Illinois Compiled Statutes
Chapter 30 - FINANCE
30 ILCS 540/ - State Prompt Payment Act.

(30 ILCS 540/0.01) (from Ch. 127, par. 132.400)
Sec. 0.01.
Short title.
This Act may be cited as the
State Prompt Payment Act.

(Source: P.A. 86-1324.)
 
(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.
For purposes of this Act, "goods or
services furnished to the State" include but are not limited to (i) covered health
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.
As used in this Act, "eligible member" means a member who is eligible for
health benefits under the State Employees Group Insurance Act of 1971, and
"member" and "dependent" have the meanings ascribed to those terms in that Act.
As used in this Act, "a proper bill or invoice" means a bill or invoice, including, but not limited to, an invoice issued under a contractual grant agreement,
that
includes the
information necessary for processing the payment as may be specified by a State
agency and in rules adopted in accordance with this Act. Beginning on and after July 1, 2021, "a proper bill or invoice" shall also include the names of all subcontractors or subconsultants to be paid from the bill or invoice and the amounts due to each of them, if any.

(Source: P.A. 100-549, eff. 1-1-18; 101-524, eff. 1-1-20.)
 
(30 ILCS 540/2) (from Ch. 127, par. 132.402)
Sec. 2.
(Repealed).

(Source: Repealed by P.A. 87-1232.)
 
(30 ILCS 540/2.1) (from Ch. 127, par. 132.402.1)
Sec. 2.1.
(Repealed).

(Source: Repealed by P.A. 87-1232.)
 
(30 ILCS 540/3) (from Ch. 127, par. 132.403)
Sec. 3.
(Repealed).

(Source: Repealed by P.A. 87-1232.)
 
(30 ILCS 540/3-1) (from Ch. 127, par. 132.403-1)
Sec. 3-1. The Illinois Court of Claims shall, in its investigation of
payments due claimants, provide for interest penalties as prescribed in this
Act; however, interest penalties in claims pursuant to the Line of Duty
Compensation Act shall be paid in accordance with subsection (3) of Section 24 of the Court of Claims Act.

(Source: P.A. 95-928, eff. 8-26-08.)
 
(30 ILCS 540/3-2)
Sec. 3-2. Beginning July 1, 1993, in any instance where a State official or
agency is late in payment of a vendor's bill or invoice for goods or services
furnished to the State, as defined in Section 1, properly approved in
accordance with rules promulgated under Section 3-3, the State official or
agency shall pay interest to the vendor in accordance with the following:
Notwithstanding any provision to the contrary, interest may not be paid under this Act when: (1) a Chief Procurement Officer has voided the underlying contract for goods or services under Article 50 of the Illinois Procurement Code; or (2) the Auditor General is conducting a performance or program audit and the Comptroller has held or is holding for review a related contract or vouchers for payment of goods or services in the exercise of duties under Section 9 of the State Comptroller Act. In such event, interest shall not accrue during the pendency of the Auditor General's review.
(Source: P.A. 100-1064, eff. 8-24-18.)
 
(30 ILCS 540/3-2.1)
Sec. 3-2.1. Interest penalty report. The State Comptroller, in conjunction with the Department of Central Management Services, shall submit a report to the General Assembly no later than January 31, 2011. The report shall include the following information, which shall be broken down by State agency and vendor:
The report shall also include recommendations regarding establishing a minimum threshold for payment of interest penalties to vendors and increased efficiencies, including, but not limited to, consolidation of multiple payments to the same vendor.

(Source: P.A. 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10.)
 
(30 ILCS 540/3-2.5)
Sec. 3-2.5. Advance payment reimbursement and interest. If a vendor provides goods or services to an individual and requires that individual to pay all or part of the cost of the goods or services in advance of the vendor being paid for those goods or services by the State, then the amount of the individual's advance payment, and any interest under this Act attributable to the advance payment, that is paid by the State to the vendor is the property of the individual and, to the extent received by the vendor, must be promptly disbursed by the vendor to that individual.

(Source: P.A. 96-1085, eff. 1-1-11.)
 
(30 ILCS 540/3-3) (from Ch. 127, par. 132.403-3)
Sec. 3-3.

The State Comptroller and the Department of Central
Management Services shall jointly promulgate rules and policies to govern
the uniform application of this Act. These rules and policies shall
include procedures and time frames for approving a bill or invoice from a
vendor for goods or services furnished to the State. These rules and
policies shall provide for procedures and time frames
applicable to
payment plans as may be agreed upon between State agencies and vendors.
These rules and
policies shall be binding on all officials and agencies under this Act's
jurisdiction. These rules and policies may be made effective no earlier
than July 1, 1993.

