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Illinois Senate Bill SB1980

Illinois 2025-2026 Regular Session

Illinois Senate Bill SB1980 Compare Versions

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11 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1980 Introduced 2/6/2025, by Sen. Willie Preston SYNOPSIS AS INTRODUCED: 30 ILCS 540/7 from Ch. 127, par. 132.407 Amends the State Prompt Payment Act. Provides that, for construction contracts with the Department of Transportation or the Capital Development Board (instead of the Department of Transportation only), 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. LRB104 10646 HLH 20723 b A BILL FOR 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1980 Introduced 2/6/2025, by Sen. Willie Preston SYNOPSIS AS INTRODUCED: 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/7 from Ch. 127, par. 132.407 Amends the State Prompt Payment Act. Provides that, for construction contracts with the Department of Transportation or the Capital Development Board (instead of the Department of Transportation only), 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. LRB104 10646 HLH 20723 b LRB104 10646 HLH 20723 b A BILL FOR
22 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1980 Introduced 2/6/2025, by Sen. Willie Preston SYNOPSIS AS INTRODUCED:
33 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/7 from Ch. 127, par. 132.407
44 30 ILCS 540/7 from Ch. 127, par. 132.407
55 Amends the State Prompt Payment Act. Provides that, for construction contracts with the Department of Transportation or the Capital Development Board (instead of the Department of Transportation only), 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.
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1111 1 AN ACT concerning finance.
1212 2 Be it enacted by the People of the State of Illinois,
1313 3 represented in the General Assembly:
1414 4 Section 5. The State Prompt Payment Act is amended by
1515 5 changing Section 7 as follows:
1616 6 (30 ILCS 540/7) (from Ch. 127, par. 132.407)
1717 7 Sec. 7. Payments to subcontractors and material suppliers.
1818 8 (a) When a State official or agency responsible for
1919 9 administering a contract submits a voucher to the Comptroller
2020 10 for payment to a contractor, that State official or agency
2121 11 shall promptly make available electronically the voucher
2222 12 number, the date of the voucher, and the amount of the voucher.
2323 13 The State official or agency responsible for administering the
2424 14 contract shall provide subcontractors and material suppliers,
2525 15 known to the State official or agency, with instructions on
2626 16 how to access the electronic information.
2727 17 (a-5) When a contractor receives any payment, the
2828 18 contractor shall pay each subcontractor and material supplier
2929 19 electronically within 10 business days or 15 calendar days,
3030 20 whichever occurs earlier, or, if paid by a printed check, the
3131 21 printed check must be postmarked within 10 business days or 15
3232 22 calendar days, whichever occurs earlier, after receiving
3333 23 payment in proportion to the work completed by each
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3737 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1980 Introduced 2/6/2025, by Sen. Willie Preston SYNOPSIS AS INTRODUCED:
3838 30 ILCS 540/7 from Ch. 127, par. 132.407 30 ILCS 540/7 from Ch. 127, par. 132.407
3939 30 ILCS 540/7 from Ch. 127, par. 132.407
4040 Amends the State Prompt Payment Act. Provides that, for construction contracts with the Department of Transportation or the Capital Development Board (instead of the Department of Transportation only), 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.
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6868 1 subcontractor and material supplier its application or pay
6969 2 estimate, plus interest received under this Act. When a
7070 3 contractor receives any payment, the contractor shall pay each
7171 4 lower-tiered subcontractor and material supplier and each
7272 5 subcontractor and material supplier shall make payment to its
7373 6 own respective subcontractors and material suppliers. If the
7474 7 contractor receives less than the full payment due under the
7575 8 public construction contract, the contractor shall be
7676 9 obligated to disburse on a pro rata basis those funds
7777 10 received, plus interest received under this Act, with the
7878 11 contractor, subcontractors and material suppliers each
7979 12 receiving a prorated portion based on the amount of payment
8080 13 each has earned. When, however, the State official or agency
8181 14 does not release the full payment due under the contract
8282 15 because there are specific areas of work or materials the
8383 16 State agency or official has determined are not suitable for
8484 17 payment, then those specific subcontractors or material
8585 18 suppliers involved shall not be paid for that portion of work
8686 19 rejected or deemed not suitable for payment and all other
8787 20 subcontractors and suppliers shall be paid based upon the
8888 21 amount of payment each has earned, plus interest received
8989 22 under this Act.
