SB2906 100TH GENERAL ASSEMBLY

LRB100 19156 RJF 34421 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2906

Introduced 2/14/2018, by Sen. Karen McConnaughay

SYNOPSIS AS INTRODUCED:

15 ILCS 405/23.9
30 ILCS 105/5.886 new
30 ILCS 575/6a	from Ch. 127, par. 132.606a
30 ILCS 575/8	from Ch. 127, par. 132.608
30 ILCS 575/10 new
30 ILCS 575/15 new
30 ILCS 575/20 new

Amends the State Comptroller Act. Requires the Comptroller to work with the Department of Central Management Services to fulfill his or her responsibilities under the Minority Contractor Opportunity Initiative. Provides for specified aspects of the Minority Contractor Opportunity Initiative to be administered by the Department of Central Management Services (rather than the Comptroller). Requires any bidder or offeror awarded a contract of $1,000 or more under specified Sections of the Illinois Procurement Code to pay a fee of $50 (currently, $15) annually for each year of the contract to cover expenses related to the operation of the Business Enterprise Program, and for the administration of the Initiative. Requires the fee to be paid into the Business Enterprise Program Fund (currently, the Comptroller's Administrative Fund). Amends the Business Enterprise for Minorities, Women, and Persons with Disabilities Act. Requires a copy of a proposed contract to be provided to the Secretary of the Business Enterprise Council within 14 days of execution before work may be commenced. Modifies enforcement provisions. Provides requirements for prompt payments to subcontractors. Specifies contracts subject to Business Enterprise Program goal analysis. Amends the State Finance Act to create the Business Enterprise Program Fund as a special fund in the State treasury. Makes other changes.

A BILL FOR

AN ACT concerning State government.

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

Section 5. The State Comptroller Act is amended by changing Section 23.9 as follows:

(15 ILCS 405/23.9)

Sec. 23.9. Minority Contractor Opportunity Initiative. The State Comptroller Minority Contractor Opportunity Initiative is created to provide greater opportunities for minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses with 20 or fewer employees in this State to participate in the State procurement process. The following portions of the initiative shall be administered by the Department of Central Management Services Comptroller. Under this initiative, the Comptroller is responsible for the following: (i) outreach to minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses capable of providing services to the State; (ii) education of minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses concerning State contracting and procurement; and (iii) notification of minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses of State contracting opportunities. The Comptroller shall be responsible for ; and (iv) maintenance of an online database of State contracts that identifies the contracts awarded to minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses that includes the total amount paid by State agencies to contractors and the percentage paid to minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses.

The Comptroller shall work with the Department of Central Management Services and the Business Enterprise Council created under Section 5 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act to fulfill the Comptroller's responsibilities under this Section. The Comptroller may rely on the Business Enterprise Council's identification of minority-owned businesses, women-owned businesses, and businesses owned by persons with disabilities.

The Comptroller shall annually prepare and submit a report to the Governor and the General Assembly concerning the progress of this initiative including the following information for the preceding calendar year: (i) a statement of the total amounts paid by each executive branch agency to contractors since the previous report; (ii) the percentage of the amounts that were paid to minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses; (iii) the successes achieved and the challenges faced by the Comptroller in operating outreach programs for minorities, women, persons with disabilities, and small businesses; (iv) the challenges each executive branch agency may face in hiring qualified minority, woman, and small business employees and employees with disabilities and contracting with qualified minority-owned businesses, women-owned businesses, businesses owned by persons with disabilities, and small businesses; and (iv) any other information, findings, conclusions, and recommendations for legislative or agency action, as the Comptroller deems appropriate.

On and after the effective date of this amendatory Act of the 97th General Assembly, any bidder or offeror awarded a contract of $1,000 or more under Section 20-10, 20-15, 20-25, or 20-30 of the Illinois Procurement Code is required to pay a fee of $50 annually for each year of the contract $15 to cover expenses related to the operation of the Business Enterprise Program provided under the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, and for the administration of this Section. The Comptroller shall deduct the fee from the first check issued to the vendor under the contract and deposit the fee into the Business Enterprise Program Comptroller's Administrative Fund. Contracts administered for statewide orders placed by agencies (commonly referred to as "statewide master contracts") are exempt from this fee.

(Source: P.A. 99-143, eff. 7-27-15; 100-391, eff. 8-25-17.)

Section 10. The State Finance Act is amended by adding Section 5.886 as follows:

(30 ILCS 105/5.886 new)

Sec. 5.886. The Business Enterprise Program Fund.