(Source: P.A. 92-384, eff. 7-1-02.)
 
(30 ILCS 540/3-3.5)
Sec. 3-3.5. Vendor payment contracts. Any contract executed under the Vendor Payment Program specified in Section 900.125 of Title 74 of the Illinois Administrative Code prior to June 30, 2018 shall remain in effect until those contracts have expired. Those parties with existing contracts shall comply with additional reporting requirements established under this amendatory Act of the 100th General Assembly or rules adopted hereunder.

(Source: P.A. 100-1089, eff. 8-24-18.)
 
(30 ILCS 540/3-4)
Sec. 3-4.

The State Comptroller must specify the manner in which State
agencies shall record interest penalty payments made under this Act. The State
Comptroller may require vouchers submitted for payment, including submission by
electronic or other means approved by the Comptroller, to indicate the
appropriate date from which interest penalties may be calculated as required
under this Act.

(Source: P.A. 92-384, eff. 7-1-02.)
 
(30 ILCS 540/3-5)
Sec. 3-5. Budget Stabilization Fund; insufficient appropriation. If an agency incurs an interest liability under this Act that is ordinarily payable from the Budget Stabilization Fund, but the agency has insufficient appropriation authority from the Budget Stabilization Fund to make the interest payment at the time the interest payment is due, the agency is authorized to pay the interest from its available appropriations from the General Revenue Fund.

(Source: P.A. 100-23, eff. 7-6-17.)
 
(30 ILCS 540/3-6)
Sec. 3-6. Federal funds; lack of authority. If an agency incurs an interest liability under this Act that cannot be charged to the same expenditure authority account to which the related goods or services were charged due to federal prohibitions, the agency is authorized to pay the interest from its available appropriations from the General Revenue Fund.

(Source: P.A. 100-587, eff. 6-4-18.)
 
(30 ILCS 540/4) (from Ch. 127, par. 132.404)
Sec. 4.

Nothing in this Act shall be construed to deprive the Comptroller of
his power to examine vouchers as specified in the State Comptroller Act.

(Source: P.A. 92-384, eff. 7-1-02.)
 
(30 ILCS 540/5) (from Ch. 127, par. 132.405)
Sec. 5.

The State remittance shall indicate that
payment of interest may be available for failure to comply with this Act.

(Source: P.A. 92-384, eff. 7-1-02.)
 
(30 ILCS 540/6) (from Ch. 127, par. 132.406)
Sec. 6.

A State official or agency may not request any vendor or
contractor to waive his rights, under this Act, to recover a penalty for
late payment as a condition of, or inducement to enter into, any contract
for goods or services.

(Source: P.A. 87-773.)
 
