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


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-Chaptered.html



Public Act 100-1089
SB3560 EnrolledLRB100 17563 RJF 32733 b
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
adding Sections 3-3.5, 8, 9, 10, and 11 as follows:
(30 ILCS 540/3-3.5 new)
Sec. 3-3.5. Vendor payment contracts. Any contract
executed under the Vendor Payment Program specified in Section
900.125 of Title 74 of the Illinois Administrative Code prior
to June 30, 2018 shall remain in effect until those contracts
have expired. Those parties with existing contracts shall
comply with additional reporting requirements established
under this amendatory Act of the 100th General Assembly or
rules adopted hereunder.
(30 ILCS 540/8 new)
Sec. 8. Vendor Payment Program.
(a) As used in this Section:
"Applicant" means any entity seeking to be designated
as a qualified purchaser.
"Application period" means the time period when the
Program is accepting applications as determined by the
Department of Central Management Services.
"Assigned penalties" means penalties payable by the
State in accordance with this Act that are assigned to the
qualified purchaser of an assigned receivable.
"Assigned receivable" means the base invoice amount of
a qualified account receivable and any associated assigned
penalties due, currently and in the future, in accordance
with this Act.
"Assignment agreement" means an agreement executed and
delivered by a participating vendor and a qualified
purchaser, in which the participating vendor will assign
one or more qualified accounts receivable to the qualified
purchaser and make certain representations and warranties
in respect thereof.
"Base invoice amount" means the unpaid principal
amount of the invoice associated with an assigned
receivable.
"Department" means the Department of Central
Management Services.
"Medical assistance program" means any program which
provides medical assistance under Article V of the Illinois
Public Aid Code, including Medicaid.
"Participating vendor" means a vendor whose
application for the sale of a qualified account receivable
is accepted for purchase by a qualified purchaser under the
Program terms.
"Program" means a Vendor Payment Program.
"Prompt payment penalties" means penalties payable by
the State in accordance with this Act.
"Purchase price" means 100% of the base invoice amount
associated with an assigned receivable minus: (1) any
deductions against the assigned receivable arising from
State offsets; and (2) if and to the extent exercised by a
qualified purchaser, other deductions for amounts owed by
the participating vendor to the qualified purchaser for
State offsets applied against other accounts receivable
assigned by the participating vendor to the qualified
purchaser under the Program.
"Qualified account receivable" means an account
receivable due and payable by the State that is outstanding
for 90 days or more, is eligible to accrue prompt payment
penalties under this Act and is verified by the relevant
State agency. A qualified account receivable shall not
include any account receivable related to medical
assistance program (including Medicaid) payments or any
other accounts receivable, the transfer or assignment of
which is prohibited by, or otherwise prevented by,
applicable law.
"Qualified purchaser" means any entity that, during
any application period, is approved by the Department of
Central Management Services to participate in the Program
on the basis of certain qualifying criteria as determined
by the Department.
"State offsets" means any amount deducted from
payments made by the State in respect of any qualified
account receivable due to the State's exercise of any
offset or other contractual rights against a participating
vendor. For the purpose of this Section, "State offsets"
include statutorily required administrative fees imposed
under the State Comptroller Act.
"Sub-participant" means any individual or entity that
intends to purchase assigned receivables, directly or
indirectly, by or through an applicant or qualified
purchaser for the purposes of the Program.
"Sub-participant certification" means an instrument
executed and delivered to the Department of Central
Management Services by a sub-participant, in which the
sub-participant certifies its agreement, among others, to
be bound by the terms and conditions of the Program as a
condition to its participation in the Program as a
sub-participant.
(b) This Section reflects the provisions of Section 900.125
of Title 74 of the Illinois Administrative Code prior to
January 1, 2018. The requirements of this Section establish the
criteria for participation by participating vendors and
qualified purchasers in a Vendor Payment Program. Information
regarding the Vendor Payment Program may be found at the
Internet website for the Department of Central Management
Services.
