SB1511 95TH GENERAL ASSEMBLY

LRB095 04366 JAM 24409 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB1511

Introduced 2/9/2007, by Sen. Kwame Raoul

SYNOPSIS AS INTRODUCED:

30 ILCS 550/1

from Ch. 29, par. 15

Amends the Public Construction Bond Act. Authorizes the Capital Development Board to waive the requirement of a surety bond for a public construction contract if (i) the contractor is a small business enterprise and (ii) the otherwise required bond amount plus other surety bond amounts waived by the Board from small business enterprises, with respect to projects that are not yet complete, does not exceed $2,000,000. Defines a small business enterprise. Authorizes the Board to adopt implementing rules. Effective July 1, 2007.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning finance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Public Construction Bond Act is amended by changing Section 1 as follows:

(30 ILCS 550/1) (from Ch. 29, par. 15)

Sec. 1. Except as otherwise provided by this Act, all officials, boards, commissions or agents of this State, or of any political subdivision thereof in making contracts for public work of any kind costing over $5,000 to be performed for the State, or a political subdivision thereof shall require every contractor for the work to furnish, supply and deliver a bond to the State, or to the political subdivision thereof entering into the contract, as the case may be, with good and sufficient sureties. The amount of the bond shall be fixed by the officials, boards, commissions, commissioners or agents, and the bond, among other conditions, shall be conditioned for the completion of the contract, for the payment of material used in the work and for all labor performed in the work, whether by subcontractor or otherwise.

If the contract is for emergency repairs as provided in the Illinois Procurement Code, proof of payment for all labor, materials, apparatus, fixtures, and machinery may be furnished in lieu of the bond required by this Section.

Each such bond is deemed to contain the following provisions whether such provisions are inserted in such bond or not:

"The principal and sureties on this bond agree that all the undertakings, covenants, terms, conditions and agreements of the contract or contracts entered into between the principal and the State or any political subdivision thereof will be performed and fulfilled and to pay all persons, firms and corporations having contracts with the principal or with subcontractors, all just claims due them under the provisions of such contracts for labor performed or materials furnished in the performance of the contract on account of which this bond is given, when such claims are not satisfied out of the contract price of the contract on account of which this bond is given, after final settlement between the officer, board, commission or agent of the State or of any political subdivision thereof and the principal has been made."

The surety bond required by this Section may be acquired from the company, agent or broker of the contractor's choice. The bond and sureties shall be subject to the right of reasonable approval or disapproval, including suspension, by the State or political subdivision thereof concerned. In the case of State construction contracts, a contractor shall not be required to post a cash bond or letter of credit in addition to or as a substitute for the surety bond required by this Section.

When other than motor fuel tax funds, federal-aid funds, or other funds received from the State are used, a political subdivision may allow the contractor to provide a non-diminishing irrevocable bank letter of credit, in lieu of the bond required by this Section, on contracts under $100,000 to comply with the requirements of this Section. Any such bank letter of credit shall contain all provisions required for bonds by this Section.

Notwithstanding this or any other law, in order to promote business competition and the stability and growth of small businesses, the Capital Development Board may waive a surety bond under this or any other Act for a public construction contract if (i) the contractor is a small business enterprise and (ii) the amount of the surety bond that would otherwise be required, when combined with the total amount of surety bonds waived by the Capital Development Board from that and all other small business enterprises with respect to projects that are not yet completed, does not exceed $2,000,000. The Capital Development Board may adopt rules to implement this Section. As used in this Section, a "small business enterprise" means a construction business whose annual sales and receipts do not exceed $10,000,000 and that is otherwise a small business as defined by rule of the Department of Central Management Services under subsection (b) of Section 45-45 of the Illinois Procurement Code.

(Source: P.A. 93-221, eff. 1-1-04.)

Section 99. Effective date. This Act takes effect July 1, 2007.