9090 23 (a-10) For construction contracts with the Department of
9191 24 Transportation or the Capital Development Board, the
9292 25 contractor, subcontractor, or material supplier, regardless of
9393 26 tier, shall not offset, decrease, or diminish payment or
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104104 1 payments that are due to its subcontractors or material
105105 2 suppliers without reasonable cause.
106106 3 A contractor, who refuses to make prompt payment within 10
107107 4 business days or 15 calendar days, whichever occurs earlier,
108108 5 after receiving payment, in whole or in part, shall provide to
109109 6 the subcontractor or material supplier and the public owner or
110110 7 its agent, a written notice of that refusal. The written
111111 8 notice shall be made by a contractor no later than 5 calendar
112112 9 days after payment is received by the contractor. The written
113113 10 notice shall identify the Department of Transportation's or
114114 11 the Capital Development Board's contract, any subcontract or
115115 12 material purchase agreement, a detailed reason for refusal,
116116 13 the value of the payment to be withheld, and the specific
117117 14 remedial actions required of the subcontractor or material
118118 15 supplier so that payment may be made. Written notice of
119119 16 refusal may be given in a form and method which is acceptable
120120 17 to the parties and public owner.
121121 18 (b) If the contractor, without reasonable cause, fails to
122122 19 make full payment of amounts due under subsection (a) to its
123123 20 subcontractors and material suppliers within 10 business days
124124 21 or 15 calendar days, whichever occurs earlier, after receipt
125125 22 of payment from the State official or agency, the contractor
126126 23 shall pay to its subcontractors and material suppliers, in
127127 24 addition to the payment due them, interest in the amount of 2%
128128 25 per month, calculated from the expiration of the
129129 26 10-business-day period or the 15-calendar-day period until
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140140 1 fully paid. This subsection shall further apply to any
141141 2 payments made by subcontractors and material suppliers to
142142 3 their subcontractors and material suppliers and to all
143143 4 payments made to lower tier subcontractors and material
144144 5 suppliers throughout the contracting chain.
145145 6 (1) If a contractor, without reasonable cause, fails
146146 7 to make payment in full as provided in subsection (a-5)
147147 8 within 10 business days or 15 calendar days, whichever
148148 9 occurs earlier, after receipt of payment under the public
149149 10 construction contract, any subcontractor or material
150150 11 supplier to whom payments are owed may file a written
151151 12 notice and request for administrative hearing with the
152152 13 State official or agency setting forth the amount owed by
153153 14 the contractor and the contractor's failure to timely pay
154154 15 the amount owed. The written notice and request for
155155 16 administrative hearing shall identify the public
156156 17 construction contract, the contractor, and the amount
157157 18 owed, and shall contain a sworn statement or attestation
158158 19 to verify the accuracy of the notice. The notice and
159159 20 request for administrative hearing shall be filed with the
160160 21 State official for the public construction contract, with
161161 22 a copy of the notice concurrently provided to the
162162 23 contractor. Notice to the State official may be made by
163163 24 certified or registered mail, messenger service, or
164164 25 personal service, and must include proof of delivery to
165165 26 the State official.
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176176 1 (2) The State official or agency, within 15 calendar
177177 2 days after receipt of a subcontractor's or material
178178 3 supplier's written notice and request for administrative
179179 4 hearing, shall hold a hearing convened by an
180180 5 administrative law judge to determine whether the
181181 6 contractor withheld payment, without reasonable cause,
182182 7 from the subcontractors or material suppliers and what
183183 8 amount, if any, is due to the subcontractors or material
184184 9 suppliers, and the reasonable cause or causes asserted by
185185 10 the contractor. The State official or agency shall provide
186186 11 appropriate notice to the parties of the date, time, and
187187 12 location of the hearing. Each contractor, subcontractor,
188188 13 or material supplier has the right to be represented by
189189 14 counsel at a hearing and to cross-examine witnesses and
190190 15 challenge documents. Upon the request of the subcontractor
191191 16 or material supplier and a showing of good cause,
192192 17 reasonable continuances may be granted by the
193193 18 administrative law judge.
194194 19 (3) Upon a finding by the administrative law judge
195195 20 that the contractor failed to make payment in full,
196196 21 without reasonable cause, as provided in subsection
197197 22 (a-10), then the administrative law judge shall, in
198198 23 writing, order the contractor to pay the amount owed to
199199 24 the subcontractors or material suppliers plus interest
200200 25 within 15 calendar days after the order.
