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Illinois House Bill HB2816

Illinois 2023-2024 Regular Session

Illinois House Bill HB2816 Compare Versions

Only one version of the bill is available at this time.
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11 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2816 Introduced , by Rep. Camille Y. Lilly SYNOPSIS AS INTRODUCED: 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 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. Requires contractors to pay each subcontractor and material supplier within 7 business days after receiving payment (currently, 10 business days or 15 calendar days). 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 specified contract under the Department of Transportation Law, that State official or agency shall make available electronically the voucher information. 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's fees if an administrative law judge finds in favor of the subcontractor. 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. Makes conforming changes. LRB103 29422 DTM 55813 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2816 Introduced , by Rep. Camille Y. Lilly SYNOPSIS AS INTRODUCED: 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 new 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 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. Requires contractors to pay each subcontractor and material supplier within 7 business days after receiving payment (currently, 10 business days or 15 calendar days). 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 specified contract under the Department of Transportation Law, that State official or agency shall make available electronically the voucher information. 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's fees if an administrative law judge finds in favor of the subcontractor. 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. Makes conforming changes. LRB103 29422 DTM 55813 b LRB103 29422 DTM 55813 b A BILL FOR
22 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2816 Introduced , by Rep. Camille Y. Lilly SYNOPSIS AS INTRODUCED:
33 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 new 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 new
44 20 ILCS 2705/2705-625 new
55 30 ILCS 540/7 from Ch. 127, par. 132.407
66 30 ILCS 540/12 new
77 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. Requires contractors to pay each subcontractor and material supplier within 7 business days after receiving payment (currently, 10 business days or 15 calendar days). 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 specified contract under the Department of Transportation Law, that State official or agency shall make available electronically the voucher information. 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's fees if an administrative law judge finds in favor of the subcontractor. 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. Makes conforming changes.
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1313 1 AN ACT concerning finance.
1414 2 Be it enacted by the People of the State of Illinois,
1515 3 represented in the General Assembly:
1616 4 Section 5. The Department of Transportation Law of the
1717 5 Civil Administrative Code of Illinois is amended by adding
1818 6 Section 2705-625 as follows:
1919 7 (20 ILCS 2705/2705-625 new)
2020 8 Sec. 2705-625. Small business; Disadvantaged Business
2121 9 Enterprise; subcontractor direct payments.
2222 10 (a) A small business subcontractor may enter into an
2323 11 agreement with the Department to receive direct payments from
2424 12 the Department on a construction project if the following
2525 13 conditions have been met:
2626 14 (1) the subcontractor is listed on the Chief
2727 15 Procurement Office's Small Business Vendors Directory;
2828 16 (2) the subcontractor is listed on the Department of
2929 17 Transportation Disadvantaged Business Enterprise
3030 18 Directory; and
3131 19 (3) the Department has reviewed the contract and
3232 20 determined that it meets the requirements for fairness and
3333 21 responsiveness to the Department's bid specifications.
3434 22 (b) Any contract entered into under this Section shall
3535 23 include the following terms:
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3939 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2816 Introduced , by Rep. Camille Y. Lilly SYNOPSIS AS INTRODUCED:
4040 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 new 20 ILCS 2705/2705-625 new 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/12 new
4141 20 ILCS 2705/2705-625 new
4242 30 ILCS 540/7 from Ch. 127, par. 132.407
4343 30 ILCS 540/12 new
4444 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. Requires contractors to pay each subcontractor and material supplier within 7 business days after receiving payment (currently, 10 business days or 15 calendar days). 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 specified contract under the Department of Transportation Law, that State official or agency shall make available electronically the voucher information. 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's fees if an administrative law judge finds in favor of the subcontractor. 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. Makes conforming changes.
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7474 1 (1) Any mobilization payment in the contract shall be
7575 2 capped at the same percentage as the mobilization payment
7676 3 in the contract between the Department and the prime
7777 4 contractor. "Mobilization payment" means an advance
7878 5 payment to a contractor that enables the contractor to
7979 6 purchase necessary machinery and tools for a project or
8080 7 its customary meaning in the context of the contract. The
8181 8 mobilization payments shall be set at a per year basis.
8282 9 Mobilization Payments on a multi-year project shall be
8383 10 paid on an annual basis.
8484 11 (2) If the prime contractor and the Department agree
8585 12 to an accelerated pay schedule, the Department must agree
8686 13 to the new pay schedule for the subcontractor as well.
