Bill Text: IL HB4769 | 2013-2014 | 98th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Public Construction Bond Act. Provides that the surety on a bond shall be a company with a certificate of authority from the Department of Insurance specifically authorizing it to execute surety bonds and a financial strength rating of at least A as rated by A.M. Best or a similar rating agency. Effective immediately.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Passed) 2014-08-22 - Public Act . . . . . . . . . 98-1018 [HB4769 Detail]
Download: Illinois-2013-HB4769-Introduced.html
Bill Title: Amends the Public Construction Bond Act. Provides that the surety on a bond shall be a company with a certificate of authority from the Department of Insurance specifically authorizing it to execute surety bonds and a financial strength rating of at least A as rated by A.M. Best or a similar rating agency. Effective immediately.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Passed) 2014-08-22 - Public Act . . . . . . . . . 98-1018 [HB4769 Detail]
Download: Illinois-2013-HB4769-Introduced.html
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1 | AN ACT concerning finance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Public Construction Bond Act is amended by | ||||||||||||||||||||||||
5 | changing Section 1 as follows:
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6 | (30 ILCS 550/1) (from Ch. 29, par. 15)
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7 | Sec. 1. Except as otherwise provided by this Act, all | ||||||||||||||||||||||||
8 | officials, boards,
commissions, or agents of this State, or of | ||||||||||||||||||||||||
9 | any political subdivision thereof, in making contracts for | ||||||||||||||||||||||||
10 | public work of
any kind costing over $50,000 to be performed | ||||||||||||||||||||||||
11 | for the State, or of any political subdivision thereof,
shall | ||||||||||||||||||||||||
12 | require every contractor for the work to furnish, supply and | ||||||||||||||||||||||||
13 | deliver
a bond to the State, or to the political subdivision | ||||||||||||||||||||||||
14 | thereof entering into
the contract, as the case may be, with | ||||||||||||||||||||||||
15 | good and sufficient sureties. The surety on the bond shall be a | ||||||||||||||||||||||||
16 | company that has a certificate of authority from the Department | ||||||||||||||||||||||||
17 | of Insurance specifically authorizing it to execute surety | ||||||||||||||||||||||||
18 | bonds and the company shall have a financial strength rating of | ||||||||||||||||||||||||
19 | at least A as rated by A.M. Best Company Inc. or a similar | ||||||||||||||||||||||||
20 | rating agency. The
amount of the bond shall be fixed by the | ||||||||||||||||||||||||
21 | officials, boards, commissions,
commissioners or agents, and | ||||||||||||||||||||||||
22 | the bond, among other conditions,
shall be
conditioned for the | ||||||||||||||||||||||||
23 | completion of the contract, for the payment of material
used in |
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1 | the work and for all labor performed in the work, whether by
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2 | subcontractor or otherwise.
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3 | If the contract is for emergency repairs as provided in the | ||||||
4 | Illinois
Procurement
Code, proof of payment for all labor, | ||||||
5 | materials, apparatus, fixtures, and
machinery may be
furnished | ||||||
6 | in lieu of the bond required by this Section.
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7 | Each such bond is deemed to contain the following | ||||||
8 | provisions whether
such provisions are inserted in such bond or | ||||||
9 | not:
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10 | "The principal and sureties on this bond agree that all the
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11 | undertakings, covenants, terms, conditions and agreements of | ||||||
12 | the contract
or contracts entered into between the principal | ||||||
13 | and the State or any
political subdivision thereof will be | ||||||
14 | performed and fulfilled and to pay
all persons, firms and | ||||||
15 | corporations having contracts with the principal or
with | ||||||
16 | subcontractors, all just claims due them under the provisions | ||||||
17 | of such
contracts for labor performed or materials furnished in | ||||||
18 | the performance of
the contract on account of which this bond | ||||||
19 | is given, when such claims are
not satisfied out of the | ||||||
20 | contract price of the contract on account of which
this bond is | ||||||
21 | given, after final settlement between the officer, board,
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22 | commission or agent of the State or of any political | ||||||
23 | subdivision thereof
and the principal has been made.". | ||||||
24 | Each bond securing contracts between the Capital | ||||||
25 | Development Board or any board of a public institution of | ||||||
26 | higher education and a contractor shall contain the following |
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1 | provisions, whether the provisions are inserted in the bond or | ||||||
2 | not: | ||||||
3 | "Upon the default of the principal with respect to | ||||||
4 | undertakings, covenants, terms, conditions, and agreements, | ||||||
5 | the termination of the contractor's right to proceed with the | ||||||
6 | work, and written notice of that default and termination by the | ||||||
7 | State or any political subdivision to the surety ("Notice"), | ||||||
8 | the surety shall promptly remedy the default by taking one of | ||||||
9 | the following actions: | ||||||
10 | (1) The surety shall complete the work pursuant to a | ||||||
11 | written takeover agreement, using a completing contractor | ||||||
12 | jointly selected by the surety and the State or any | ||||||
13 | political subdivision; or | ||||||
14 | (2) The surety shall pay a sum of money to the obligee, | ||||||
15 | up to the penal sum of the bond, that represents the | ||||||
16 | reasonable cost to complete the work that exceeds the | ||||||
17 | unpaid balance of the contract sum. | ||||||
18 | The surety shall respond to the Notice within 15 working | ||||||
19 | days of receipt indicating the course of action that it intends | ||||||
20 | to take or advising that it requires more time to investigate | ||||||
21 | the default and select a course of action. If the surety | ||||||
22 | requires more than 15 working days to investigate the default | ||||||
23 | and select a course of action or if the surety elects to | ||||||
24 | complete the work with a completing contractor that is not | ||||||
25 | prepared to commence performance within 15 working days after | ||||||
26 | receipt of Notice, and if the State or any political |
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1 | subdivision determines it is in the best interest of the State | ||||||
2 | to maintain the progress of the work, the State or any | ||||||
3 | political subdivision may continue to work until the completing | ||||||
4 | contractor is prepared to commence performance. Unless | ||||||
5 | otherwise agreed to by the procuring agency, in no case may the | ||||||
6 | surety take longer than 30 working days to advise the State or | ||||||
7 | political subdivision on the course of action it intends to | ||||||
8 | take. The surety shall be liable for reasonable costs incurred | ||||||
9 | by the State or any political subdivision to maintain the | ||||||
10 | progress to the extent the costs exceed the unpaid balance of | ||||||
11 | the contract sum, subject to the penal sum of the bond.".
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12 | The surety bond required by this Section may be acquired | ||||||
13 | from the
company, agent or broker of the contractor's choice. | ||||||
14 | The bond and sureties
shall
be subject to the right of | ||||||
15 | reasonable approval or disapproval, including
suspension, by | ||||||
16 | the State or political subdivision thereof concerned. In the
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17 | case of State construction contracts, a contractor shall not be | ||||||
18 | required to
post a cash bond or letter of credit in addition to | ||||||
19 | or as a substitute for the
surety bond required by this | ||||||
20 | Section.
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21 | When other than motor fuel tax funds, federal-aid funds, or | ||||||
22 | other
funds received from the State are used, a political | ||||||
23 | subdivision may allow
the contractor to provide a | ||||||
24 | non-diminishing irrevocable bank letter of
credit, in lieu of | ||||||
25 | the bond required by this Section, on contracts under
$100,000 | ||||||
26 | to comply with the requirements of this Section. Any such bank
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1 | letter of credit shall contain all provisions required for | ||||||
2 | bonds by this
Section.
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3 | (Source: P.A. 98-216, eff. 8-9-13.)
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4 | Section 99. Effective date. This Act takes effect upon | ||||||
5 | becoming law.
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