(c) The State Comptroller and the Department of Central
Management Services are authorized to establish and implement
the Program under Section 3-3. This Section applies to all
qualified accounts receivable not otherwise excluded from
receiving prompt payment interest under Section 900.120 of
Title 74 of the Illinois Administrative Code. This Section
shall not apply to the purchase of any accounts receivable
related to payments made under a medical assistance program,
including Medicaid payments, or any other purchase of accounts
receivable that is otherwise prohibited by law.
(d) Under the Program, qualified purchasers may purchase
from participating vendors certain qualified accounts
receivable owed by the State to the participating vendors. A
participating vendor shall not simultaneously apply to sell the
same qualified account receivable to more than one qualified
purchaser. In consideration of the payment of the purchase
price, a participating vendor shall assign to the qualified
purchaser all of its rights to payment of the qualified account
receivable, including all current and future prompt payment
penalties due to that qualified account receivable in
accordance with this Act.
(e) A vendor may apply to participate in the Program if:
(1) the vendor is owed an account receivable by the
State for which prompt payment penalties have commenced
accruing;
(2) the vendor's account receivable is eligible to
accrue prompt payment penalty interest under this Act;
(3) the vendor's account receivable is not for payments
under a medical assistance program; and
(4) the vendor's account receivable is not prohibited
by, or otherwise prevented by, applicable law from being
transferred or assigned under this Section.
(f) The Department shall review and approve or disapprove
each applicant seeking a qualified purchaser designation.
Factors to be considered by the Department in determining
whether an applicant shall be designated as a qualified
purchaser include, but are not limited to, the following:
(1) the qualified purchaser's agreement to commit a
minimum purchase amount as established from time to time by
the Department based upon the current needs of the Program
and the qualified purchaser's demonstrated ability to fund
its commitment;
(2) the demonstrated ability of a qualified
purchaser's sub-participants to fund their portions of a
qualified purchaser's minimum purchase commitment;
(3) the ability of a qualified purchaser and its
sub-participants to meet standards of responsibility
substantially in accordance with the requirements of the
Standards of Responsibility found in subsection (b) of
Section 1.2046 of Title 44 of the Illinois Administrative
Code concerning government contracts, procurement, and
property management;
(4) the agreement of each qualified purchaser, at its
sole cost and expense, to administer and facilitate the
operation of the Program with respect to that qualified
purchaser, including, without limitation, assisting
potential participating vendors with the application and
assignment process;
(5) the agreement of each qualified purchaser, at its
sole cost and expense, to establish a website that is
determined by the Department to be sufficient to administer
the Program in accordance with the terms and conditions of
the Program;
(6) the agreement of each qualified purchaser, at its
sole cost and expense, to market the Program to potential
participating vendors;
(7) the agreement of each qualified purchaser, at its
sole cost and expense, to educate participating vendors
about the benefits and risks associated with participation
in the Program;
(8) the agreement of each qualified purchaser, at its
sole cost and expense, to deposit funds into, release funds
from, and otherwise maintain all required accounts in
accordance with the terms and conditions of the Program.
