Bill Text: IL SB3560 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the State Prompt Payment Act. Codifies the Vendor Payment Program established under the Illinois Administrative Code. Provides that any contract executed under that Program prior to June 30, 2018 shall remain in effect until those contracts have expired, and that existing contracts shall comply with the additional reporting requirements of this amendatory Act. Provides for the authority, applicability, and requirements for participants and entities involved in the Program established under this amendatory Act. Provides disclosure requirements for vendors under the Program. Requires the Auditor General to perform an annual audit of the Program. Requires the Department of Central Management Services to disclose specified information on its Internet website. Defines terms. Makes other changes. Effective immediately.

Spectrum: Strong Partisan Bill (Democrat 13-1)

Status: (Passed) 2018-08-24 - Public Act . . . . . . . . . 100-1089 [SB3560 Detail]

Download: Illinois-2017-SB3560-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3560

Introduced 2/16/2018, by Sen. Omar Aquino

SYNOPSIS AS INTRODUCED:
30 ILCS 540/3-3.5 new
30 ILCS 540/8 new
30 ILCS 540/9 new
30 ILCS 540/10 new
30 ILCS 540/11 new
30 ILCS 540/12 new

Amends the State Prompt Payment Act. Codifies the Vendor Payment Program established under the Illinois Administrative Code. Provides that any contract executed under that Program prior to June 30, 2018 shall remain in effect until those contracts have expired, and that existing contracts shall comply with the additional reporting requirements of this amendatory Act. Provides for the authority, applicability, and requirements for participants and entities involved in the Program established under this amendatory Act. Provides disclosure requirements for vendors under the Program. Requires the Auditor General to perform an annual audit of the Program. Requires the Department of Central Management Services to disclose specified information on its Internet website. Defines terms. Makes other changes. Effective immediately.
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FISCAL NOTE ACT MAY APPLY

A BILL FOR

SB3560LRB100 17563 RJF 32733 b
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 State Prompt Payment Act is amended by
5adding Sections 3-3.5, 8, 9, 10, 11, and 12 as follows:
6 (30 ILCS 540/3-3.5 new)
7 Sec. 3-3.5. Vendor payment contracts. Any contract
8executed under the Vendor Payment Program specified in Section
9900.125 of Title 74 of the Illinois Administrative Code prior
10to June 30, 2018 shall remain in effect until those contracts
11have expired. Those parties with existing contracts shall
12comply with additional reporting requirements established
13under this amendatory Act of the 100th General Assembly or
14rules adopted hereunder.
15 (30 ILCS 540/8 new)
16 Sec. 8. Vendor Payment Program.
17 (a) As used in this Section:
18 "Applicant" means any entity seeking to be designated
19 as a qualified purchaser.
20 "Application period" means the time period when the
21 Program is accepting applications as determined by the
22 Department of Central Management Services.

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1 "Assigned penalties" means penalties payable by the
2 State in accordance with this Act that are assigned to the
3 qualified purchaser of an assigned receivable.
4 "Assigned receivable" means the base invoice amount of
5 a qualified account receivable and any associated assigned
6 penalties due, currently and in the future, in accordance
7 with this Act.
8 "Assignment agreement" means an agreement executed and
9 delivered by a participating vendor and a qualified
10 purchaser, in which the participating vendor will assign
11 one or more qualified accounts receivable to the qualified
12 purchaser and make certain representations and warranties
13 in respect thereof.
14 "Base invoice amount" means the unpaid principal
15 amount of the invoice associated with an assigned
16 receivable.
17 "Department" means the Department of Central
18 Management Services.
19 "Medical assistance program" means any program which
20 provides medical assistance under Article V of the Illinois
21 Public Aid Code, including Medicaid.
22 "Participating vendor" means a vendor whose
23 application for the sale of a qualified account receivable
24 is accepted for purchase by a qualified purchaser under the
25 Programs terms.
26 "Program" means a Vendor Payment Program.

