Illinois 2023-2024 Regular Session

Illinois Senate Bill SB0157 Compare Versions

Only one version of the bill is available at this time.

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1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0157 Introduced 1/31/2023, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED: 30 ILCS 550/1 from Ch. 29, par. 15 Amends the Public Construction Bond Act. Provides that public construction bonds are required only for those public work construction contracts that are valued over $5,000,000. Authorizes any official, board, commission, agent of the State, or any political subdivision of the State to create a self-insured risk pool for contracts of $5,000,000 or less. Defines "self insured risk pool". LRB103 25392 DTM 51738 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0157 Introduced 1/31/2023, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED: 30 ILCS 550/1 from Ch. 29, par. 15 30 ILCS 550/1 from Ch. 29, par. 15 Amends the Public Construction Bond Act. Provides that public construction bonds are required only for those public work construction contracts that are valued over $5,000,000. Authorizes any official, board, commission, agent of the State, or any political subdivision of the State to create a self-insured risk pool for contracts of $5,000,000 or less. Defines "self insured risk pool". LRB103 25392 DTM 51738 b LRB103 25392 DTM 51738 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0157 Introduced 1/31/2023, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED:
3	3	30 ILCS 550/1 from Ch. 29, par. 15 30 ILCS 550/1 from Ch. 29, par. 15
4	4	30 ILCS 550/1 from Ch. 29, par. 15
5	5	Amends the Public Construction Bond Act. Provides that public construction bonds are required only for those public work construction contracts that are valued over $5,000,000. Authorizes any official, board, commission, agent of the State, or any political subdivision of the State to create a self-insured risk pool for contracts of $5,000,000 or less. Defines "self insured risk pool".
6	6	LRB103 25392 DTM 51738 b LRB103 25392 DTM 51738 b
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8	8	A BILL FOR
9	9	SB0157LRB103 25392 DTM 51738 b SB0157 LRB103 25392 DTM 51738 b
10	10	SB0157 LRB103 25392 DTM 51738 b
11	11	1 AN ACT concerning finance.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Public Construction Bond Act is amended by
15	15	5 changing Section 1 as follows:
16	16	6 (30 ILCS 550/1) (from Ch. 29, par. 15)
17	17	7 Sec. 1. Except as otherwise provided by this Act, all
18	18	8 officials, boards, commissions, or agents of this State, or of
19	19	9 any political subdivision thereof, in making contracts for
20	20	10 public work of any kind costing over $5,000,000 $50,000 to be
21	21	11 performed for the State, or of any political subdivision
22	22	12 thereof, shall require every contractor for the work to
23	23	13 furnish, supply and deliver a bond to the State, or to the
24	24	14 political subdivision thereof entering into the contract, as
25	25	15 the case may be, with good and sufficient sureties. The surety
26	26	16 on the bond shall be a company that is licensed by the
27	27	17 Department of Insurance authorizing it to execute surety bonds
28	28	18 and the company shall have a financial strength rating of at
29	29	19 least A- as rated by A.M. Best Company, Inc., Moody's
30	30	20 Investors Service, Standard & Poor's Corporation, or a similar
31	31	21 rating agency. The amount of the bond shall be fixed by the
32	32	22 officials, boards, commissions, commissioners or agents, and
33	33	23 the bond, among other conditions, shall be conditioned for the
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37	37	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0157 Introduced 1/31/2023, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED:
38	38	30 ILCS 550/1 from Ch. 29, par. 15 30 ILCS 550/1 from Ch. 29, par. 15
39	39	30 ILCS 550/1 from Ch. 29, par. 15
40	40	Amends the Public Construction Bond Act. Provides that public construction bonds are required only for those public work construction contracts that are valued over $5,000,000. Authorizes any official, board, commission, agent of the State, or any political subdivision of the State to create a self-insured risk pool for contracts of $5,000,000 or less. Defines "self insured risk pool".
41	41	LRB103 25392 DTM 51738 b LRB103 25392 DTM 51738 b
42	42	LRB103 25392 DTM 51738 b
43	43	A BILL FOR
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49	49	30 ILCS 550/1 from Ch. 29, par. 15
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68	68	1 completion of the contract, for the payment of material,
69	69	2 apparatus, fixtures, and machinery used in the work and for
70	70	3 all labor performed in the work, whether by subcontractor or
71	71	4 otherwise.
72	72	5 If the contract is for emergency repairs as provided in
73	73	6 the Illinois Procurement Code, proof of payment for all labor,
74	74	7 materials, apparatus, fixtures, and machinery may be furnished
75	75	8 in lieu of the bond required by this Section.
76	76	9 Each such bond is deemed to contain the following
77	77	10 provisions whether such provisions are inserted in such bond
78	78	11 or not:
79	79	12 "The principal and sureties on this bond agree that all
80	80	13 the undertakings, covenants, terms, conditions and agreements
81	81	14 of the contract or contracts entered into between the
82	82	15 principal and the State or any political subdivision thereof
83	83	16 will be performed and fulfilled and to pay all persons, firms
84	84	17 and corporations having contracts with the principal or with
85	85	18 subcontractors, all just claims due them under the provisions
86	86	19 of such contracts for labor performed or materials furnished
87	87	20 in the performance of the contract on account of which this
88	88	21 bond is given, when such claims are not satisfied out of the
89	89	22 contract price of the contract on account of which this bond is
90	90	23 given, after final settlement between the officer, board,
91	91	24 commission or agent of the State or of any political
92	92	25 subdivision thereof and the principal has been made.".
93	93	26 Each bond securing contracts between the Capital
