PROMPT PAYMENT-CAP DEVELOP BD

Illinois General Assembly - Full Text of HB3185

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Full Text of HB3185

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HB3185 - 104th General Assembly

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HB3185 Engrossed
LRB104 10629 HLH 20706 b
1

AN ACT concerning finance.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

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

6

(30 ILCS 540/7)

(from Ch. 127, par. 132.407)
7

Sec. 7.
Payments to subcontractors and material suppliers.
8

(a) When a State official or agency responsible for
9
administering a contract submits a voucher to the Comptroller
10
for payment to a contractor, that State official or agency
11
shall promptly make available electronically the voucher
12
number, the date of the voucher, and the amount of the voucher.
13
The State official or agency responsible for administering the
14
contract shall provide subcontractors and material suppliers,
15
known to the State official or agency, with instructions on
16
how to access the electronic information.
17

(a-5) When a contractor receives any payment, the
18
contractor shall pay each subcontractor and material supplier
19
electronically within 10 business days or 15 calendar days,
20
whichever occurs earlier, or, if paid by a printed check, the
21
printed check must be postmarked within 10 business days or 15
22
calendar days, whichever occurs earlier, after receiving
23
payment in proportion to the work completed by each

HB3185 Engrossed
- 2 -
LRB104 10629 HLH 20706 b
1
subcontractor and material supplier its application or pay
2
estimate, plus interest received under this Act. When a
3
contractor receives any payment, the contractor shall pay each
4
lower-tiered subcontractor and material supplier and each
5
subcontractor and material supplier shall make payment to its
6
own respective subcontractors and material suppliers. If the
7
contractor receives less than the full payment due under the
8
public construction contract, the contractor shall be
9
obligated to disburse on a pro rata basis those funds
10
received, plus interest received under this Act, with the
11
contractor, subcontractors and material suppliers each
12
receiving a prorated portion based on the amount of payment
13
each has earned. When, however, the State official or agency
14
does not release the full payment due under the contract
15
because there are specific areas of work or materials the
16
State agency or official has determined are not suitable for
17
payment, then those specific subcontractors or material
18
suppliers involved shall not be paid for that portion of work
19
rejected or deemed not suitable for payment and all other
20
subcontractors and suppliers shall be paid based upon the
21
amount of payment each has earned, plus interest received
22
under this Act.
23

(a-10) For construction contracts with the Department of
24
Transportation
or the Capital Development Board
, the
25
contractor, subcontractor, or material supplier, regardless of
26
tier, shall not offset, decrease, or diminish payment or

HB3185 Engrossed
- 3 -
LRB104 10629 HLH 20706 b
1
payments that are due to its subcontractors or material
2
suppliers without reasonable cause.
3

A contractor, who refuses to make prompt payment within 10
4
business days or 15 calendar days, whichever occurs earlier,
5
after receiving payment, in whole or in part, shall provide to
6
the subcontractor or material supplier and the public owner or
7
its agent, a written notice of that refusal. The written
8
notice shall be made by a contractor no later than 5 calendar
9
days after payment is received by the contractor. The written
10
notice shall identify the Department of Transportation's
or
11
the Capital Development Board's
contract, any subcontract or
12
material purchase agreement, a detailed reason for refusal,
13
the value of the payment to be withheld, and the specific
14
remedial actions required of the subcontractor or material
15
supplier so that payment may be made. Written notice of
16
refusal may be given in a form and method which is acceptable
17
to the parties and public owner.
18

(b) If the contractor, without reasonable cause, fails to
19
make full payment of amounts due under subsection (a) to its
20
subcontractors and material suppliers within 10 business days
21
or 15 calendar days, whichever occurs earlier, after receipt
22
of payment from the State official or agency, the contractor
23
shall pay to its subcontractors and material suppliers, in
24
addition to the payment due them, interest in the amount of 2%
25
per month, calculated from the expiration of the
26
10-business-day period or the 15-calendar-day period until

HB3185 Engrossed
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LRB104 10629 HLH 20706 b
1
fully paid. This subsection shall further apply to any
2
payments made by subcontractors and material suppliers to
3
their subcontractors and material suppliers and to all
4
payments made to lower tier subcontractors and material
5
suppliers throughout the contracting chain.
6

(1) If a contractor, without reasonable cause, fails
7

to make payment in full as provided in subsection (a-5)
8

within 10 business days or 15 calendar days, whichever
9

occurs earlier, after receipt of payment under the public
10

construction contract, any subcontractor or material
11

supplier to whom payments are owed may file a written
12

notice and request for administrative hearing with the
13

State official or agency setting forth the amount owed by
14

the contractor and the contractor's failure to timely pay
15

the amount owed. The written notice and request for
16

administrative hearing shall identify the public
17

construction contract, the contractor, and the amount
18

owed, and shall contain a sworn statement or attestation
19

to verify the accuracy of the notice. The notice and
20

request for administrative hearing shall be filed with the
21

State official for the public construction contract, with
22

a copy of the notice concurrently provided to the
23

contractor. Notice to the State official may be made by
24

certified or registered mail, messenger service, or
25

personal service, and must include proof of delivery to
26

the State official.