Subject to the Program terms, all required accounts shall
be maintained and controlled by the qualified purchaser at
the qualified purchaser's sole cost and at no cost, whether
in the form of fees or otherwise, to the participating
vendors;
(9) the agreement of each qualified purchaser, at its
sole cost and expense, to submit a monthly written report,
in an acceptable electronic format, to the State
Comptroller or its designee and the Department or its
designee, within 10 days after the end of each month,
which, unless otherwise specified by the Department, at a
minimum, shall contain:
(A) a listing of each assigned receivable
purchased by that qualified purchaser during the
month, specifying the base invoice amount and invoice
date of that assigned receivable and the name of the
participating vendor, State contract number, voucher
number, and State agency associated with that assigned
receivable;
(B) a listing of each assigned receivable with
respect to which the qualified purchaser has received
payment of the base invoice amount from the State
during that month, including the amount of and date on
which that payment was made and the name of the
participating vendor, State contract number, voucher
number, and State agency associated with the assigned
receivable, and identifying the relevant application
period for each assigned receivable;
(C) a listing of any payments of assigned penalties
received from the State during the month, including the
amount of and date on which the payment was made, the
name of the participating vendor, the voucher number
for the assigned penalty receivable, and the
associated assigned receivable, including the State
contract number, voucher number, and State agency
associated with the assigned receivable, and
identifying the relevant application period for each
assigned receivable;
(D) the aggregate number and dollar value of
assigned receivables purchased by the qualified
purchaser from the date on which that qualified
purchaser commenced participating in the Program
through the last day of the month;
(E) the aggregate number and dollar value of
assigned receivables purchased by the qualified
purchaser for which no payment by the State of the base
invoice amount has yet been received, from the date on
which the qualified purchaser commenced participating
in the Program through the last day of the month;
(F) the aggregate number and dollar value of
invoices purchased by the qualified purchaser for
which no voucher has been submitted; and
(G) any other data the State Comptroller and the
Department may reasonably request from time to time;
(10) the agreement of each qualified purchaser to use
its reasonable best efforts, and for any sub-participant to
cause a qualified purchaser to use its reasonable best
efforts, to diligently pursue receipt of assigned
penalties associated with the assigned receivables,
including, without limitation, by promptly notifying the
relevant State agency that an assigned penalty is due and,
if necessary, seeking payment of assigned penalties
through the Illinois Court of Claims; and
(11) the agreement of each qualified purchaser and any
sub-participant to use their reasonable best efforts to
implement the Program terms and to perform their
obligations under the Program in a timely fashion.
(g) Each qualified purchaser's performance and
implementation of its obligations under subsection (f) shall be
subject to review by the Department and the State Comptroller
at any time to confirm that the qualified purchaser is
undertaking those obligations in a manner consistent with the
terms and conditions of the Program. A qualified purchaser's
failure to so perform its obligations including, without
limitation, its obligations to diligently pursue receipt of
assigned penalties associated with assigned receivables, shall
be grounds for the Department and the State Comptroller to
terminate the qualified purchaser's participation in the
Program under subsection (i). Any such termination shall be
without prejudice to any rights a participating vendor may have
against that qualified purchaser, in law or in equity,
including, without limitation, the right to enforce the terms
of the assignment agreement and of the Program against the
qualified purchaser.
(h) In determining whether any applicant shall be
designated as a qualified purchaser, the Department shall have
the right to review or approve sub-participants that intend to
purchase assigned receivables, directly or indirectly, by or
through the applicant. The Department reserves the right to
reject or terminate the designation of any applicant as a
qualified purchaser or require an applicant to exclude a
proposed sub-participant in order to become or remain a
qualified purchaser on the basis of a review, whether prior to
or after the designation. Each applicant and each qualified
purchaser has an affirmative obligation to promptly notify the
Department of any change or proposed change in the identity of
the sub-participants that it disclosed to the Department no
later than 3 business days after that change. Each
sub-participant shall be required to execute a sub-participant
certification that will be attached to the corresponding
qualified purchaser designation. Sub-participants shall meet,
at a minimum, the requirements of paragraphs (2), (3), (10),
and (11) of subsection (f).
(i) The Program, as codified under this Section, shall
continue until terminated or suspended as follows:
(1) The Program may be terminated or suspended: (A) by
the State Comptroller, after consulting with the
Department, by giving 10 days prior written notice to the
Department and the qualified purchasers in the Program; or
(B) by the Department, after consulting with the State
Comptroller, by giving 10 days prior written notice to the
State Comptroller and the qualified purchasers in the
Program.