8787 14 Section 10. The State Prompt Payment Act is amended by
8888 15 changing Section 7 and by adding Section 12 as follows:
8989 16 (30 ILCS 540/7) (from Ch. 127, par. 132.407)
9090 17 Sec. 7. Payments to subcontractors and material suppliers.
9191 18 (a) When a State official or agency responsible for
9292 19 administering a contract submits a voucher to the Comptroller
9393 20 for payment to a subcontractor who enters into a contract
9494 21 under Section 2705-620 of the Department of Transportation Law
9595 22 of the Civil Administrative Code of Illinois or a contractor,
9696 23 that State official or agency shall promptly make available
9797 24 electronically the voucher number, the date of the voucher,
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108108 1 and the amount of the voucher. The State official or agency
109109 2 responsible for administering the contract shall provide
110110 3 subcontractors and material suppliers, known to the State
111111 4 official or agency, with instructions on how to access the
112112 5 electronic information.
113113 6 (a-5) When a contractor receives any payment, the
114114 7 contractor shall pay each subcontractor and material supplier
115115 8 electronically within 7 10 business days or 15 calendar days,
116116 9 whichever occurs earlier, or, if paid by a printed check, the
117117 10 printed check must be postmarked within 7 10 business days or
118118 11 15 calendar days, whichever occurs earlier, after receiving
119119 12 payment in proportion to the work completed by each
120120 13 subcontractor and material supplier its application or pay
121121 14 estimate, plus interest received under this Act. When a
122122 15 contractor receives any payment, the contractor shall pay each
123123 16 lower-tiered subcontractor and material supplier and each
124124 17 subcontractor and material supplier shall make payment to its
125125 18 own respective subcontractors and material suppliers. If the
126126 19 contractor receives less than the full payment due under the
127127 20 public construction contract, the contractor shall be
128128 21 obligated to disburse on a pro rata basis those funds
129129 22 received, plus interest received under this Act, with the
130130 23 contractor, subcontractors and material suppliers each
131131 24 receiving a prorated portion based on the amount of payment
132132 25 each has earned. If the contractor is assessed liquidated
133133 26 damages from the State, the contractor is still responsible to
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144144 1 each subcontractor under the subcontracts. When, however, the
145145 2 State official or agency does not release the full payment due
146146 3 under the contract because there are specific areas of work or
147147 4 materials the State agency or official has determined are not
148148 5 suitable for payment, then those specific subcontractors or
149149 6 material suppliers involved shall not be paid for that portion
150150 7 of work rejected or deemed not suitable for payment and all
151151 8 other subcontractors and suppliers shall be paid based upon
152152 9 the amount of payment each has earned, plus interest received
153153 10 under this Act.
154154 11 (a-10) For construction contracts with the Department of
155155 12 Transportation, the contractor, subcontractor, or material
156156 13 supplier, regardless of tier, shall not offset, decrease, or
157157 14 diminish payment or payments that are due to its
158158 15 subcontractors or material suppliers without reasonable cause.
159159 16 A contractor, who refuses to make prompt payment within 7
160160 17 10 business days or 15 calendar days, whichever occurs
161161 18 earlier, after receiving payment, in whole or in part, shall
162162 19 provide to the subcontractor or material supplier and the
163163 20 public owner or its agent, a written notice of that refusal.
164164 21 The written notice shall be made by a contractor no later than
165165 22 5 calendar days after payment is received by the contractor.
166166 23 The written notice shall identify the Department of
167167 24 Transportation's contract, any subcontract or material
168168 25 purchase agreement, a detailed reason for refusal, the value
169169 26 of the payment to be withheld, and the specific remedial
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180180 1 actions required of the subcontractor or material supplier so
181181 2 that payment may be made. Written notice of refusal may be
182182 3 given in a form and method which is acceptable to the parties
183183 4 and public owner.
184184 5 (b) If the contractor, without reasonable cause, fails to
185185 6 make full payment of amounts due under subsection (a) to its
186186 7 subcontractors and material suppliers within 7 10 business
187187 8 days or 15 calendar days, whichever occurs earlier, after
188188 9 receipt of payment from the State official or agency, the
189189 10 contractor shall pay to its subcontractors and material
190190 11 suppliers, in addition to the payment due them, interest in
191191 12 the amount of 2% per month, calculated from the expiration of
192192 13 the 7-business-day period 10-business-day period or the
193193 14 15-calendar-day period until fully paid. This subsection shall
194194 15 further apply to any payments made by subcontractors and
195195 16 material suppliers to their subcontractors and material
196196 17 suppliers and to all payments made to lower tier
197197 18 subcontractors and material suppliers throughout the
198198 19 contracting chain.