(30 ILCS 540/7)
(from Ch. 127, par. 132.407)
Sec. 7. Payments to subcontractors and material suppliers.
(a) When a State official or agency responsible for administering a
contract submits a voucher to the Comptroller for
payment to a contractor, that State official or agency shall promptly make
available electronically
the voucher number, the date of the voucher, and
the amount of the voucher.
The State official or agency responsible for administering the contract shall
provide subcontractors and material suppliers, known to the State official or
agency, with instructions on how to access the electronic information.
(a-5) When a
contractor receives any payment, the contractor shall
pay each subcontractor and material supplier electronically within 10 business days or 15 calendar days, whichever occurs earlier, or, if paid by a printed check, the printed check must be postmarked within 10 business days or 15 calendar days, whichever occurs earlier, after receiving payment in proportion to the work
completed by each subcontractor and material supplier its application or pay estimate, plus interest received under this Act. When a contractor receives any payment, the contractor shall pay each lower-tiered subcontractor and material supplier and each subcontractor and material supplier shall make payment to its own respective subcontractors and material suppliers. If the contractor receives less than the full payment
due under the public construction contract, the contractor shall be
obligated to disburse on a pro rata basis those funds received, plus interest received under this Act, with the
contractor, subcontractors and material suppliers each receiving a prorated
portion based on the amount of payment each has earned. When, however, the State official or agency
does not release the full payment due under the contract because there are
specific areas of work or materials the State agency or official has determined are not suitable for
payment, then those specific subcontractors or material suppliers involved shall not
be paid for that portion of work rejected or deemed not suitable for
payment and all other subcontractors and suppliers shall be paid based upon the amount of payment each has earned, plus interest received under this Act.
(a-10) For construction contracts with the Department of Transportation, 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.
A contractor, who refuses to make prompt payment within 10 business days or 15 calendar days, whichever occurs earlier, after receiving payment, in whole or in part, shall provide to the subcontractor or material supplier and the public owner or its agent, a written notice of that refusal. The written notice shall be made by a contractor no later than 5 calendar days after payment is received by the contractor. The written notice shall identify the Department of Transportation's contract, any subcontract or material purchase agreement, a detailed reason for refusal, the value of the payment to be withheld, and the specific remedial actions required of the subcontractor or material supplier so that payment may be made. Written notice of refusal may be given in a form and method which is acceptable to the parties and public owner.
(b) If the contractor, without reasonable cause, fails to make full payment of amounts due under subsection (a) to its
subcontractors and material suppliers within 10 business days or 15 calendar days, whichever occurs earlier, after
receipt of
payment from the State official or agency, the contractor shall pay to its
subcontractors and material suppliers, in addition to the payment due
them, interest in the amount of
2% per month, calculated from the
expiration of the 10-business-day period or the 15-calendar-day period until fully paid. This subsection shall further
apply to any payments made by subcontractors and material suppliers to
their subcontractors and material suppliers and to all payments made to
lower tier subcontractors and material suppliers throughout the contracting
chain.
(b-5) On or before July 2021, the Department of Transportation shall publish on its website a searchable database that allows for queries for each active construction contract by the name of a subcontractor or the pay item such that each pay item is associated with either the prime contractor or a subcontractor.
(c) This Section shall not be construed to in any manner diminish, negate, or interfere with the contractor-subcontractor or contractor-material supplier relationship or commercially useful function.
(d) This Section shall not preclude, bar, or stay the rights, remedies, and defenses available to the parties by way of the operation of their contract, purchase agreement, the Mechanics Lien Act, or the Public Construction Bond Act.
(e) State officials and agencies may adopt rules as may be deemed necessary in order to establish the formal procedures required under this Section.
(f) As used in this Section:
"Payment" means the discharge of an obligation in money or other valuable consideration or thing delivered in full or partial satisfaction of an obligation to pay. "Payment" shall include interest paid pursuant to this Act.
"Reasonable cause" may include, but is not limited to, unsatisfactory workmanship or materials; failure to provide documentation required by the contract, subcontract, or material purchase agreement; claims made against the Department of Transportation or the subcontractor pursuant to subsection (c) of Section 23 of the Mechanics Lien Act or the Public Construction Bond Act; judgments, levies, garnishments, or other court-ordered assessments or offsets in favor of the Department of Transportation or other State agency entered against a subcontractor or material supplier. "Reasonable cause" does not include payments issued to the contractor that create a negative or reduced valuation pay application or pay estimate due to a reduction of contract quantities or work not performed or provided by the subcontractor or material supplier; the interception or withholding of funds for reasons not related to the subcontractor's or material supplier's work on the contract; anticipated claims or assessments of third parties not a party related to the contract or subcontract; asserted claims or assessments of third parties that are not authorized by court order, administrative tribunal, or statute. "Reasonable cause" further does not include the withholding, offset, or reduction of payment, in whole or in part, due to the assessment of liquidated damages or penalties assessed by the Department of Transportation against the contractor, unless the subcontractor's performance or supplied materials were the sole and proximate cause of the liquidated damage or penalty.
(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18; 100-863, eff. 8-14-18; 101-524, eff. 1-1-20.)
 