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104	104	1 Development Board or any board of a public institution of
105	105	2 higher education and a contractor shall contain the following
106	106	3 provisions, whether the provisions are inserted in the bond or
107	107	4 not:
108	108	5 "Upon the default of the principal with respect to
109	109	6 undertakings, covenants, terms, conditions, and agreements,
110	110	7 the termination of the contractor's right to proceed with the
111	111	8 work, and written notice of that default and termination by
112	112	9 the State or any political subdivision to the surety
113	113	10 ("Notice"), the surety shall promptly remedy the default by
114	114	11 taking one of the following actions:
115	115	12 (1) The surety shall complete the work pursuant to a
116	116	13 written takeover agreement, using a completing contractor
117	117	14 jointly selected by the surety and the State or any
118	118	15 political subdivision; or
119	119	16 (2) The surety shall pay a sum of money to the obligee,
120	120	17 up to the penal sum of the bond, that represents the
121	121	18 reasonable cost to complete the work that exceeds the
122	122	19 unpaid balance of the contract sum.
123	123	20 The surety shall respond to the Notice within 15 working
124	124	21 days of receipt indicating the course of action that it
125	125	22 intends to take or advising that it requires more time to
126	126	23 investigate the default and select a course of action. If the
127	127	24 surety requires more than 15 working days to investigate the
128	128	25 default and select a course of action or if the surety elects
129	129	26 to complete the work with a completing contractor that is not
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140	140	1 prepared to commence performance within 15 working days after
141	141	2 receipt of Notice, and if the State or any political
142	142	3 subdivision determines it is in the best interest of the State
143	143	4 to maintain the progress of the work, the State or any
144	144	5 political subdivision may continue to work until the
145	145	6 completing contractor is prepared to commence performance.
146	146	7 Unless otherwise agreed to by the procuring agency, in no case
147	147	8 may the surety take longer than 30 working days to advise the
148	148	9 State or political subdivision on the course of action it
149	149	10 intends to take. The surety shall be liable for reasonable
150	150	11 costs incurred by the State or any political subdivision to
151	151	12 maintain the progress to the extent the costs exceed the
152	152	13 unpaid balance of the contract sum, subject to the penal sum of
153	153	14 the bond.".
154	154	15 The surety bond required by this Section may be acquired
155	155	16 from the company, agent or broker of the contractor's choice.
156	156	17 The bond and sureties shall be subject to the right of
157	157	18 reasonable approval or disapproval, including suspension, by
158	158	19 the State or political subdivision thereof concerned. Except
159	159	20 as otherwise provided in this Section, in the case of State
160	160	21 construction contracts, a contractor shall not be required to
161	161	22 post a cash bond or letter of credit in addition to or as a
162	162	23 substitute for the surety bond required by this Section.
163	163	24 When other than motor fuel tax funds, federal-aid funds,
164	164	25 or other funds received from the State are used, a political
165	165	26 subdivision may allow the contractor to provide a
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176	176	1 non-diminishing irrevocable bank letter of credit, in lieu of
177	177	2 the bond required by this Section, on contracts under $100,000
178	178	3 to comply with the requirements of this Section. Any such bank
179	179	4 letter of credit shall contain all provisions required for
180	180	5 bonds by this Section.
181	181	6 In order to reduce barriers to entry for diverse and small
182	182	7 businesses, the Department of Transportation may implement a
183	183	8 5-year pilot program to allow a contractor to provide a
184	184	9 non-diminishing irrevocable bank letter of credit in lieu of
185	185	10 the bond required by this Section on contracts under $500,000.
186	186	11 Projects selected by the Department of Transportation for this
187	187	12 pilot program must be classified by the Department as low-risk
188	188	13 scope of work contracts. The Department shall adopt rules to
189	189	14 define the criteria for pilot project selection and
190	190	15 implementation of the pilot program.
191	191	16 Beginning on the effective date of this amendatory Act of
192	192	17 the 103rd General Assembly, any official, board, commission,
193	193	18 agent of this State, or any political subdivision of this
194	194	19 State may create a self-insured risk pool to cover any claims
195	195	20 or damages arising under a public works construction contract
196	196	21 valued at $5,000,000 or less as a consequence of a
197	197	22 contractor's failure to perform for the State, or of any
198	198	23 political subdivision thereof, work in accordance with the
199	199	24 terms of that contract.
200	200	25 In For the purposes of this Section:
201	201	26 "Material", , the terms "material", "labor",
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212	212	1 "apparatus", "fixtures", and "machinery" include those
213	213	2 rented items that are on the construction site and those
214	214	3 rented tools that are used or consumed on the construction
215	215	4 site in the performance of the contract on account of
216	216	5 which the bond is given.
217	217	6 "Self-insured risk pool" means a legal entity through
218	218	7 which officials, boards, commissions, agents of this
219	219	8 State, or political subdivisions of the State can
220	220	9 collectively purchase claims administration services and
221	221	10 excess insurance to provide coverage for claims and
222	222	11 damages arising as a consequence of a contractor's failure
223	223	12 to perform for the State, or of any political subdivision
224	224	13 thereof, work in accordance with the terms of a public
225	225	14 works construction contract valued at $5,000,000 or less.
226	226	15 (Source: P.A. 101-65, eff. 1-1-20; 102-968, eff. 1-1-23.)
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