Illinois General Assembly - Full Text of SB2906
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Full Text of SB2906  100th General Assembly




State of Illinois
2017 and 2018


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


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.

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SB2906LRB100 19156 RJF 34421 b

1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The State Comptroller Act is amended by changing
5Section 23.9 as follows:
6    (15 ILCS 405/23.9)
7    Sec. 23.9. Minority Contractor Opportunity Initiative. The
8State Comptroller Minority Contractor Opportunity Initiative
9is created to provide greater opportunities for minority-owned
10businesses, women-owned businesses, businesses owned by
11persons with disabilities, and small businesses with 20 or
12fewer employees in this State to participate in the State
13procurement process. The following portions of the initiative
14shall be administered by the Department of Central Management
15Services Comptroller. Under this initiative, the Comptroller
16is responsible for the following: (i) outreach to
17minority-owned businesses, women-owned businesses, businesses
18owned by persons with disabilities, and small businesses
19capable of providing services to the State; (ii) education of
20minority-owned businesses, women-owned businesses, businesses
21owned by persons with disabilities, and small businesses
22concerning State contracting and procurement; and (iii)
23notification of minority-owned businesses, women-owned



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1businesses, businesses owned by persons with disabilities, and
2small businesses of State contracting opportunities. The
3Comptroller shall be responsible for ; and (iv) maintenance of
4an online database of State contracts that identifies the
5contracts awarded to minority-owned businesses, women-owned
6businesses, businesses owned by persons with disabilities, and
7small businesses that includes the total amount paid by State
8agencies to contractors and the percentage paid to
9minority-owned businesses, women-owned businesses, businesses
10owned by persons with disabilities, and small businesses.
11    The Comptroller shall work with the Department of Central
12Management Services and the Business Enterprise Council
13created under Section 5 of the Business Enterprise for
14Minorities, Women, and Persons with Disabilities Act to fulfill
15the Comptroller's responsibilities under this Section. The
16Comptroller may rely on the Business Enterprise Council's
17identification of minority-owned businesses, women-owned
18businesses, and businesses owned by persons with disabilities.
19    The Comptroller shall annually prepare and submit a report
20to the Governor and the General Assembly concerning the
21progress of this initiative including the following
22information for the preceding calendar year: (i) a statement of
23the total amounts paid by each executive branch agency to
24contractors since the previous report; (ii) the percentage of
25the amounts that were paid to minority-owned businesses,
26women-owned businesses, businesses owned by persons with



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1disabilities, and small businesses; (iii) the successes
2achieved and the challenges faced by the Comptroller in
3operating outreach programs for minorities, women, persons
4with disabilities, and small businesses; (iv) the challenges
5each executive branch agency may face in hiring qualified
6minority, woman, and small business employees and employees
7with disabilities and contracting with qualified
8minority-owned businesses, women-owned businesses, businesses
9owned by persons with disabilities, and small businesses; and
10(iv) any other information, findings, conclusions, and
11recommendations for legislative or agency action, as the
12Comptroller deems appropriate.
13    On and after the effective date of this amendatory Act of
14the 97th General Assembly, any bidder or offeror awarded a
15contract of $1,000 or more under Section 20-10, 20-15, 20-25,
16or 20-30 of the Illinois Procurement Code is required to pay a
17fee of $50 annually for each year of the contract $15 to cover
18expenses related to the operation of the Business Enterprise
19Program provided under the Business Enterprise for Minorities,
20Women, and Persons with Disabilities Act, and for the
21administration of this Section. The Comptroller shall deduct
22the fee from the first check issued to the vendor under the
23contract and deposit the fee into the Business Enterprise
24Program Comptroller's Administrative Fund. Contracts
25administered for statewide orders placed by agencies (commonly
26referred to as "statewide master contracts") are exempt from



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1this fee.
2(Source: P.A. 99-143, eff. 7-27-15; 100-391, eff. 8-25-17.)
3    Section 10. The State Finance Act is amended by adding
4Section 5.886 as follows:
5    (30 ILCS 105/5.886 new)
6    Sec. 5.886. The Business Enterprise Program Fund.
7    Section 15. The Business Enterprise for Minorities, Women,
8and Persons with Disabilities Act is amended by changing
9Sections 6a and 8 and by adding Sections 10, 15, and 20 as
11    (30 ILCS 575/6a)  (from Ch. 127, par. 132.606a)
12    (Section scheduled to be repealed on June 30, 2020)
13    Sec. 6a. Notice of contracts to Council. Except in case of
14emergency as defined in the Illinois Procurement Code, or as
15authorized by rule promulgated by the Department of Central
16Management Services, each agency and public institution of
17higher education under the jurisdiction of this Act shall
18notify the Secretary of the Council of proposed contracts for
19professional and artistic services and provide the information
20in the form and detail as required by rule promulgated by the
21Department of Central Management Services. Notification may be
22made through direct written communication to the Secretary to