Section 15. The Business Enterprise for Minorities, Women, and Persons with Disabilities Act is amended by changing Sections 6a and 8 and by adding Sections 10, 15, and 20 as follows:

(30 ILCS 575/6a) (from Ch. 127, par. 132.606a)

(Section scheduled to be repealed on June 30, 2020)

Sec. 6a. Notice of contracts to Council. Except in case of emergency as defined in the Illinois Procurement Code, or as authorized by rule promulgated by the Department of Central Management Services, each agency and public institution of higher education under the jurisdiction of this Act shall notify the Secretary of the Council of proposed contracts for professional and artistic services and provide the information in the form and detail as required by rule promulgated by the Department of Central Management Services. Notification may be made through direct written communication to the Secretary to be received at least 14 days before execution of the contract (or the solicitation response date, if applicable). The agency or public institution of higher education must consider any vendor referred by the Secretary before execution of the contract. The agency or public institution of higher education shall provide a copy of the contract to the Secretary of the Business Enterprise Council within 14 days of execution. Work shall not commence on a contract until the executed version has been provided to the Secretary of the Council as required under this Section. The provisions of this Section shall not apply to any State agency or public institution of higher education that has awarded contracts for professional and artistic services to businesses owned by minorities, women, and persons with disabilities totaling in the aggregate $40,000,000 or more during the preceding fiscal year.

(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)

(30 ILCS 575/8) (from Ch. 127, par. 132.608)

(Section scheduled to be repealed on June 30, 2020)

Sec. 8. Enforcement.

(1) The Council shall make such findings, recommendations and proposals to the Governor as are necessary and appropriate to enforce this Act. If, as a result of its monitoring activities, the Council determines that its goals and policies are not being met by any State agency or public institution of higher education, the Council may recommend any or all of the following actions:

(a) Establish enforcement procedures whereby the Council may recommend to the appropriate State agency, public institutions of higher education, or law enforcement officer that legal or administrative remedies be initiated for violations of contract provisions or rules issued hereunder or by a contracting State agency or public institutions of higher education. The Director of the Department of Central Management Services State agencies and public institutions of higher education shall be authorized to adopt remedies for such violations which shall include (1) termination of the contract involved, (2) prohibition of participation of the respondents in public contracts for a period not to exceed one year, (3) imposition of a penalty not to exceed the dollar value of the contract goal for the contract term in which the vendor is in any profit acquired as a result of violation, or (4) any combination thereof.

(b) If the Council concludes that a compliance plan submitted under Section 6 is unlikely to produce the participation goals for businesses owned by minorities, women, and persons with disabilities within the then current fiscal year, the Council may recommend that the State agency or public institution of higher education revise its plan to provide additional opportunities for participation by businesses owned by minorities, women, and persons with disabilities. Such recommended revisions may include, but shall not be limited to, the following:

(i) assurances of stronger and better focused solicitation efforts to obtain more businesses owned by minorities, women, and persons with disabilities as potential sources of supply;

(ii) division of job or project requirements, when economically feasible, into tasks or quantities to permit participation of businesses owned by minorities, women, and persons with disabilities;

(iii) elimination of extended experience or capitalization requirements, when programmatically feasible, to permit participation of businesses owned by minorities, women, and persons with disabilities;

(iv) identification of specific proposed contracts as particularly attractive or appropriate for participation by businesses owned by minorities, women, and persons with disabilities, such identification to result from and be coupled with the efforts of subparagraphs (i) through (iii);

(v) implementation of those regulations established for the use of the sheltered market process.

(2) State agencies and public institutions of higher education shall review a vendor's compliance with its utilization plan and the terms of its contract. Without limitation, a vendor's failure to comply with its contractual commitments as contained in the utilization plan; failure to cooperate in providing information regarding its compliance with its utilization plan; or the provision of false or misleading information or statements concerning compliance, certification status, or eligibility of the Business Enterprise Program-certified vendor, good faith efforts, or any other material fact or representation shall constitute a material breach of the contract and entitle the State agency or public institution of higher education to declare a default, terminate the contract, or exercise those remedies provided for in the contract, at law, or in equity.

(3) A vendor shall be in breach of the contract and may be subject to penalties for failure to meet contract goals established under this Act, unless the vendor can show that it made good faith efforts to meet the contract goals.

(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)

(30 ILCS 575/10 new)

Sec. 10. Prompt payments to subcontractors.

(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.

(b) 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 its application or pay estimate, plus interest received under this Act. When a contractor receives any payment, the contractor shall pay each lower-tiered subcontractor and material supplier and each subcontractor and material supplier shall make payment to its own respective subcontractors and material suppliers. If the contractor receives less than the full payment due under the 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 each has earned. When, however, the State official or agency does not release the full payment due under the contract because there are specific areas of work or materials the State agency or official has determined are not suitable for payment, then those specific subcontractors or material 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 based upon the amount of payment each has earned, plus interest received under this Act.

(c) A contractor who refuses to make prompt payment, in whole or in part, shall provide to the subcontractor or material supplier and the public owner or its agent, a written notice of that refusal. The written notice shall be made by a contractor no later than 5 calendar days after payment is received by the contractor. The written notice shall identify the contract, any subcontract or material purchase agreement, a detailed reason for refusal, the value of the payment to be withheld, and the specific remedial actions required of the subcontractor or material supplier so that payment may be made. Written notice of refusal may be given in a form and method which is acceptable to the parties and public owner.

