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| 1 | AN ACT concerning finance.
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| 2 | Be it enacted by the People of the State of Illinois,
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| 3 | represented in the General Assembly:
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| 4 | Section 5. The Public Construction Bond Act is amended by | ||||||
| 5 | changing Section 1 as follows:
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| 6 | (30 ILCS 550/1) (from Ch. 29, par. 15)
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| 7 | Sec. 1. Except as otherwise provided by this Act, all | ||||||
| 8 | officials, boards,
commissions or agents of this State, or of
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| 9 | any political subdivision thereof in making contracts for | ||||||
| 10 | public work of
any kind costing over $5,000 to be performed for | ||||||
| 11 | the State, or a political
subdivision thereof
shall require | ||||||
| 12 | every contractor for the work to furnish, supply and deliver
a | ||||||
| 13 | bond to the State, or to the political subdivision thereof | ||||||
| 14 | entering into
the contract, as the case may be, with good and | ||||||
| 15 | sufficient sureties. The
amount of the bond shall be fixed by | ||||||
| 16 | the officials, boards, commissions,
commissioners or agents, | ||||||
| 17 | and the bond, among other conditions,
shall be
conditioned for | ||||||
| 18 | the completion of the contract, for the payment of material
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| 19 | used in the work and for all labor performed in the work, | ||||||
| 20 | whether by
subcontractor or otherwise.
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| 21 | If the contract is for emergency repairs as provided in the | ||||||
| 22 | Illinois
Procurement
Code, proof of payment for all labor, | ||||||
| 23 | materials, apparatus, fixtures, and
machinery may be
furnished | ||||||
| 24 | in lieu of the bond required by this Section.
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| 25 | Each such bond is deemed to contain the following | ||||||
| 26 | provisions whether
such provisions are inserted in such bond or | ||||||
| 27 | not:
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| 28 | "The principal and sureties on this bond agree that all the
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| 29 | undertakings, covenants, terms, conditions and agreements of | ||||||
| 30 | the contract
or contracts entered into between the principal | ||||||
| 31 | and the State or any
political subdivision thereof will be | ||||||
| 32 | performed and fulfilled and to pay
all persons, firms and | ||||||
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| 1 | corporations having contracts with the principal or
with | ||||||
| 2 | subcontractors, all just claims due them under the provisions | ||||||
| 3 | of such
contracts for labor performed or materials furnished in | ||||||
| 4 | the performance of
the contract on account of which this bond | ||||||
| 5 | is given, when such claims are
not satisfied out of the | ||||||
| 6 | contract price of the contract on account of which
this bond is | ||||||
| 7 | given, after final settlement between the officer, board,
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| 8 | commission or agent of the State or of any political | ||||||
| 9 | subdivision thereof
and the principal has been made." | ||||||
| 10 | Each bond securing contracts between the Capital | ||||||
| 11 | Development Board or any board of a public institution of | ||||||
| 12 | higher education and a contractor shall contain the following | ||||||
| 13 | provisions, whether the provisions are inserted in the bond or | ||||||
| 14 | not:
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| 15 | "Upon the default of the principal with respect to | ||||||
| 16 | undertakings, covenants, terms, conditions, and agreements, | ||||||
| 17 | the termination of the contractor's right to proceed with the | ||||||
| 18 | work, and written notice of that default and termination by the | ||||||
| 19 | State or any political subdivision to the surety ("Notice"), | ||||||
| 20 | the surety shall promptly remedy the default by taking one of | ||||||
| 21 | the following actions: | ||||||
| 22 | (1) The surety shall complete the work pursuant to a | ||||||
| 23 | written takeover agreement, using a completing contractor | ||||||
| 24 | jointly selected by the surety and the State or any | ||||||
| 25 | political subdivision; or | ||||||
| 26 | (2) The surety shall pay a sum of money to the obligee, | ||||||
| 27 | up to the penal sum of the bond, that represents the | ||||||
| 28 | reasonable cost to complete the work that exceeds the | ||||||
| 29 | unpaid balance of the contract sum. | ||||||
| 30 | The surety shall respond to the Notice within 15 working | ||||||
| 31 | days of receipt indicating the course of action that it intends | ||||||
| 32 | to take. If the surety elects to complete the work with a | ||||||
| 33 | completing contractor and if the State or any political | ||||||
| 34 | subdivision determines it is in the best interest of the State | ||||||
| 35 | to maintain the progress of the work, the State or any | ||||||
| 36 | political subdivision may continue to work until the completing | ||||||
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| 1 | contractor is prepared to commence performance. The surety | ||||||
| 2 | shall be liable for reasonable costs incurred by the State or | ||||||
| 3 | any political subdivision to maintain the progress to the | ||||||
| 4 | extent the costs exceed the unpaid balance of the contract sum, | ||||||
| 5 | subject to the penal sum of the bond.".
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| 6 | The surety bond required by this Section may be acquired | ||||||
| 7 | from the
company, agent or broker of the contractor's choice. | ||||||
| 8 | The bond and sureties
shall
be subject to the right of | ||||||
| 9 | reasonable approval or disapproval, including
suspension, by | ||||||
| 10 | the State or political subdivision thereof concerned. In the
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| 11 | case of State construction contracts, a contractor shall not be | ||||||
| 12 | required to
post a cash bond or letter of credit in addition to | ||||||
| 13 | or as a substitute for the
surety bond required by this | ||||||
| 14 | Section.
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| 15 | When other than motor fuel tax funds, federal-aid funds, or | ||||||
| 16 | other
funds received from the State are used, a political | ||||||
| 17 | subdivision may allow
the contractor to provide a | ||||||
| 18 | non-diminishing irrevocable bank letter of
credit, in lieu of | ||||||
| 19 | the bond required by this Section, on contracts under
$100,000 | ||||||
| 20 | to comply with the requirements of this Section. Any such bank
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| 21 | letter of credit shall contain all provisions required for | ||||||
| 22 | bonds by this
Section.
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| 23 | (Source: P.A. 93-221, eff. 1-1-04.)
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| 24 | Section 99. Effective date. This Act takes effect upon | ||||||
| 25 | becoming law.
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