(2) In the event a qualified purchaser or
sub-participant breaches or fails to meet any of the terms
or conditions of the Program, that qualified purchaser or
sub-participant may be terminated from the Program: (A) by
the State Comptroller, after consulting with the
Department. The termination shall be effective immediately
upon the State Comptroller giving written notice to the
Department and the qualified purchaser or sub-participant;
or (B) by the Department, after consulting with the State
Comptroller. The termination shall be effective
immediately upon the Department giving written notice to
the State Comptroller and the qualified purchaser or
sub-participant.
(3) A qualified purchaser or sub-participant may
terminate its participation in the Program, solely with
respect to its own participation in the Program, in the
event of any change to this Act from the form that existed
on the date that the qualified purchaser or the
sub-participant, as applicable, submitted the necessary
documentation for admission into the Program if the change
materially and adversely affects the qualified purchaser's
or the sub-participant's ability to purchase and receive
payment on receivables on the terms described in this
Section.
If the Program, a qualified purchaser, or a sub-participant
is terminated or suspended under paragraphs (1) or (2) of this
subsection (i), the Program, qualified purchaser, or
sub-participant may be reinstated only by written agreement of
the State Comptroller and the Department. No termination or
suspension under paragraphs (1), (2), or (3) of this subsection
(i) shall alter or affect the qualified purchaser's or
sub-participant's obligations with respect to assigned
receivables purchased by or through the qualified purchaser
prior to the termination.
(30 ILCS 540/9 new)
Sec. 9. Vendor Payment Program financial backer
disclosure.
(a) Within 60 days after the effective date of this
amendatory Act of the 100th General Assembly, at the time of
application, and annually on July 1 of each year, each
qualified purchaser shall submit to the Department and the
State Comptroller the following information about each person,
director, owner, officer, association, financial backer,
partnership, other entity, corporation, or trust with an
indirect or direct financial interest in each qualified
purchaser:
(1) percent ownership;
(2) type of ownership;
(3) first name, middle name, last name, maiden name (if
applicable), including aliases or former names;
(4) mailing address;
(5) type of business entity, if applicable;
(6) dates and jurisdiction of business formation or
incorporation, if applicable;
(7) names of controlling shareholders, class of stock,
percentage ownership;
(8) any indirect earnings resulting from the Program;
and
(9) any earnings associated with the Program to any
parties not previously disclosed.
(b) Within 60 days after the effective date of this
amendatory Act of the 100th General Assembly, at the time of
application, and annually on July 1 of each year, each trust
associated with the qualified purchaser shall submit to the
Department and the State Comptroller the following
information:
(1) names, addresses, dates of birth, and percentages
of interest of all beneficiaries;
(2) any indirect earnings resulting from the Program;
and
(3) any earnings associated with the Program to any
parties not previously disclosed.
(c) Each qualified purchaser must submit a statement to the
State Comptroller and the Department of Central Management
Services disclosing whether such qualified purchaser or any
related person, director, owner, officer, or financial backer
has previously or currently retained or contracted with any
registered lobbyist, lawyer, accountant, or other consultant
to prepare the disclosure required under this Section.
(30 ILCS 540/10 new)
Sec. 10. Vendor Payment Program audit. The Office of the
Auditor General shall perform a performance audit of the
Program established under Section 8. The audit shall include,
but not be limited to, a review of the administration of the
Program and compliance with requirements applicable to
participating vendors, qualified purchasers, qualified
accounts receivable, and financial backer disclosures. The
audit shall cover the Program's operations for fiscal years
2019 and 2020. Upon its completion and release, the Auditor
General's report shall be posted on the Internet website of the
Auditor General.
(30 ILCS 540/11 new)
Sec. 11. Vendor Payment Program accountability portal. The
Department of Central Management Services and the State
Comptroller shall publish on their respective Internet
websites: (1) the monthly report information submitted under
paragraph 9 of subsection (f) of Section 8; and (2) the
information required to be submitted under Section 9.
Section 99. Effective date. This Act takes effect upon
becoming law.
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