HB3185 Engrossed
- 5 -
LRB104 10629 HLH 20706 b
1

(2) The State official or agency, within 15 calendar
2

days after receipt of a subcontractor's or material
3

supplier's written notice and request for administrative
4

hearing, shall hold a hearing convened by an
5

administrative law judge to determine whether the
6

contractor withheld payment, without reasonable cause,
7

from the subcontractors or material suppliers and what
8

amount, if any, is due to the subcontractors or material
9

suppliers, and the reasonable cause or causes asserted by
10

the contractor. The State official or agency shall provide
11

appropriate notice to the parties of the date, time, and
12

location of the hearing. Each contractor, subcontractor,
13

or material supplier has the right to be represented by
14

counsel at a hearing and to cross-examine witnesses and
15

challenge documents. Upon the request of the subcontractor
16

or material supplier and a showing of good cause,
17

reasonable continuances may be granted by the
18

administrative law judge.
19

(3) Upon a finding by the administrative law judge
20

that the contractor failed to make payment in full,
21

without reasonable cause, as provided in subsection
22

(a-10), then the administrative law judge shall, in
23

writing, order the contractor to pay the amount owed to
24

the subcontractors or material suppliers plus interest
25

within 15 calendar days after the order.
26

(4) If a contractor fails to make full payment as

HB3185 Engrossed
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LRB104 10629 HLH 20706 b
1

ordered under paragraph (3) of this subsection (b) within
2

15 days after the administrative law judge's order, then
3

the contractor shall be barred from entering into a State
4

public construction contract for a period of one year
5

beginning on the date of the administrative law judge's
6

order.
7

(5) If, on 2 or more occasions within a
8

3-calendar-year period, there is a finding by an
9

administrative law judge that the contractor failed to
10

make payment in full, without reasonable cause, and a
11

written order was issued to a contractor under paragraph
12

(3) of this subsection (b), then the contractor shall be
13

barred from entering into a State public construction
14

contract for a period of 6 months beginning on the date of
15

the administrative law judge's second written order, even
16

if the payments required under the orders were made in
17

full.
18

(6) If a contractor fails to make full payment as
19

ordered under paragraph (4) of this subsection (b), the
20

subcontractor or material supplier may, within 30 days of
21

the date of that order, petition the State agency for an
22

order for reasonable attorney's fees and costs incurred in
23

the prosecution of the action under this subsection (b).
24

Upon that petition and taking of additional evidence, as
25

may be required, the administrative law judge may issue a
26

supplemental order directing the contractor to pay those

HB3185 Engrossed
- 7 -
LRB104 10629 HLH 20706 b
1

reasonable attorney's fees and costs.
2

(7) The written order of the administrative law judge
3

shall be final and appealable under the Administrative
4

Review Law.
5

(b-5) On or before July 2021, the Department of
6
Transportation shall publish on its website a searchable
7
database that allows for queries for each active construction
8
contract by the name of a subcontractor or the pay item such
9
that each pay item is associated with either the prime
10
contractor or a subcontractor.
11

(c) This Section shall not be construed to in any manner
12
diminish, negate, or interfere with the
13
contractor-subcontractor or contractor-material supplier
14
relationship or commercially useful function.
15

(d) This Section shall not preclude, bar, or stay the
16
rights, remedies, and defenses available to the parties by way
17
of the operation of their contract, purchase agreement, the
18
Mechanics Lien Act, or the Public Construction Bond Act.
19

(e) State officials and agencies may adopt rules as may be
20
deemed necessary in order to establish the formal procedures
21
required under this Section.
22

(f) As used in this Section:
23

"Payment" means the discharge of an obligation in money or
24
other valuable consideration or thing delivered in full or
25
partial satisfaction of an obligation to pay. "Payment" shall
26
include interest paid pursuant to this Act.

HB3185 Engrossed
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LRB104 10629 HLH 20706 b
1

"Reasonable cause" may include, but is not limited to,
2
unsatisfactory workmanship or materials; failure to provide
3
documentation required by the contract, subcontract, or
4
material purchase agreement; claims made against the
5
Department of Transportation
, the Capital Development Board,

6
or the subcontractor pursuant to subsection (c) of Section 23
7
of the Mechanics Lien Act or the Public Construction Bond Act;
8
judgments, levies, garnishments, or other court-ordered
9
assessments or offsets in favor of the Department of
10
Transportation
, the Capital Development Board,
or other State
11
agency entered against a subcontractor or material supplier.
12
"Reasonable cause" does not include payments issued to the
13
contractor that create a negative or reduced valuation pay
14
application or pay estimate due to a reduction of contract
15
quantities or work not performed or provided by the
16
subcontractor or material supplier; the interception or
17
withholding of funds for reasons not related to the
18
subcontractor's or material supplier's work on the contract;
19
anticipated claims or assessments of third parties not a party
20
related to the contract or subcontract; asserted claims or
21
assessments of third parties that are not authorized by court
22
order, administrative tribunal, or statute. "Reasonable cause"
23
further does not include the withholding, offset, or reduction
24
of payment, in whole or in part, due to the assessment of
25
liquidated damages or penalties assessed by the Department of
26
Transportation
or the Capital Development Board
against the

HB3185 Engrossed
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LRB104 10629 HLH 20706 b
1
contractor, unless the subcontractor's performance or supplied
2
materials were the sole and proximate cause of the liquidated
3
damage or penalty.
4
(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18;
5
100-863, eff. 8-14-18; 101-524, eff. 1-1-20
.)

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