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1 "Prompt payment penalties" means penalties payable by
2 the State in accordance with this Act.
3 "Purchase Price" means 100% of the base invoice amount
4 associated with an assigned receivable minus: (1) any
5 deductions against the assigned receivable arising from
6 State offsets; and (2) if and to the extent exercised by a
7 qualified purchaser, other deductions for amounts owed by
8 the participating vendor to the qualified purchaser for
9 State offsets applied against other accounts receivable
10 assigned by the participating vendor to the qualified
11 purchaser under the Program.
12 "Qualified account receivable" means an account
13 receivable due and payable by the State that is outstanding
14 for 90 days or more, is eligible to accrue prompt payment
15 penalties under this Act and is verified by the relevant
16 State agency. A qualified account receivable shall not
17 include any account receivable related to medical
18 assistance program (including Medicaid) payments or any
19 other accounts receivable, the transfer or assignment of
20 which is prohibited by, or otherwise prevented by,
21 applicable law.
22 "Qualified purchaser" means any entity that, during
23 any application period, is approved by the Department of
24 Central Management Services to participate in the Program
25 on the basis of certain qualifying criteria as determined
26 by the Department.

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1 "State offsets" means any amount deducted from
2 payments made by the State in respect of any qualified
3 account receivable due to the State's exercise of any
4 offset or other contractual rights against a participating
5 vendor. For the purpose of this Section, "State offsets"
6 include statutorily required administrative fees imposed
7 under the State Comptroller Act.
8 "Sub-participant" means any individual or entity that
9 intends to purchase assigned receivables, directly or
10 indirectly, by or through an applicant or qualified
11 purchaser for the purposes of the Program.
12 "Sub-participant certification" means an instrument
13 executed and delivered to the Department of Central
14 Management Services by a sub-participant, in which the
15 sub-participant certifies its agreement, among others, to
16 be bound by the terms and conditions of the Program as a
17 condition to its participation in the Program as a
18 sub-participant.
19 (b) This Section reflects the provisions of Section 900.125
20of Title 74 of the Illinois Administrative Code prior to
21January 1, 2018. The requirements of this Section establish the
22criteria for participation by participating vendors and
23qualified purchasers in a Vendor Payment Program. Information
24regarding the Vendor Payment Program may be found at the
25Internet website for the Department of Central Management
26Services.

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1 (c) The State Comptroller and the Department of Central
2Management Services are authorized to establish and implement
3the Program under Section 3-3. This Section applies to all
4qualified accounts receivable not otherwise excluded from
5receiving prompt payment interest under Section 900.120 of
6Title 74 of the Illinois Administrative Code. This Section
7shall not apply to the purchase of any accounts receivable
8related to payments made under a medical assistance program,
9including Medicaid payments, or any other purchase of accounts
10receivable that is otherwise prohibited by law.
11 (d) Under the Program, qualified purchasers may purchase
12from participating vendors certain qualified accounts
13receivable owed by the State to the participating vendors. A
14participating vendor shall not simultaneously apply to sell the
15same qualified account receivable to more than one qualified
16purchaser. In consideration of the payment of the purchase
17price, a participating vendor shall assign to the qualified
18purchaser all of its rights to payment of the qualified account
19receivable, including all current and future prompt payment
20penalties due to that qualified account receivable in
21accordance with this Act.
22 (e) A vendor may apply to participate in the Program if:
23 (1) the vendor is owed an account receivable by the
24 State for which prompt payment penalties have commenced
25 accruing;
26 (2) the vendor's account receivable is eligible to

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1 accrue prompt payment penalty interest under this Act;
2 (3) the vendor's account receivable is not for payments
3 under a medical assistance program; and
4 (4) the vendor's account receivable is not prohibited
5 by, or otherwise prevented by, applicable law from being
6 transferred or assigned under this Section.
7 (f) Factors to be considered by the Department in
8determining whether an applicant shall be designated as a
9qualified purchaser include, but are not limited to, the
10following:
11 (1) the qualified purchaser's agreement to commit a
12 minimum purchase amount as established from time to time by
13 the Department based upon the current needs of the Program
14 and the qualified purchaser's demonstrated ability to fund
15 its commitment;
16 (2) the demonstrated ability of a qualified
17 purchaser's sub-participants to fund their portions of a
18 qualified purchaser's minimum purchase commitment;
19 (3) the ability of a qualified purchaser and its
20 sub-participants to meet standards of responsibility
21 substantially in accordance with the requirements of the
22 Standards of Responsibility found in Section 1.2046 of
23 Title 44 of the Illinois Administrative Code concerning
24 government contracts, procurement, and property
25 management;
26 (4) the agreement of each qualified purchaser, at its