(30 ILCS 540/8)
Sec. 8. Vendor Payment Program.
(a) As used in this Section:
(b) This Section reflects the provisions of Section 900.125 of Title 74 of the Illinois Administrative Code prior to January 1, 2018. The requirements of this Section establish the criteria for participation by participating vendors and qualified purchasers in a Vendor Payment Program. Information regarding the Vendor Payment Program may be found at the Internet website for the Department of Central Management Services.
(c) The Department of Central Management Services is authorized to establish and implement the Program under Section 3-3. This Section applies to all qualified accounts receivable not otherwise excluded from receiving prompt payment interest under Section 900.120 of Title 74 of the Illinois Administrative Code. This Section shall not apply to the purchase of any accounts receivable related to payments made under a medical assistance program, including Medicaid payments, or any other purchase of accounts receivable that is otherwise prohibited by law.
(d) Under the Program, qualified purchasers may purchase from participating vendors certain qualified accounts receivable owed by the State to the participating vendors. A participating vendor shall not simultaneously apply to sell the same qualified account receivable to more than one qualified purchaser. In consideration of the payment of the purchase price, a participating vendor shall assign to the qualified purchaser all of its rights to payment of the qualified account receivable, including all current and future prompt payment penalties due to that qualified account receivable in accordance with this Act.
(e) A vendor may apply to participate in the Program if:
(f) The Department shall review and approve or disapprove each applicant seeking a qualified purchaser designation. Factors to be considered by the Department in determining whether an applicant shall be designated as a qualified purchaser include, but are not limited to, the following:
(g) Each qualified purchaser's performance and implementation of its obligations under subsection (f) shall be subject to review by the Department and the State Comptroller at any time to confirm that the qualified purchaser is undertaking those obligations in a manner consistent with the terms and conditions of the Program. A qualified purchaser's failure to so perform its obligations including, without limitation, its obligations to diligently pursue receipt of assigned penalties associated with assigned receivables, shall be grounds for the Department and the State Comptroller to terminate the qualified purchaser's participation in the Program under subsection (i). Any such termination shall be without prejudice to any rights a participating vendor may have against that qualified purchaser, in law or in equity, including, without limitation, the right to enforce the terms of the assignment agreement and of the Program against the qualified purchaser.
(h) In determining whether any applicant shall be designated as a qualified purchaser, the Department shall have the right to review or approve sub-participants that intend to purchase assigned receivables, directly or indirectly, by or through the applicant. The Department reserves the right to reject or terminate the designation of any applicant as a qualified purchaser or require an applicant to exclude a proposed sub-participant in order to become or remain a qualified purchaser on the basis of a review, whether prior to or after the designation. Each applicant and each qualified purchaser has an affirmative obligation to promptly notify the Department of any change or proposed change in the identity of the sub-participants that it disclosed to the Department no later than 3 business days after that change. Each sub-participant shall be required to execute a sub-participant certification that will be attached to the corresponding qualified purchaser designation. Sub-participants shall meet, at a minimum, the requirements of paragraphs (2), (3), (10), and (11) of subsection (f).
(i) The Program, as codified under this Section, shall continue until terminated or suspended as follows:
If the Program, a qualified purchaser, or a sub-participant is terminated or suspended under paragraph (1) or (2) of this subsection (i), the Program, qualified purchaser, or sub-participant may be reinstated only by written agreement of the State Comptroller and the Department. No termination or suspension under paragraph (1), (2), or (3) of this subsection (i) shall alter or affect the qualified purchaser's or sub-participant's obligations with respect to assigned receivables purchased by or through the qualified purchaser prior to the termination.

(Source: P.A. 101-81, eff. 7-12-19; 102-291, eff. 8-6-21.)
 
(30 ILCS 540/9)
Sec. 9. Vendor Payment Program financial backer disclosure.
(a) Within 60 days after August 24, 2018 (the effective date of Public Act 100-1089), at the time of application, and annually on August 1 of each year for the previous fiscal year, each qualified purchaser shall submit to the Department and the State Comptroller the following information about each person, director, owner, officer, association, financial backer, partnership, other entity, corporation, or trust with an indirect or direct financial interest in each qualified purchaser:
(b) Within 60 days after August 24, 2018 (the effective date of Public Act 100-1089), at the time of application, and annually on August 1 of each year for the previous fiscal year, each trust associated with the qualified purchaser shall submit to the Department and the State Comptroller the following information:
(c) Each qualified purchaser must submit a statement to the State Comptroller and the Department of Central Management Services disclosing whether such qualified purchaser or any related person, director, owner, officer, or financial backer has previously or currently retained or contracted with any registered lobbyist, lawyer, accountant, or other consultant to prepare the disclosure required under this Section.

(Source: P.A. 102-291, eff. 8-6-21.)
 
(30 ILCS 540/10)
Sec. 10. Vendor Payment Program audit. The Office of the Auditor General shall perform a performance audit of the Program established under Section 8. The audit shall include, but not
be limited to, a review of the administration of the Program and compliance with requirements
applicable to participating vendors, qualified purchasers, qualified accounts receivable, and
financial backer disclosures. The audit shall cover the Program's operations for fiscal years 2019 and 2020. Upon its completion and release, the Auditor General's report shall be posted on the Internet website of the Auditor General.

(Source: P.A. 100-1089, eff. 8-24-18.)
 
(30 ILCS 540/11)
Sec. 11. Vendor Payment Program accountability portal. The Department of Central Management Services and the State Comptroller shall publish on their respective Internet websites: (1) the monthly report information submitted under paragraph 9 of subsection (f) of Section 8; and (2) the information required to be submitted under Section 9.

(Source: P.A. 100-1089, eff. 8-24-18.)

Structure Illinois Compiled Statutes