199199 20 (1) If a contractor, without reasonable cause, fails
200200 21 to make payment in full as provided in subsection (a-5)
201201 22 within 7 10 business days or 15 calendar days, whichever
202202 23 occurs earlier, after receipt of payment under the public
203203 24 construction contract, any subcontractor or material
204204 25 supplier to whom payments are owed may file a written
205205 26 notice and request for administrative hearing with the
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216216 1 State official or agency setting forth the amount owed by
217217 2 the contractor and the contractor's failure to timely pay
218218 3 the amount owed. The written notice and request for
219219 4 administrative hearing shall identify the public
220220 5 construction contract, the contractor, and the amount
221221 6 owed, and shall contain a sworn statement or attestation
222222 7 to verify the accuracy of the notice. The notice and
223223 8 request for administrative hearing shall be filed with the
224224 9 State official for the public construction contract, with
225225 10 a copy of the notice concurrently provided to the
226226 11 contractor. Notice to the State official may be made by
227227 12 certified or registered mail, messenger service, or
228228 13 personal service, and must include proof of delivery to
229229 14 the State official.
230230 15 (2) The State official or agency, within 15 calendar
231231 16 days after receipt of a subcontractor's or material
232232 17 supplier's written notice and request for administrative
233233 18 hearing, shall hold a hearing convened by an
234234 19 administrative law judge to determine whether the
235235 20 contractor withheld payment, without reasonable cause,
236236 21 from the subcontractors or material suppliers and what
237237 22 amount, if any, is due to the subcontractors or material
238238 23 suppliers, and the reasonable cause or causes asserted by
239239 24 the contractor. The State official or agency shall provide
240240 25 appropriate notice to the parties of the date, time, and
241241 26 location of the hearing. Each contractor, subcontractor,
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252252 1 or material supplier has the right to be represented by
253253 2 counsel at a hearing and to cross-examine witnesses and
254254 3 challenge documents. Upon the request of the subcontractor
255255 4 or material supplier and a showing of good cause,
256256 5 reasonable continuances may be granted by the
257257 6 administrative law judge.
258258 7 (3) Upon a finding by the administrative law judge
259259 8 that the contractor failed to make payment in full,
260260 9 without reasonable cause, as provided in subsection
261261 10 (a-10), then the administrative law judge shall, in
262262 11 writing, order the contractor to pay the amount owed to
263263 12 the subcontractors or material suppliers plus interest and
264264 13 all reasonable attorney's fees incurred by the
265265 14 subcontractor within 15 calendar days after the order.
266266 15 (4) If a contractor fails to make full payment as
267267 16 ordered under paragraph (3) of this subsection (b) within
268268 17 15 days after the administrative law judge's order, then
269269 18 the contractor shall be barred from entering into a State
270270 19 public construction contract for a period of one year
271271 20 beginning on the date of the administrative law judge's
272272 21 order.
273273 22 (5) If, on 2 or more occasions within a
274274 23 3-calendar-year period, there is a finding by an
275275 24 administrative law judge that the contractor failed to
276276 25 make payment in full, without reasonable cause, and a
277277 26 written order was issued to a contractor under paragraph
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288288 1 (3) of this subsection (b), then the contractor shall be
289289 2 barred from entering into a State public construction
290290 3 contract for a period of 6 months beginning on the date of
291291 4 the administrative law judge's second written order, even
292292 5 if the payments required under the orders were made in
293293 6 full.
294294 7 (6) If a contractor fails to make full payment as
295295 8 ordered under paragraph (4) of this subsection (b), the
296296 9 subcontractor or material supplier may, within 30 days of
297297 10 the date of that order, petition the State agency for an
298298 11 order for reasonable attorney's fees and costs incurred in
299299 12 the prosecution of the action under this subsection (b).
300300 13 Upon that petition and taking of additional evidence, as
301301 14 may be required, the administrative law judge may issue a
302302 15 supplemental order directing the contractor to pay those
303303 16 reasonable attorney's fees and costs.
304304 17 (7) The written order of the administrative law judge
305305 18 shall be final and appealable under the Administrative
306306 19 Review Law.