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1 sole cost and expense, to administer and facilitate the
2 operation of the Program with respect to that qualified
3 purchaser, including, without limitation, assisting
4 potential participating vendors with the application and
5 assignment process;
6 (5) the agreement of each qualified purchaser, at its
7 sole cost and expense, to establish a website that is
8 determined by the Department to be sufficient to administer
9 the Program in accordance with the terms and conditions of
10 the Program;
11 (6) the agreement of each qualified purchaser, at its
12 sole cost and expense, to market the Program to potential
13 participating vendors;
14 (7) the agreement of each qualified purchaser, at its
15 sole cost and expense, to educate participating vendors
16 about the benefits and risks associated with participation
17 in the Program;
18 (8) the agreement of each qualified purchaser, at its
19 sole cost and expense, to deposit funds into, release funds
20 from, and otherwise maintain all required accounts in
21 accordance with the terms and conditions of the Program.
22 Subject to the Program terms, all required accounts shall
23 be maintained and controlled by the qualified purchaser at
24 the qualified purchaser's sole cost and at no cost, whether
25 in the form of fees or otherwise, to the participating
26 vendors;

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1 (9) the agreement of each qualified purchaser, at its
2 sole cost and expense, to submit a monthly written report,
3 in both hard copy and Excel format, to the State
4 Comptroller or its designee and the Department or its
5 designee, within 10 days after the end of each month,
6 which, unless otherwise specified by the Department, at a
7 minimum, shall contain:
8 (A) a listing of each assigned receivable
9 purchased by that qualified purchaser during the
10 month, specifying the base invoice amount and invoice
11 date of that assigned receivable and the name of the
12 participating vendor, State contract number, voucher
13 number, and State agency associated with that assigned
14 receivable;
15 (B) a listing of each assigned receivable with
16 respect to which the qualified purchaser has received
17 payment of the base invoice amount from the State
18 during that month, including the amount of and date on
19 which that payment was made and the name of the
20 participating vendor, State contract number, voucher
21 number, and State agency associated with the assigned
22 receivable, and identifying the relevant application
23 period for each assigned receivable;
24 (C) a listing of any payments of assigned penalties
25 received from the State during the month, including the
26 amount of and date on which the payment was made, the

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1 name of the participating vendor, the voucher number
2 for the assigned penalty receivable, and the
3 associated assigned receivable, including the State
4 contract number, voucher number, and State agency
5 associated with the assigned receivable, and
6 identifying the relevant application period for each
7 assigned receivable;
8 (D) the aggregate number and dollar value of
9 assigned receivables purchased by the qualified
10 purchaser from the date on which that qualified
11 purchaser commenced participating in the Program
12 through the last day of the month;
13 (E) the aggregate number and dollar value of
14 assigned receivables purchased by the qualified
15 purchaser for which no payment by the State of the base
16 invoice amount has yet been received, from the date on
17 which the qualified purchaser commenced participating
18 in the Program through the last day of the month; and
19 (F) any other data the State Comptroller and the
20 Department may reasonably request from time to time;
21 (10) the agreement of each qualified purchaser to use
22 its reasonable best efforts, and for any sub-participant to
23 cause a qualified purchaser to use its reasonable best
24 efforts, to diligently pursue receipt of assigned
25 penalties associated with the assigned receivables,
26 including, without limitation, by promptly notifying the