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1be received at least 14 days before execution of the contract
2(or the solicitation response date, if applicable). The agency
3or public institution of higher education must consider any
4vendor referred by the Secretary before execution of the
5contract. The agency or public institution of higher education
6shall provide a copy of the contract to the Secretary of the
7Business Enterprise Council within 14 days of execution. Work
8shall not commence on a contract until the executed version has
9been provided to the Secretary of the Council as required under
10this Section. The provisions of this Section shall not apply to
11any State agency or public institution of higher education that
12has awarded contracts for professional and artistic services to
13businesses owned by minorities, women, and persons with
14disabilities totaling in the aggregate $40,000,000 or more
15during the preceding fiscal year.
16(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)
17    (30 ILCS 575/8)  (from Ch. 127, par. 132.608)
18    (Section scheduled to be repealed on June 30, 2020)
19    Sec. 8. Enforcement.
20    (1) The Council shall make such findings, recommendations
21and proposals to the Governor as are necessary and appropriate
22to enforce this Act. If, as a result of its monitoring
23activities, the Council determines that its goals and policies
24are not being met by any State agency or public institution of
25higher education, the Council may recommend any or all of the



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1following actions:
2        (a) Establish enforcement procedures whereby the
3    Council may recommend to the appropriate State agency,
4    public institutions of higher education, or law
5    enforcement officer that legal or administrative remedies
6    be initiated for violations of contract provisions or rules
7    issued hereunder or by a contracting State agency or public
8    institutions of higher education. The Director of the
9    Department of Central Management Services State agencies
10    and public institutions of higher education shall be
11    authorized to adopt remedies for such violations which
12    shall include (1) termination of the contract involved, (2)
13    prohibition of participation of the respondents in public
14    contracts for a period not to exceed one year, (3)
15    imposition of a penalty not to exceed the dollar value of
16    the contract goal for the contract term in which the vendor
17    is in any profit acquired as a result of violation, or (4)
18    any combination thereof.
19        (b) If the Council concludes that a compliance plan
20    submitted under Section 6 is unlikely to produce the
21    participation goals for businesses owned by minorities,
22    women, and persons with disabilities within the then
23    current fiscal year, the Council may recommend that the
24    State agency or public institution of higher education
25    revise its plan to provide additional opportunities for
26    participation by businesses owned by minorities, women,



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1    and persons with disabilities. Such recommended revisions
2    may include, but shall not be limited to, the following:
3            (i) assurances of stronger and better focused
4        solicitation efforts to obtain more businesses owned
5        by minorities, women, and persons with disabilities as
6        potential sources of supply;
7            (ii) division of job or project requirements, when
8        economically feasible, into tasks or quantities to
9        permit participation of businesses owned by
10        minorities, women, and persons with disabilities;
11            (iii) elimination of extended experience or
12        capitalization requirements, when programmatically
13        feasible, to permit participation of businesses owned
14        by minorities, women, and persons with disabilities;
15            (iv) identification of specific proposed contracts
16        as particularly attractive or appropriate for
17        participation by businesses owned by minorities,
18        women, and persons with disabilities, such
19        identification to result from and be coupled with the
20        efforts of subparagraphs (i) through (iii);
21            (v) implementation of those regulations
22        established for the use of the sheltered market
23        process.
24    (2) State agencies and public institutions of higher
25education shall review a vendor's compliance with its
26utilization plan and the terms of its contract. Without



