Bill Text: IL HB1224 | 2025-2026 | 104th General Assembly | Introduced

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Bill Title: Creates the State Agency Retainage Act. Provides that, if a State agency determines that satisfactory progress has not been achieved by a contractor or subcontractor during any period for which a payment is to be made, a percentage of the payment may be retained by the State agency. Prohibits the amount of retainage under the Act from exceeding 10% of the amount of any and all draw amounts submitted and approved under the terms of the contract until the contract is 50% completed. Prohibits retainage of more than 5% of the contract of the amount of any and all draw amounts submitted and approved under the terms of the contract for the duration of the contract. Authorizes retainage to be adjusted as the contract approaches completion to recognize better than expected performance, the ability to rely on alternative safeguards, and other factors. Further provides that on completion of all contract requirements, amounts retained under the Act must be paid promptly. Defines the terms "retainage" and "State agency". Amends the State Prompt Payment Act. Specifies that the State Prompt Payment Act does not apply to retainage withheld under the State Agency Retainage Act.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-01-09 - Referred to Rules Committee [HB1224 Detail]

Download: Illinois-2025-HB1224-Introduced.html

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104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB1224 Introduced 1/9/2025, by Rep. William "Will" Davis SYNOPSIS AS INTRODUCED:
New Act
30 ILCS 540/1 from Ch. 127, par. 132.401
Creates the State Agency Retainage Act. Provides that, if a State agency determines that satisfactory progress has not been achieved by a contractor or subcontractor during any period for which a payment is to be made, a percentage of the payment may be retained by the State agency. Prohibits the amount of retainage under the Act from exceeding 10% of the amount of any and all draw amounts submitted and approved under the terms of the contract until the contract is 50% completed. Prohibits retainage of more than 5% of the contract of the amount of any and all draw amounts submitted and approved under the terms of the contract for the duration of the contract. Authorizes retainage to be adjusted as the contract approaches completion to recognize better than expected performance, the ability to rely on alternative safeguards, and other factors. Further provides that on completion of all contract requirements, amounts retained under the Act must be paid promptly. Defines the terms "retainage" and "State agency". Amends the State Prompt Payment Act. Specifies that the State Prompt Payment Act does not apply to retainage withheld under the State Agency Retainage Act.
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A BILL FOR
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AN ACT concerning government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the State
Agency Retainage Act.
Section 5. Definitions. As used in this Act:
"Retainage" means a portion of moneys withheld from the
payment of a contract for a specified period of time to ensure
that a contractor or subcontractor completes a construction
project in the manner specified in the contract. "Retainage"
does not include moneys withheld due to violations of local,
State, or federal laws.
"State agency" has the meaning given to "State agencies"
in Section 1-7 of the Illinois State Auditing Act.
Section 10. Determination of satisfactory progress. If a
State agency determines that satisfactory progress has not
been achieved by a contractor or subcontractor during any
period for which a payment is to be made, a percentage of the
payment may be retained by the State agency. Retainage may not
be used as a substitute for good contract management, and the
State agency may not withhold funds without cause.
Determinations to retain and the specific amount to be

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withheld must be made by the State agency on a case-by-case
basis. These determinations must be based on an assessment of
past performance and the likelihood that such performance will
continue. The amount of retainage withheld may not exceed 10%
of the amount of any and all draw amounts submitted and
approved under the terms of the contract until the contract is
50% completed, may not exceed 5% of the amount of any and all
draw amounts submitted and approved under the terms of the
contract for the duration of the contract, and may be adjusted
as the contract approaches completion to recognize better than
expected performance, the ability to rely on alternative
safeguards, and other factors. Upon completion of all contract
requirements, amounts retained under this Act must be paid
promptly.
Section 15. The State Prompt Payment Act is amended by
changing Section 1 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. This Act does not apply to
retainage withheld under the State Agency Retainage Act.
For purposes of this Act, "goods or services furnished to
the State" include but are not limited to (i) covered health

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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.

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