201201 26 (4) If a contractor fails to make full payment as
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212212 1 ordered under paragraph (3) of this subsection (b) within
213213 2 15 days after the administrative law judge's order, then
214214 3 the contractor shall be barred from entering into a State
215215 4 public construction contract for a period of one year
216216 5 beginning on the date of the administrative law judge's
217217 6 order.
218218 7 (5) If, on 2 or more occasions within a
219219 8 3-calendar-year period, there is a finding by an
220220 9 administrative law judge that the contractor failed to
221221 10 make payment in full, without reasonable cause, and a
222222 11 written order was issued to a contractor under paragraph
223223 12 (3) of this subsection (b), then the contractor shall be
224224 13 barred from entering into a State public construction
225225 14 contract for a period of 6 months beginning on the date of
226226 15 the administrative law judge's second written order, even
227227 16 if the payments required under the orders were made in
228228 17 full.
229229 18 (6) If a contractor fails to make full payment as
230230 19 ordered under paragraph (4) of this subsection (b), the
231231 20 subcontractor or material supplier may, within 30 days of
232232 21 the date of that order, petition the State agency for an
233233 22 order for reasonable attorney's fees and costs incurred in
234234 23 the prosecution of the action under this subsection (b).
235235 24 Upon that petition and taking of additional evidence, as
236236 25 may be required, the administrative law judge may issue a
237237 26 supplemental order directing the contractor to pay those
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248248 1 reasonable attorney's fees and costs.
249249 2 (7) The written order of the administrative law judge
250250 3 shall be final and appealable under the Administrative
251251 4 Review Law.
252252 5 (b-5) On or before July 2021, the Department of
253253 6 Transportation shall publish on its website a searchable
254254 7 database that allows for queries for each active construction
255255 8 contract by the name of a subcontractor or the pay item such
256256 9 that each pay item is associated with either the prime
257257 10 contractor or a subcontractor.
258258 11 (c) This Section shall not be construed to in any manner
259259 12 diminish, negate, or interfere with the
260260 13 contractor-subcontractor or contractor-material supplier
261261 14 relationship or commercially useful function.
262262 15 (d) This Section shall not preclude, bar, or stay the
263263 16 rights, remedies, and defenses available to the parties by way
264264 17 of the operation of their contract, purchase agreement, the
265265 18 Mechanics Lien Act, or the Public Construction Bond Act.
266266 19 (e) State officials and agencies may adopt rules as may be
267267 20 deemed necessary in order to establish the formal procedures
268268 21 required under this Section.
269269 22 (f) As used in this Section:
270270 23 "Payment" means the discharge of an obligation in money or
271271 24 other valuable consideration or thing delivered in full or
272272 25 partial satisfaction of an obligation to pay. "Payment" shall
273273 26 include interest paid pursuant to this Act.
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284284 1 "Reasonable cause" may include, but is not limited to,
285285 2 unsatisfactory workmanship or materials; failure to provide
286286 3 documentation required by the contract, subcontract, or
287287 4 material purchase agreement; claims made against the
288288 5 Department of Transportation, the Capital Development Board,
289289 6 or the subcontractor pursuant to subsection (c) of Section 23
290290 7 of the Mechanics Lien Act or the Public Construction Bond Act;
291291 8 judgments, levies, garnishments, or other court-ordered
292292 9 assessments or offsets in favor of the Department of
293293 10 Transportation, the Capital Development Board, or other State
294294 11 agency entered against a subcontractor or material supplier.
295295 12 "Reasonable cause" does not include payments issued to the
296296 13 contractor that create a negative or reduced valuation pay
297297 14 application or pay estimate due to a reduction of contract
298298 15 quantities or work not performed or provided by the
299299 16 subcontractor or material supplier; the interception or
300300 17 withholding of funds for reasons not related to the
301301 18 subcontractor's or material supplier's work on the contract;
302302 19 anticipated claims or assessments of third parties not a party
303303 20 related to the contract or subcontract; asserted claims or
304304 21 assessments of third parties that are not authorized by court
305305 22 order, administrative tribunal, or statute. "Reasonable cause"
306306 23 further does not include the withholding, offset, or reduction
307307 24 of payment, in whole or in part, due to the assessment of
308308 25 liquidated damages or penalties assessed by the Department of
309309 26 Transportation or the Capital Development Board against the
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