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1limitation, a vendor's failure to comply with its contractual
2commitments as contained in the utilization plan; failure to
3cooperate in providing information regarding its compliance
4with its utilization plan; or the provision of false or
5misleading information or statements concerning compliance,
6certification status, or eligibility of the Business
7Enterprise Program-certified vendor, good faith efforts, or
8any other material fact or representation shall constitute a
9material breach of the contract and entitle the State agency or
10public institution of higher education to declare a default,
11terminate the contract, or exercise those remedies provided for
12in the contract, at law, or in equity.
13    (3) A vendor shall be in breach of the contract and may be
14subject to penalties for failure to meet contract goals
15established under this Act, unless the vendor can show that it
16made good faith efforts to meet the contract goals.
17(Source: P.A. 99-462, eff. 8-25-15; 100-391, eff. 8-25-17.)
18    (30 ILCS 575/10 new)
19    Sec. 10. Prompt payments to subcontractors.
20    (a) When a State official or agency responsible for
21administering a contract submits a voucher to the Comptroller
22for payment to a contractor, that State official or agency
23shall promptly make available electronically the voucher
24number, the date of the voucher, and the amount of the voucher.
25The State official or agency responsible for administering the



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1contract shall provide subcontractors and material suppliers,
2known to the State official or agency, with instructions on how
3to access the electronic information.
4    (b) When a contractor receives any payment, the contractor
5shall pay each subcontractor and material supplier in
6proportion to the work completed by each subcontractor and
7material supplier its application or pay estimate, plus
8interest received under this Act. When a contractor receives
9any payment, the contractor shall pay each lower-tiered
10subcontractor and material supplier and each subcontractor and
11material supplier shall make payment to its own respective
12subcontractors and material suppliers. If the contractor
13receives less than the full payment due under the contract, the
14contractor shall be obligated to disburse on a pro rata basis
15those funds received, plus interest received under this Act,
16with the contractor, subcontractors and material suppliers
17each receiving a prorated portion based on the amount of
18payment each has earned. When, however, the State official or
19agency does not release the full payment due under the contract
20because there are specific areas of work or materials the State
21agency or official has determined are not suitable for payment,
22then those specific subcontractors or material suppliers
23involved shall not be paid for that portion of work rejected or
24deemed not suitable for payment and all other subcontractors
25and suppliers shall be paid based upon the amount of payment
26each has earned, plus interest received under this Act.



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1    (c) A contractor who refuses to make prompt payment, in
2whole or in part, shall provide to the subcontractor or
3material supplier and the public owner or its agent, a written
4notice of that refusal. The written notice shall be made by a
5contractor no later than 5 calendar days after payment is
6received by the contractor. The written notice shall identify
7the contract, any subcontract or material purchase agreement, a
8detailed reason for refusal, the value of the payment to be
9withheld, and the specific remedial actions required of the
10subcontractor or material supplier so that payment may be made.
11Written notice of refusal may be given in a form and method
12which is acceptable to the parties and public owner.
13    (d) If the contractor, without reasonable cause, fails to
14make full payment of amounts due under subsection (a) to its
15subcontractors and material suppliers within 30 calendar days
16after receipt of payment from the State official or agency, the
17contractor shall pay to its subcontractors and material
18suppliers, in addition to the payment due them, interest in the
19amount of 15% per month, calculated from the expiration of the
2030-day period until fully paid. This subsection shall further
21apply to any payments made by subcontractors and material
22suppliers to their subcontractors and material suppliers and to
23all payments made to lower tier subcontractors and material
24suppliers throughout the contracting chain.
25        (1) If a contractor, without reasonable cause, fails to
26    make payment in full as provided in subsection (b) within



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1    15 calendar days after receipt of payment under the
2    contract, any subcontractor or material supplier to whom
3    payments are owed may file a written notice and request for
4    administrative hearing with the State official or agency
5    setting forth the amount owed by the contractor and the
6    contractor's failure to timely pay the amount owed. The
7    written notice and request for administrative hearing
8    shall identify the contract, the contractor, and the amount
9    owed, and shall contain a sworn statement or attestation to
10    verify the accuracy of the notice. The notice and request
11    for administrative hearing shall be filed with the State
12    official for the contract, with a copy of the notice
13    concurrently provided to the contractor. Notice to the
14    State official may be made by certified or registered mail,
15    messenger service, or personal service, and must include
16    proof of delivery to the State official.
17        (2) The State official or agency, within 15 calendar
18    days after receipt of a subcontractor's or material
19    supplier's written notice and request for administrative
20    hearing, shall hold a hearing convened by an administrative
21    law judge to determine whether the contractor withheld
22    payment, without reasonable cause, from the subcontractors
23    or material suppliers and what amount, if any, is due to
24    the subcontractors or material suppliers, and the
25    reasonable cause or causes asserted by the contractor. The
26    State official or agency shall provide appropriate notice



