Rep. Daniel V. Beiser

Filed: 2/28/2014





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2    AMENDMENT NO. ______. Amend House Bill 4769 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Public Construction Bond Act is amended by
5changing Section 1 as follows:
6    (30 ILCS 550/1)  (from Ch. 29, par. 15)
7    Sec. 1. Except as otherwise provided by this Act, all
8officials, boards, commissions, or agents of this State, or of
9any political subdivision thereof, in making contracts for
10public work of any kind costing over $50,000 to be performed
11for the State, or of any political subdivision thereof, shall
12require every contractor for the work to furnish, supply and
13deliver a bond to the State, or to the political subdivision
14thereof entering into the contract, as the case may be, with
15good and sufficient sureties. The surety on the bond shall be a
16company that is licensed by the Department of Insurance



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1authorizing it to execute surety bonds and the company shall
2have a financial strength rating of at least A- as rated by
3A.M. Best Company, Inc. or a similar rating agency. The amount
4of the bond shall be fixed by the officials, boards,
5commissions, commissioners or agents, and the bond, among other
6conditions, shall be conditioned for the completion of the
7contract, for the payment of material used in the work and for
8all labor performed in the work, whether by subcontractor or
10    If the contract is for emergency repairs as provided in the
11Illinois Procurement Code, proof of payment for all labor,
12materials, apparatus, fixtures, and machinery may be furnished
13in lieu of the bond required by this Section.
14    Each such bond is deemed to contain the following
15provisions whether such provisions are inserted in such bond or
17    "The principal and sureties on this bond agree that all the
18undertakings, covenants, terms, conditions and agreements of
19the contract or contracts entered into between the principal
20and the State or any political subdivision thereof will be
21performed and fulfilled and to pay all persons, firms and
22corporations having contracts with the principal or with
23subcontractors, all just claims due them under the provisions
24of such contracts for labor performed or materials furnished in
25the performance of the contract on account of which this bond
26is given, when such claims are not satisfied out of the



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1contract price of the contract on account of which this bond is
2given, after final settlement between the officer, board,
3commission or agent of the State or of any political
4subdivision thereof and the principal has been made.".
5    Each bond securing contracts between the Capital
6Development Board or any board of a public institution of
7higher education and a contractor shall contain the following
8provisions, whether the provisions are inserted in the bond or
10    "Upon the default of the principal with respect to
11undertakings, covenants, terms, conditions, and agreements,
12the termination of the contractor's right to proceed with the
13work, and written notice of that default and termination by the
14State or any political subdivision to the surety ("Notice"),
15the surety shall promptly remedy the default by taking one of
16the following actions:
17        (1) The surety shall complete the work pursuant to a
18    written takeover agreement, using a completing contractor
19    jointly selected by the surety and the State or any
20    political subdivision; or
21        (2) The surety shall pay a sum of money to the obligee,
22    up to the penal sum of the bond, that represents the
23    reasonable cost to complete the work that exceeds the
24    unpaid balance of the contract sum.
25    The surety shall respond to the Notice within 15 working
26days of receipt indicating the course of action that it intends



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1to take or advising that it requires more time to investigate
2the default and select a course of action. If the surety
3requires more than 15 working days to investigate the default
4and select a course of action or if the surety elects to
5complete the work with a completing contractor that is not
6prepared to commence performance within 15 working days after
7receipt of Notice, and if the State or any political
8subdivision determines it is in the best interest of the State
9to maintain the progress of the work, the State or any
10political subdivision may continue to work until the completing
11contractor is prepared to commence performance. Unless
12otherwise agreed to by the procuring agency, in no case may the
13surety take longer than 30 working days to advise the State or
14political subdivision on the course of action it intends to
15take. The surety shall be liable for reasonable costs incurred
16by the State or any political subdivision to maintain the
17progress to the extent the costs exceed the unpaid balance of
18the contract sum, subject to the penal sum of the bond.".
19    The surety bond required by this Section may be acquired
20from the company, agent or broker of the contractor's choice.
21The bond and sureties shall be subject to the right of
22reasonable approval or disapproval, including suspension, by
23the State or political subdivision thereof concerned. In the
24case of State construction contracts, a contractor shall not be
25required to post a cash bond or letter of credit in addition to
26or as a substitute for the surety bond required by this



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2    When other than motor fuel tax funds, federal-aid funds, or
3other funds received from the State are used, a political
4subdivision may allow the contractor to provide a
5non-diminishing irrevocable bank letter of credit, in lieu of
6the bond required by this Section, on contracts under $100,000
7to comply with the requirements of this Section. Any such bank
8letter of credit shall contain all provisions required for
9bonds by this Section.
10(Source: P.A. 98-216, eff. 8-9-13.)
11    Section 99. Effective date. This Act takes effect upon
12becoming law.".