100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB0804

 

Introduced , by Rep. Camille Y. Lilly

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 2705/2705-615 new
30 ILCS 540/7  from Ch. 127, par. 132.407
30 ILCS 540/8 new

    Amends the Department of Transportation Law of the Civil Administrative Code of Illinois. Provides that a small business subcontractor may enter into an agreement with the Department of Transportation to receive direct payments from the Department on a construction project. Amends the State Prompt Payment Act. Provides that if a contractor is assessed liquidated damages from the State, the contractor is still responsible to each subcontractor under subcontracts. Provides that contractors are responsible for reasonable attorney fees if an administrative law judge finds in favor of the subcontractor. Provides that when a State official or agency responsible for administering a contract submits a voucher to the Comptroller for payment to a small business subcontractor who enters into a contract, that State official or agency shall make available electronically the voucher information. Provides that if a contractor with the Department or a small business subcontractor claims that additional payment is due under the terms of the contract, and the Department of Transportation has not agreed that payment is due, the contractor or subcontractor desiring to pursue additional compensation shall file a claim according to the requirements and procedures specified by the Department. Provides that if the claim, after consideration by the Department, is found to have merit, the Department will make an equitable adjustment.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0804LRB100 05476 MLM 15487 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Department of Transportation Law of the
5Civil Administrative Code of Illinois is amended by adding
6Section 2705-615 as follows:
 
7    (20 ILCS 2705/2705-615 new)
8    Sec. 2705-615. Small business; Disadvantaged Business
9Enterprise; subcontractor direct payments.
10    (a) A small business subcontractor may enter into an
11agreement with the Department to receive direct payments from
12the Department on a construction project if the following
13conditions have been met:
14        (1) the subcontractor is listed on the Chief
15    Procurement Office's Small Business Vendors Directory;
16        (2) the subcontractor is listed on the Department of
17    Transportation Disadvantaged Business Enterprise
18    Directory; and
19        (3) the Department has reviewed the contract and
20    determined that it meets the requirements for fairness and
21    responsiveness to the Department's bid specifications.
22    (b) Any contract entered pursuant to this Section shall
23include the following terms:

 

 

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1        (1) Any mobilization payment in the contract shall be
2    capped at the same percentage as the mobilization payment
3    in the contract between the Department and the prime
4    contractor. "Mobilization payment" means an advance
5    payment to a contractor that enables the contractor to
6    purchase necessary machinery and tools for a project or its
7    customary meaning in the context of the contract. The
8    mobilization payments shall be set at a per year basis.
9    Mobilization Payments on a multi-year project shall be paid
10    on an annual basis.
11        (2) If the prime contractor and the Department agree to
12    an accelerated pay schedule, the Department must agree to
13    the new pay schedule for the subcontractor as well.
 
14    Section 10. The State Prompt Payment Act is amended by
15changing Section 7 and by adding Section 8 as follows:
 
16    (30 ILCS 540/7)   (from Ch. 127, par. 132.407)
17    Sec. 7. Payments to subcontractors and material suppliers.
18    (a) When a State official or agency responsible for
19administering a contract submits a voucher to the Comptroller
20for payment to (i) a contractor; or (ii) a subcontractor who
21enters into a contract pursuant to Section 2705-615 of the
22Department of Transportation Law of the Civil Administrative
23Code of Illinois, that State official or agency shall promptly
24make available electronically the voucher number, the date of

 

 

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1the voucher, and the amount of the voucher. The State official
2or agency responsible for administering the contract shall
3provide subcontractors and material suppliers, known to the
4State official or agency, with instructions on how to access
5the electronic information. When a contractor receives any
6payment, the contractor shall pay each subcontractor and
7material supplier in proportion to the work completed by each
8subcontractor and material supplier their application, plus
9interest received under this Act, less any retention. If the
10contractor receives less than the full payment due under the
11public construction contract, the contractor shall be
12obligated to disburse on a pro rata basis those funds received,
13plus interest received under this Act, with the contractor,
14subcontractors and material suppliers each receiving a
15prorated portion based on the amount of payment. If the
16contractor is assessed liquidated damages from the State, the
17contractor is still responsible to each subcontractor under the
18subcontracts. When, however, the public owner does not release
19the full payment due under the contract because there are
20specific areas of work or materials the contractor is rejecting
21or because the contractor has otherwise determined such areas
22are not suitable for payment, then those specific
23subcontractors or suppliers involved shall not be paid for that
24portion of work rejected or deemed not suitable for payment and
25all other subcontractors and suppliers shall be paid in full,
26plus interest received under this Act.