(d) If the contractor, without reasonable cause, fails to make full payment of amounts due under subsection (a) to its subcontractors and material suppliers within 30 calendar days after receipt of payment from the State official or agency, the contractor shall pay to its subcontractors and material suppliers, in addition to the payment due them, interest in the amount of 15% per month, calculated from the expiration of the 30-day period until fully paid. This subsection shall further 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 (b) within 15 calendar days after receipt of payment under the contract, any subcontractor or material supplier to whom payments are owed may file a written notice and request for administrative hearing 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. The written notice and request for administrative hearing shall identify the contract, the contractor, and the amount owed, and shall contain a sworn statement or attestation to verify the accuracy of the notice. The notice and request for administrative hearing shall be filed with the State official for the contract, with a copy of the notice concurrently provided to the contractor. Notice to the State official may be made by certified or registered mail, messenger service, or personal service, and must include proof of delivery to the State official.

(2) The State official or agency, within 15 calendar days after receipt of a subcontractor's or material supplier's written notice and request for administrative hearing, shall hold a hearing convened by an administrative law judge to determine whether the contractor withheld payment, without reasonable cause, from the subcontractors or material suppliers and what amount, if any, is due to the subcontractors or material suppliers, and the reasonable cause or causes asserted by the contractor. The State official or agency shall provide appropriate notice to the parties of the date, time, and location of the hearing. Each contractor, subcontractor, or material supplier has the right to be represented by counsel at a hearing and to cross-examine witnesses and challenge documents. Upon the request of the subcontractor or material supplier and a showing of good cause, reasonable continuances may be granted by the administrative law judge.

(3) Upon a finding by the administrative law judge that the contractor failed to make payment in full, without reasonable cause, as provided in subsection (c), then the administrative law judge shall, in writing, order the contractor to pay the amount owed to the subcontractors or material suppliers plus interest within 15 calendar days after the order.

(4) If a contractor fails to make full payment as ordered under paragraph (3) of this subsection (d) within 15 days after the administrative law judge's order, then the contractor shall be barred from entering into a State contract for a period of one year beginning on the date of the administrative law judge's order.

(5) If, on 2 or more occasions within a 3-calendar-year period, there is a finding by an administrative law judge that the contractor failed to make payment in full, without reasonable cause, and a written order was issued to a contractor under paragraph (3) of this subsection (d), then the contractor shall be barred from entering into a State contract for a period of 6 months beginning on the date of the administrative law judge's second written order, even if the payments required under the orders were made in full.

(6) If a contractor fails to make full payment as ordered under paragraph (4) of this subsection (d), the subcontractor or material supplier may, within 30 days of the date of that order, petition the State agency for an order for reasonable attorney's fees and costs incurred in the prosecution of the action under this subsection (d). Upon that petition and taking of additional evidence, as may be required, the administrative law judge may issue a supplemental order directing the contractor to pay those reasonable attorney's fees and costs.

(7) The written order of the administrative law judge shall be final and appealable under the Administrative Review Law.

(e) This Section shall not be construed to in any manner diminish, negate, or interfere with the contractor-subcontractor or contractor-material supplier relationship or commercially useful function.

(f) This Section shall not preclude, bar, or stay the rights, remedies, and defenses available to the parties by way of the operation of their contract or purchase agreement.

(g) As used in this Section:

"Payment" means the discharge of an obligation in money or other valuable consideration or thing delivered in full or partial satisfaction of an obligation to pay. "Payment" shall include interest paid pursuant to this Act.

"Reasonable cause" may include, but is not limited to, unsatisfactory workmanship or materials; failure to provide documentation required by the contract, subcontract, or material purchase agreement. "Reasonable cause" does not include payments issued to the contractor that create a negative or reduced valuation pay application or pay estimate due to a reduction of contract quantities or work not performed or provided by the subcontractor or material supplier; the interception or withholding of funds for reasons not related to the subcontractor's or material supplier's work on the contract; anticipated claims or assessments of third parties not a party related to the contract or subcontract; asserted claims or assessments of third parties that are not authorized by court order, administrative tribunal, or statute. "Reasonable cause" further does not include the withholding, offset, or reduction of payment, in whole or in part, due to the assessment of liquidated damages or penalties assessed against the contractor, unless the subcontractor's performance or supplied materials were the sole and proximate cause of the liquidated damage or penalty.

(30 ILCS 575/15 new)

Sec. 15. Business Enterprise Program Fund. The Business Enterprise Program Fund is created as a special fund in the State treasury. All money in the Business Enterprise Program Fund shall be paid to the Department of Central Management Services for the operation of the Business Enterprise Program for Minorities, Women, and Persons with Disabilities.

(30 ILCS 575/20 new)

Sec. 20. Contracts subject to goal.

(a) All non-exempt contracts over $100,000 shall be reviewed by the Department of Central Management Services for a Business Enterprise Program goal analysis.

(b) The Department of Central Management Services shall make all final decisions regarding Business Enterprise Program goal amounts to be applied to any solicitations or contracts that are subject to the requirements of this Act.