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1    to the parties of the date, time, and location of the
2    hearing. Each contractor, subcontractor, or material
3    supplier has the right to be represented by counsel at a
4    hearing and to cross-examine witnesses and challenge
5    documents. Upon the request of the subcontractor or
6    material supplier and a showing of good cause, reasonable
7    continuances may be granted by the administrative law
8    judge.
9        (3) Upon a finding by the administrative law judge that
10    the contractor failed to make payment in full, without
11    reasonable cause, as provided in subsection (c), then the
12    administrative law judge shall, in writing, order the
13    contractor to pay the amount owed to the subcontractors or
14    material suppliers plus interest within 15 calendar days
15    after the order.
16        (4) If a contractor fails to make full payment as
17    ordered under paragraph (3) of this subsection (d) within
18    15 days after the administrative law judge's order, then
19    the contractor shall be barred from entering into a State
20    contract for a period of one year beginning on the date of
21    the administrative law judge's order.
22        (5) If, on 2 or more occasions within a 3-calendar-year
23    period, there is a finding by an administrative law judge
24    that the contractor failed to make payment in full, without
25    reasonable cause, and a written order was issued to a
26    contractor under paragraph (3) of this subsection (d), then



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1    the contractor shall be barred from entering into a State
2    contract for a period of 6 months beginning on the date of
3    the administrative law judge's second written order, even
4    if the payments required under the orders were made in
5    full.
6        (6) If a contractor fails to make full payment as
7    ordered under paragraph (4) of this subsection (d), the
8    subcontractor or material supplier may, within 30 days of
9    the date of that order, petition the State agency for an
10    order for reasonable attorney's fees and costs incurred in
11    the prosecution of the action under this subsection (d).
12    Upon that petition and taking of additional evidence, as
13    may be required, the administrative law judge may issue a
14    supplemental order directing the contractor to pay those
15    reasonable attorney's fees and costs.
16        (7) The written order of the administrative law judge
17    shall be final and appealable under the Administrative
18    Review Law.
19    (e) This Section shall not be construed to in any manner
20diminish, negate, or interfere with the
21contractor-subcontractor or contractor-material supplier
22relationship or commercially useful function.
23    (f) This Section shall not preclude, bar, or stay the
24rights, remedies, and defenses available to the parties by way
25of the operation of their contract or purchase agreement.
26    (g) As used in this Section:



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1        "Payment" means the discharge of an obligation in money
2    or other valuable consideration or thing delivered in full
3    or partial satisfaction of an obligation to pay. "Payment"
4    shall include interest paid pursuant to this Act.
5        "Reasonable cause" may include, but is not limited to,
6    unsatisfactory workmanship or materials; failure to
7    provide documentation required by the contract,
8    subcontract, or material purchase agreement. "Reasonable
9    cause" does not include payments issued to the contractor
10    that create a negative or reduced valuation pay application
11    or pay estimate due to a reduction of contract quantities
12    or work not performed or provided by the subcontractor or
13    material supplier; the interception or withholding of
14    funds for reasons not related to the subcontractor's or
15    material supplier's work on the contract; anticipated
16    claims or assessments of third parties not a party related
17    to the contract or subcontract; asserted claims or
18    assessments of third parties that are not authorized by
19    court order, administrative tribunal, or statute.
20    "Reasonable cause" further does not include the
21    withholding, offset, or reduction of payment, in whole or
22    in part, due to the assessment of liquidated damages or
23    penalties assessed against the contractor, unless the
24    subcontractor's performance or supplied materials were the
25    sole and proximate cause of the liquidated damage or
26    penalty.



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1    (30 ILCS 575/15 new)
2    Sec. 15. Business Enterprise Program Fund. The Business
3Enterprise Program Fund is created as a special fund in the
4State treasury. All money in the Business Enterprise Program
5Fund shall be paid to the Department of Central Management
6Services for the operation of the Business Enterprise Program
7for Minorities, Women, and Persons with Disabilities.
8    (30 ILCS 575/20 new)
9    Sec. 20. Contracts subject to goal.
10    (a) All non-exempt contracts over $100,000 shall be
11reviewed by the Department of Central Management Services for a
12Business Enterprise Program goal analysis.
13    (b) The Department of Central Management Services shall
14make all final decisions regarding Business Enterprise Program
15goal amounts to be applied to any solicitations or contracts
16that are subject to the requirements of this Act.