Public Act 101-0524
 
SB0104 EnrolledLRB101 04773 RJF 49782 b


  
    AN ACT concerning finance.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  






 
 
    Section 5. The State Prompt Payment Act is amended  by 
changing Sections 1 and 7 as follows:
 


    (30 ILCS 540/1)  (from Ch. 127, par. 132.401)




    Sec. 1. 
This Act applies to any State official or agency 
authorized to
provide for payment from State funds, by virtue 
of any appropriation of the
General Assembly, for goods or 
services furnished to the State.

    For purposes of this Act, "goods or
services furnished to 
the State" include but are not limited to (i) covered health

care provided to eligible members and their covered dependents 
in accordance
with the State Employees Group Insurance Act of 
1971, including coverage
through a physician-owned health 
maintenance organization under Section 6.1 of
that Act, (ii) 
prevention, intervention, or treatment services and supports 
for persons with developmental disabilities, mental health 
services, alcohol and substance abuse services, rehabilitation 
services, and early intervention services provided by a vendor, 
and (iii) prevention, intervention, or treatment services and 
supports for youth provided by a vendor by virtue of a 
contractual grant agreement. For the purposes of items (ii) and 
(iii), a vendor includes but is not limited to sellers of goods 
and services, including community-based organizations that are 
licensed to provide prevention, intervention, or treatment 
services and supports for persons with developmental 
disabilities, mental illness, and substance abuse problems, or 
that provides prevention, intervention, or treatment services 
and supports for youth. 

    For the purposes of this Act, "appropriate State official 
or agency" is
defined as the Director or Chief Executive or his 
designee of that State
agency or department or facility of such 
agency or department.
With respect to covered health care 
provided to eligible members and
their dependents in accordance 
with the State Employees Group Insurance Act
of 1971, 
"appropriate State official or agency" also includes an

administrator of a program of health benefits under that Act.

    As used in this Act, "eligible member" means a member who 
is eligible for
health benefits under the State Employees Group 
Insurance Act of 1971, and
"member" and "dependent" have the 
meanings ascribed to those terms in that Act.

    As used in this Act, "a proper bill or invoice" means a 
bill or invoice, including, but not limited to, an invoice 
issued under a contractual grant agreement,
that
includes the

information necessary for processing the payment as may be 
specified by a State
agency and in rules adopted in accordance 
with this Act. Beginning on and after July 1, 2021, "a proper 
bill or invoice" shall also  include the names of all 
subcontractors or subconsultants to be paid from the bill or 
invoice and the amounts due to each of them, if any.

(Source: P.A. 100-549, eff. 1-1-18.)

 


    (30 ILCS 540/7)
  (from Ch. 127, par. 132.407)



    Sec. 7. Payments to subcontractors and material suppliers.
    (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.
    (a-5) When a
contractor receives any payment, the 
contractor shall
pay each subcontractor and material supplier 
electronically within 10 business days or 15 calendar days, 
whichever occurs earlier, or, if paid by a printed check, the 
printed check must be postmarked within 10 business days or 15 
calendar days, whichever occurs earlier, after receiving 
payment 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 
public construction 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.

    (a-10) For construction contracts with the Department of 
Transportation, the contractor, subcontractor, or material 
supplier, regardless of tier, shall not offset, decrease, or 
diminish payment or payments that are due to its subcontractors 
or material suppliers without reasonable cause.
    A contractor, who refuses to make prompt payment within 10 
business days or 15 calendar days, whichever occurs earlier, 
after receiving 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 Department of Transportation's 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.
    (b) If the contractor, without reasonable cause, fails to 
make full payment of amounts due under subsection (a) to its
 
subcontractors and material suppliers within 10 business days 
or 15 calendar days, whichever occurs earlier, 15 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
2% per month, calculated from the
expiration of the 
10-business-day period or the 15-calendar-day 15-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 (a-5) within 
    10 business days or 15 calendar days, whichever occurs 
    earlier, 15 calendar days after receipt of payment under 
    the
public
construction 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 public 
    construction 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 public construction 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 (a-10), 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 (b) within 
    15 days after the
administrative law judge's order, then 
    the contractor shall be barred from
entering into a State

    public construction 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 (b), then 
    the contractor shall be barred from entering into a State 
    public construction 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 (b), 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 (b).  
    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.
    (b-5) On or before July 2021, the Department of 
Transportation shall publish on its website a searchable 
database that allows for queries for each active construction 
contract by the name of a subcontractor or the pay item such 
that each pay item is associated with either the prime 
contractor or a subcontractor. 
    (c) 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.
    (d) 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, purchase agreement, the 
Mechanics Lien Act, or the Public Construction Bond Act.
    (e) State officials and agencies may adopt rules as may be 
deemed necessary in order to establish the formal procedures 
required under this Section.
    (f) 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; claims made against the 
Department of Transportation or the subcontractor pursuant to 
subsection (c) of Section 23 of the Mechanics Lien Act or the 
Public Construction Bond Act; judgments, levies, garnishments, 
or other court-ordered assessments or offsets in favor of the 
Department of Transportation or other State agency entered 
against a subcontractor or material supplier. "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 by the Department of Transportation against the 
contractor, unless the subcontractor's performance or supplied 
materials were the sole and proximate cause of the liquidated 
damage or penalty. 
(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18; 
100-863, eff. 8-14-18.)






Effective Date:  1/1/2020