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1 relevant State agency that an assigned penalty is due and,
2 if necessary, seeking payment of assigned penalties
3 through the Illinois Court of Claims; and
4 (11) the agreement of each qualified purchaser and any
5 sub-participant to use their reasonable best efforts to
6 implement the Program terms and to perform their
7 obligations under the Program in a timely fashion.
8 (g) Each qualified purchaser's performance and
9implementation of its obligations under subsection (f) shall be
10subject to review by the Department and the State Comptroller
11at any time to confirm that the qualified purchaser is
12undertaking those obligations in a manner consistent with the
13terms and conditions of the Program. A qualified purchaser's
14failure to so perform its obligations including, without
15limitation, its obligations to diligently pursue receipt of
16assigned penalties associated with assigned receivables, shall
17be grounds for the Department and the State Comptroller to
18terminate the qualified purchaser's participation in the
19Program under subsection (i). Any such termination shall be
20without prejudice to any rights a participating vendor may have
21against that qualified purchaser, in law or in equity,
22including, without limitation, the right to enforce the terms
23of the assignment agreement and of the Program against the
24qualified purchaser.
25 (h) In determining whether any applicant shall be
26designated as a qualified purchaser, the Department shall have

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1the right to review or approve sub-participants that intend to
2purchase assigned receivables, directly or indirectly, by or
3through the applicant. The Department reserves the right to
4reject or terminate the designation of any applicant as a
5qualified purchaser or require an applicant to exclude a
6proposed sub-participant in order to become or remain a
7qualified purchaser on the basis of a review, whether prior to
8or after the designation. Each applicant and each qualified
9purchaser has an affirmative obligation to promptly notify the
10Department of any change or proposed change in the identity of
11the sub-participants that it disclosed to the Department no
12later than 3 business days after that change. Each
13sub-participant shall be required to execute a sub-participant
14certification that will be attached to the corresponding
15qualified purchaser designation. Sub-participants shall meet,
16at a minimum, the requirements of paragraphs (2), (3), (10),
17and (11) of subsection (f).
18 (i) The Program, as codified under this Section, shall
19commence July 1, 2018, and shall continue until terminated as
20follows:
21 (1) The Program may be terminated: (A) by the State
22 Comptroller, after consulting with the Department, by
23 giving 10 days prior written notice to the Department and
24 the qualified purchasers in the Program; or (B) by the
25 Department, after consulting with the State Comptroller,
26 by giving 10 days prior written notice to the State

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1 Comptroller and the qualified purchasers in the Program.
2 (2) In the event a qualified purchaser or
3 sub-participant breaches or fails to meet any of the terms
4 or conditions of the Program, that qualified purchaser or
5 sub-participant may be terminated from the Program: (A) by
6 the State Comptroller, after consulting with the
7 Department. The termination shall be effective immediately
8 upon the State Comptroller giving written notice to the
9 Department and the qualified purchaser or sub-participant;
10 or (B) by the Department, after consulting with the State
11 Comptroller. The termination shall be effective
12 immediately upon the Department giving written notice to
13 the State Comptroller and the qualified purchaser or
14 sub-participant.
15 (3) A qualified purchaser or sub-participant may
16 terminate its participation in the Program, solely with
17 respect to its own participation in the Program, in the
18 event of any change to this Act from the form that existed
19 on the date that the qualified purchaser or the
20 sub-participant, as applicable, submitted the necessary
21 documentation for admission into the Program if the change
22 materially and adversely affects the qualified purchaser's
23 or the sub-participant's ability to purchase and receive
24 payment on receivables on the terms described in this
25 Section.
26 If the Program, a qualified purchaser, or a sub-participant

