Bill Text: IL SR0541 | 2023-2024 | 103rd General Assembly | Introduced
Bill Title: Urges all stakeholders and policymakers to collaborate and consider how to best upgrade public works law in 2024 from retention's across-the-board, capital-draining policy of taking money from all contractors on all projects to a more efficient, nuanced, and tailored approach that protects agencies without forcing cash-strapped contractors to go into debt by providing no interest loans to their government. clients
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced) 2023-10-25 - Added as Co-Sponsor Sen. Emil Jones, III [SR0541 Detail]
Download: Illinois-2023-SR0541-Introduced.html
| |||||||
| |||||||
1 | SENATE RESOLUTION | ||||||
2 | WHEREAS, State law forces contractors who do construction | ||||||
3 | for government agencies to lend money back to their government | ||||||
4 | clients at a zero percent interest rate pursuant to retention | ||||||
5 | laws; and
| ||||||
6 | WHEREAS, Under retention laws, for every pay period after | ||||||
7 | the project bill is approved, the government agency pays only | ||||||
8 | 90% of the bill; and
| ||||||
9 | WHEREAS, The government agency keeps 10% of the bill, | ||||||
10 | which is known as the retention or retainage; and
| ||||||
11 | WHEREAS, The government agency will pay back this forced | ||||||
12 | loan months or even years after the contractor has performed | ||||||
13 | the work and paid for all the supplies and labor required; and
| ||||||
14 | WHEREAS, The forced loan of retainage has an enormous | ||||||
15 | impact on contractors' ability to grow; and
| ||||||
16 | WHEREAS, Instead of improving access to capital, the | ||||||
17 | retention law drains capital from employers; and
| ||||||
18 | WHEREAS, Defenders of retention laws argue that without | ||||||
19 | the leverage of keeping the contractors in debt from the costs |
| |||||||
| |||||||
1 | they have incurred for doing the approved work for agencies, | ||||||
2 | the agencies wouldn't be able to require contractors to | ||||||
3 | perform to the agencies' satisfaction; and
| ||||||
4 | WHEREAS, Agencies have many other tools to manage | ||||||
5 | contractors, including, but not limited to, their existing | ||||||
6 | vigorous approval and verification process for every pay | ||||||
7 | period or invoice, liquidated damages clauses if a contractor | ||||||
8 | doesn't perform, warranties on all work performed by | ||||||
9 | contractors, and a more nuanced contract for those few | ||||||
10 | circumstances where the quality of the work needs to be | ||||||
11 | verified later; and
| ||||||
12 | WHEREAS, Retention takes 10% of the contract value from | ||||||
13 | all contractors as a forced loan from everyone, whether the | ||||||
14 | subcontractor simply delivered materials or the prime | ||||||
15 | contractor is working on a complicated project that needs some | ||||||
16 | later examination; and
| ||||||
17 | WHEREAS, Under State law, this forced loan drops to 5% of | ||||||
18 | the contract value halfway through the project until close | ||||||
19 | out, a paperwork exercise that can take months after the work | ||||||
20 | is performed; and
| ||||||
21 | WHEREAS, Sometimes, government agencies are understaffed | ||||||
22 | and aren't able to close out a project in a reasonable period |
| |||||||
| |||||||
1 | of time, or some required paperwork isn't in from one vendor, | ||||||
2 | leading all the contractors to suffer with a forced loan until | ||||||
3 | the agency is satisfied; and
| ||||||
4 | WHEREAS, Retention is a punishing, blunt, and expensive | ||||||
5 | policy; and
| ||||||
6 | WHEREAS, Subcontractors will regularly and successfully | ||||||
7 | complete major work, fronting all the money for supplies and | ||||||
8 | labor, only to be caught waiting for the prime contractor to | ||||||
9 | pay out while they muddle through a retention dispute with a | ||||||
10 | government agency, putting the subcontractor in debt; | ||||||
11 | therefore, be it
|