307307 20 (b-5) On or before July 2021, the Department of
308308 21 Transportation shall publish on its website a searchable
309309 22 database that allows for queries for each active construction
310310 23 contract by the name of a subcontractor or the pay item such
311311 24 that each pay item is associated with either the prime
312312 25 contractor or a subcontractor.
313313 26 (c) This Section shall not be construed to in any manner
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324324 1 diminish, negate, or interfere with the
325325 2 contractor-subcontractor or contractor-material supplier
326326 3 relationship or commercially useful function.
327327 4 (d) This Section shall not preclude, bar, or stay the
328328 5 rights, remedies, and defenses available to the parties by way
329329 6 of the operation of their contract, purchase agreement, the
330330 7 Mechanics Lien Act, or the Public Construction Bond Act.
331331 8 (e) State officials and agencies may adopt rules as may be
332332 9 deemed necessary in order to establish the formal procedures
333333 10 required under this Section.
334334 11 (f) As used in this Section:
335335 12 "Payment" means the discharge of an obligation in money or
336336 13 other valuable consideration or thing delivered in full or
337337 14 partial satisfaction of an obligation to pay. "Payment" shall
338338 15 include interest paid pursuant to this Act.
339339 16 "Reasonable cause" may include, but is not limited to,
340340 17 unsatisfactory workmanship or materials; failure to provide
341341 18 documentation required by the contract, subcontract, or
342342 19 material purchase agreement; claims made against the
343343 20 Department of Transportation or the subcontractor pursuant to
344344 21 subsection (c) of Section 23 of the Mechanics Lien Act or the
345345 22 Public Construction Bond Act; judgments, levies, garnishments,
346346 23 or other court-ordered assessments or offsets in favor of the
347347 24 Department of Transportation or other State agency entered
348348 25 against a subcontractor or material supplier. "Reasonable
349349 26 cause" does not include payments issued to the contractor that
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360360 1 create a negative or reduced valuation pay application or pay
361361 2 estimate due to a reduction of contract quantities or work not
362362 3 performed or provided by the subcontractor or material
363363 4 supplier; the interception or withholding of funds for reasons
364364 5 not related to the subcontractor's or material supplier's work
365365 6 on the contract; anticipated claims or assessments of third
366366 7 parties not a party related to the contract or subcontract;
367367 8 asserted claims or assessments of third parties that are not
368368 9 authorized by court order, administrative tribunal, or
369369 10 statute. "Reasonable cause" further does not include the
370370 11 withholding, offset, or reduction of payment, in whole or in
371371 12 part, due to the assessment of liquidated damages or penalties
372372 13 assessed by the Department of Transportation against the
373373 14 contractor, unless the subcontractor's performance or supplied
374374 15 materials were the sole and proximate cause of the liquidated
375375 16 damage or penalty.
376376 17 (Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18;
377377 18 100-863, eff. 8-14-18; 101-524, eff. 1-1-20.)
378378 19 (30 ILCS 540/12 new)
379379 20 Sec. 12. Contract claims. If a contractor who has a
380380 21 contract with the Department of Transportation or a
381381 22 subcontractor who enters into a contract under Section
382382 23 2705-620 of the Civil Administrative Code of Illinois claims
383383 24 that additional payment is due under the terms of the
384384 25 contract, or for any other reason arising out of the
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395395 1 performance of the contract, and the Department has not agreed
396396 2 during the ordinary course of contract administration that the
397397 3 payment is due, then the contractor or subcontractor may file
398398 4 a claim according to the requirements and procedures specified
399399 5 by the Department. If written notifications are not given, if
400400 6 the Department is not afforded reasonable access by the
401401 7 contractor or subcontractor to complete records of actual
402402 8 costs or additional time claimed, or if a claim is not filed
403403 9 according to the procedures and within the time specified in
404404 10 the rules of the Department of Transportation, then the
405405 11 contractor or subcontractor's claim is waived and the
406406 12 Department is released from any and all demands and claims
407407 13 under that contract by the contractor or subcontractor. The
408408 14 fact that the contractor or subcontractor has provided a
409409 15 proper notification, provided a properly filed claim, or
410410 16 provided the Department access to records of actual cost shall
411411 17 not in any way be construed as proving or substantiating the
412412 18 validity of the claim. If the claim, after consideration by
413413 19 the Department, is found to have merit, the Department will
414414 20 make an equitable adjustment either in the amount of costs to
415415 21 be paid according to the basis of payment specified by the
416416 22 Department or in the time required for the work, or both. If
417417 23 the Department finds the claim to be without merit, no
418418 24 adjustment will be made.
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