, using in addition to
the foregoing criteria other criteria, including the number of
employees and the dollar volume of business. When computing the
size status of a potential contractor, annual sales and
receipts of the potential contractor and all of its affiliates
shall be included. The maximum number of employees and the
maximum dollar volume that a small business may have under the
rules promulgated by the chief procurement officer may vary
from industry to industry to the extent necessary to reflect
differing characteristics of those industries, subject to the
following limitations:
(1) No wholesale business is a small business if its
annual sales for its most recently completed fiscal year
exceed $13,000,000.
(2) No retail business or business selling services is
a small business if its annual sales and receipts exceed
$8,000,000.
(3) No manufacturing business is a small business if it
employs more than 250 persons.

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(4) No construction business is a small business if its
annual sales and receipts exceed $14,000,000.
(c) Fair proportion. For the purpose of subsection (a), for
State agencies of the executive branch, a fair proportion of
construction contracts shall be no less than 25% nor more than
40% of the annual total contracts for construction.
(d) Withdrawal of designation. A small business set-aside
designation may be withdrawn by the purchasing agency when
deemed in the best interests of the State. Upon withdrawal, all
bids or offers shall be rejected, and the bidders or offerors
shall be notified of the reason for rejection. The contract
shall then be awarded in accordance with this Code without the
designation of small business set-aside.
(e) Small business specialist. The chief procurement
officer shall designate a State purchasing officer who will be
responsible for engaging an experienced contract negotiator to
serve as its small business specialist, whose duties shall
include:
(1) Compiling and maintaining a comprehensive list of
potential small contractors. In this duty, he or she shall
cooperate with the Federal Small Business Administration
in locating potential sources for various products and
services.
(2) Assisting small businesses in complying with the
procedures for bidding on State contracts.
(3) Examining requests from State agencies for the

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purchase of property or services to help determine which
invitations to bid are to be designated small business
set-asides.
(4) Making recommendations to the chief procurement
officer for the simplification of specifications and terms
in order to increase the opportunities for small business
participation.
(5) Assisting in investigations by purchasing agencies
to determine the responsibility of bidders or offerors on
small business set-asides.
(f) Small business annual report. The State purchasing
officer designated under subsection (e) shall annually before
December 1 report in writing to the General Assembly concerning
the awarding of contracts to small businesses. The report shall
include the total value of awards made in the preceding fiscal
year under the designation of small business set-aside. The
report shall also include the total value of awards made to
businesses owned by minorities, females, and persons with
disabilities, as defined in the Business Enterprise for
Minorities, Females, and Persons with Disabilities Act, in the
preceding fiscal year under the designation of small business
set-aside.
The requirement for reporting to the General Assembly shall
be satisfied by filing copies of the report as required by
Section 3.1 of the General Assembly Organization Act.
(Source: P.A. 98-1076, eff. 1-1-15.)

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Section 15. The State Prompt Payment Act is amended by
changing Section 7 and by adding Section 8 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 (i) a contractor; or (ii) a subcontractor who
enters into a contract pursuant to Section 2705-615 of the
Civil Administrative Code of Illinois, 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

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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

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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

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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.)
(30 ILCS 540/8 new)
Sec. 8. Contract Claims. If (i) a contractor who has a
contract with the Department of Transportation, or (ii) a
subcontractor who enters into a contract pursuant to Section
2705-615 of the Civil Administrative Code of Illinois claims
that additional payment is due under the terms of the contract,
or for any other reason arising out of the performance of the
contract, and the Department has not agreed during the ordinary
course of contract administration that the payment is due, then
the contractor or subcontractor may file a claim according to
the requirements and procedures specified by the Department. If
written notifications are not given, or if the Department is
not afforded reasonable access by the contractor or
subcontractor to complete records of actual costs or additional
time claimed, or if a claim is not filed according to the
procedures and within the time specified in the rules of the
Department of Transportation, then the contractor or
subcontractor's claim is waived and the Department is released
from any and all demands and claims under that contract by the

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contract or subcontractor. The fact that the contractor or
subcontractor has provided a proper notification, provided a
properly filed claim, or provided the Department access to
records of actual cost shall not in any way be construed as
proving or substantiating the validity of the claim. If the
claim, after consideration by the Department, is found to have
merit, the Department will make an equitable adjustment either
in the amount of costs to be paid according to the basis of
payment specified by the Department or in the time required for
the work, or both. If the Department finds the claim to be
without merit, no adjustment will be made.