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1is terminated under paragraphs (1) or (2) of this subsection
2(i), the Program, qualified purchaser, or sub-participant may
3be reinstated only by written agreement of the State
4Comptroller and the Department. No termination under
5paragraphs (1), (2), or (3) of this subsection (i) shall alter
6or affect the qualified purchaser's or sub-participant's
7obligations with respect to assigned receivables purchased by
8or through the qualified purchaser prior to the termination.
9 (30 ILCS 540/9 new)
10 Sec. 9. Vendor Payment Program financial backer
11disclosure.
12 (a) The Secretary of State shall create an online database
13listing the following information about each person, director,
14owner, officer, association, financial backer, partnership,
15other entity, corporation, or trust with an indirect or direct
16financial interest in each qualified purchaser:
17 (1) percent ownership;
18 (2) type of ownership;
19 (3) first name, middle name, last name, maiden name (if
20 applicable), including aliases or former names; and
21 (4) resident mailing address, work mailing address,
22 work telephone, and work email address.
23 (b) If a corporation or other entity, the following
24information shall be disclosed:
25 (1) business name, mailing address, telephone number,

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1 and website, if any;
2 (2) type of business entity;
3 (3) dates and jurisdiction of business formation or
4 incorporation;
5 (4) names of controlling shareholders, class of stock,
6 percentage ownership;
7 (5) any indirect earnings resulting from the Program;
8 and
9 (6) any earnings associated with the Program to any
10 parties not previously disclosed.
11 (c) If a trust, the following information shall be
12disclosed:
13 (1) names, addresses, dates of birth, and percentages
14 of interest of all beneficiaries;
15 (2) any indirect earnings resulting from the Program;
16 and
17 (3) any earnings associated with the Program to any
18 parties not previously disclosed.
19 (d) Each person, director, owner, officer, or financial
20backer must submit a statement disclosing whether they have
21previously or currently retained or contracted with any
22registered lobbyist, lawyer, or consultant to prepare the
23disclosure required under this Section.
24 (e) The Secretary of State shall adopt rules and policies
25to govern the application of this Section that shall be binding
26on all officials and agencies under this Act's jurisdiction.

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1These rules and policies may be made effective no earlier than
2July 1, 2018.
3 (30 ILCS 540/10 new)
4 Sec. 10. Vendor Payment Program audit. The Office of the
5Auditor General shall perform a compliance and performance
6audit of the Program established under Section 8 annually for
7the previous fiscal year beginning on January 1, 2019. The
8Auditor General shall deliver a report of his or her findings
9as provided under Section 3-14 of the State Auditing Act by
10January 1 of each year.
11 (30 ILCS 540/11 new)
12 Sec. 11. Vendor Payment Program accountability portal. The
13Department of Central Management Services shall publish on its
14Internet website a monthly report disclosing the following:
15 (1) a listing of each assigned receivable with respect
16 to which the qualified purchaser has received payment of
17 the base invoice amount from the State during that month,
18 including the amount of and date on which that payment was
19 made and the name of the participating vendor, State
20 contract number, voucher number, and State agency
21 associated with the assigned receivable, and identifying
22 the relevant application period for each assigned
23 receivable;
24 (2) a listing of any payments of assigned penalties

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1 received from the State during the month, including the
2 amount of and date on which the payment was made, the name
3 of the participating vendor, the voucher number for the
4 assigned penalty receivable, and the associated assigned
5 receivable, including the State contract number, voucher
6 number, and State agency associated with the assigned
7 receivable, and identifying the relevant application
8 period for each assigned receivable;
9 (3) the aggregate number and dollar value of assigned
10 receivables purchased by the qualified purchaser from the
11 date on which that qualified purchaser commenced
12 participating in the Program through the last day of the
13 month;
14 (4) the aggregate number and dollar value of assigned
15 receivables purchased by the qualified purchaser for which
16 no payment by the State of the base invoice amount has yet
17 been received, from the date on which the qualified
18 purchaser commenced participating in the Program through
19 the last day of the month;
20 (5) the aggregate number and dollar value of invoices
21 purchased by the qualified purchaser for which no
22 appropriation has been authorized; and
23 (6) any other data the State Comptroller and the
24 Department of Central Management Services may reasonably
25 request from time to time.

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1 (30 ILCS 540/12 new)
2 Sec. 12. Vendor Payment Program promotion. In the absence
3of a State appropriation, the State of Illinois and its
4agencies shall not promote any Program established to
5facilitate the assignment of any accounts receivable.
6 Section 99. Effective date. This Act takes effect upon
7becoming law.
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