 

 

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1    (b) If the contractor, without reasonable cause, fails to
2make full payment of amounts due under subsection (a) to his
3subcontractors and material suppliers within 15 days after
4receipt of payment under the public construction contract, the
5contractor shall pay to his subcontractors and material
6suppliers, in addition to the payment due them, interest in the
7amount of 2% per month, calculated from the expiration of the
815-day period until fully paid. This subsection shall also
9apply to any payments made by subcontractors and material
10suppliers to their subcontractors and material suppliers and to
11all payments made to lower tier subcontractors and material
12suppliers throughout the contracting chain.
13        (1) If a contractor, without reasonable cause, fails to
14    make payment in full as provided in subsection (a) within
15    15 days after receipt of payment under the public
16    construction contract, any subcontractor or material
17    supplier to whom payments are owed may file a written
18    notice with the State official or agency setting forth the
19    amount owed by the contractor and the contractor's failure
20    to timely pay the amount owed.
21        (2) The State official or agency, within 15 days after
22    receipt of a subcontractor's or material supplier's
23    written notice of the failure to receive payment from the
24    contractor, shall hold a hearing convened by an
25    administrative law judge to determine whether the
26    contractor withheld payment, without reasonable cause,

 

 

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1    from the subcontractors and material suppliers and what
2    amount, if any, is due to the subcontractors and material
3    suppliers. The State official or agency shall provide
4    appropriate notice to the parties of the date, time, and
5    location of the hearing. Each contractor, subcontractor,
6    and material supplier has the right to be represented by
7    counsel at the hearing and to cross-examine witnesses and
8    challenge documents.
9        (3) If there is a finding by the administrative law
10    judge that the contractor failed to make payment in full,
11    without reasonable cause, as provided in subsection (a),
12    then the administrative law judge shall, in writing, direct
13    the contractor to pay the amount owed to the subcontractors
14    and material suppliers plus interest and all reasonable
15    attorney fees incurred by the subcontractor within 15 days
16    after the finding.
17        (4) If a contractor fails to make full payment within
18    15 days after the administrative law judge's finding, then
19    the contractor shall be barred from entering into a State
20    public construction contract for a period of one year
21    beginning on the date of the administrative law judge's
22    finding.
23(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)
 
24    (30 ILCS 540/8 new)
25    Sec. 8. Contract Claims. If (i) a contractor who has a

 

 

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1contract with the Department of Transportation, or (ii) a
2subcontractor who enters into a contract pursuant to Section
32705-615 of the Civil Administrative Code of Illinois claims
4that additional payment is due under the terms of the contract,
5or for any other reason arising out of the performance of the
6contract, and the Department has not agreed during the ordinary
7course of contract administration that the payment is due, then
8the contractor or subcontractor may file a claim according to
9the requirements and procedures specified by the Department. If
10written notifications are not given, or if the Department is
11not afforded reasonable access by the contractor or
12subcontractor to complete records of actual costs or additional
13time claimed, or if a claim is not filed according to the
14procedures and within the time specified in the rules of the
15Department of Transportation, then the contractor or
16subcontractor's claim is waived and the Department is released
17from any and all demands and claims under that contract by the
18contract or subcontractor. The fact that the contractor or
19subcontractor has provided a proper notification, provided a
20properly filed claim, or provided the Department access to
21records of actual cost shall not in any way be construed as
22proving or substantiating the validity of the claim. If the
23claim, after consideration by the Department, is found to have
24merit, the Department will make an equitable adjustment either
25in the amount of costs to be paid according to the basis of
26payment specified by the Department or in the time required for

 

 

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1the work, or both. If the Department finds the claim to be
2without merit, no adjustment will be made.