Public Act 094-0972
 
HB5260 Enrolled LRB094 16231 RSP 51475 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
changing Sections 3-2 and 7 as follows:
 
    (30 ILCS 540/3-2)  (from Ch. 127, par. 132.403-2)
    Sec. 3-2. Beginning July 1, 1993, in any instance where a
State official or agency is late in payment of a vendor's bill
or invoice for goods or services furnished to the State, as
defined in Section 1, properly approved in accordance with
rules promulgated under Section 3-3, the State official or
agency shall pay interest to the vendor in accordance with the
following:
        (1) Any bill approved for payment under this Section
    must be paid or the payment issued to the payee within 60
    days of receipt of a proper bill or invoice. If payment is
    not issued to the payee within this 60 day period, an
    interest penalty of 1.0% of any amount approved and unpaid
    shall be added for each month or fraction thereof after the
    end of this 60 day period, until final payment is made.
        (1.1) A State agency shall review in a timely manner
    each bill or invoice after its receipt. If the State agency
    determines that the bill or invoice contains a defect
    making it unable to process the payment request, the agency
    shall notify the vendor requesting payment as soon as
    possible after discovering the defect pursuant to rules
    promulgated under Section 3-3; provided, however, that the
    notice for construction related bills or invoices must be
    given not later than 30 days after the bill or invoice was
    first submitted. The notice shall identify the defect and
    any additional information necessary to correct the
    defect. If one or more items on a construction related bill
    or invoice are disapproved, but not the entire bill or
    invoice, then the portion that is not disapproved shall be
    paid.
        (2) Where a State official or agency is late in payment
    of a vendor's bill or invoice properly approved in
    accordance with this Act, and different late payment terms
    are not reduced to writing as a contractual agreement, the
    State official or agency shall automatically pay interest
    penalties required by this Section amounting to $50 or more
    to the appropriate vendor. Each agency shall be responsible
    for determining whether an interest penalty is owed and for
    paying the interest to the vendor. For interest of at least
    $5 but less than $50, the vendor must initiate a written
    request for the interest penalty when such interest is due
    and payable. The Department of Central Management Services
    and the State Comptroller shall jointly promulgate rules
    establishing the conditions under which interest of less
    than $5 may be claimed and paid. In the event an individual
    has paid a vendor for services in advance, the provisions
    of this Section shall apply until payment is made to that
    individual.
(Source: P.A. 92-384, eff. 7-1-02.)
 
    (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
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. 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
    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
    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.)
 
    Section 10. The Local Government Prompt Payment Act is
amended by changing Sections 3 and 9 as follows:
 
    (50 ILCS 505/3)  (from Ch. 85, par. 5603)
    Sec. 3. The appropriate local governmental official or
agency receiving goods or services must approve or disapprove a
bill from a vendor or contractor for goods or services
furnished the local governmental agency within 30 days after
the receipt of such bill or within 30 days after the date on
which the goods or services were received, whichever is later.
If one or more items on a construction related bill or invoice
are disapproved, but not the entire bill or invoice, then the
portion that is not disapproved shall be paid. When safety or
quality assurance testing of goods by the local governmental
agency is necessary before the approval or disapproval of a
bill and such testing cannot be completed within 30 days after
receipt of the goods, approval or disapproval of the bill must
be made immediately upon completion of the testing or within 60
days after receipt of the goods, whichever occurs first.
Written notice shall be mailed to the vendor or contractor
immediately if a bill is disapproved.
(Source: P.A. 87-773.)
 
    (50 ILCS 505/9)  (from Ch. 85, par. 5609)
    Sec. 9. Payments to subcontractors and material suppliers;
failure to make timely payments; additional amount due. 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 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, with the contractor,
subcontractors and material suppliers each receiving a
prorated portion based on the amount of payment. All interest
payments received pursuant to Section 4 also shall be disbursed
to subcontractors and material suppliers to whom payment has
been delayed, on a pro rata basis. 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 the work rejected or deemed not suitable
for payment and all other subcontractors and suppliers shall be
paid in full.
    If the contractor, without reasonable cause, fails to make
any payment 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 Section
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.
(Source: P.A. 87-773.)
 
    Section 99. Effective date. This Act takes effect July 1,
2007.