More Hurdles for Subcontractors that Perform Work on Public Contracts
In August, the Illinois State legislature enacted an amendment to the Public Construction Bond Act (the "Act"), the substance of which amounts to nothing more than an additional burden for the unwary or unsophisticated subcontractor that provides labor and/or materials under a contract with the State (or one of its political subdivisions).
Prior to the amendment, a subcontractor, in order to maintain its right to sue, was only required to file a verified notice of the action with the "officer, board, bureau or department awarding the contract" within 180 days of the date on which the last item of work was performed or material was furnished by the subcontractor and also provide a copy of the same verified notice to its contractor within 10 days of filing the notice with the State.
Public Act 97-0487 amended Section 2 of the Act by including an additional notice requirement for all actions brought to recover for performance and/or labor that has gone unpaid. Now, in addition to the preceding requirements, a subcontractor must file the same verified notice with the "Clerk or Secretary" of the same political subdivision within 180 days of the date on which the last item of work was performed or material was furnished by the subcontractor and also provide a copy of the same verified notice to its contractor within 10 days of filing the notice with the Clerk or Secretary.
The Act was further amended to require all notices to include a brief description of the subcontractor's contract, the work performed by the subcontractor and the amount due and unpaid as of the date of the notice.
The final substantive amendment to the Act extended the limitations period for all actions. Prior to the amendment, all actions had to be brought no earlier than 120 days after the date on which the last item of work was performed or material was furnished by the subcontractor and no later than six months from the same date. The Act now requires all actions to be filed no later than one year after the date on which the last item of work was performed or material was furnished by the subcontractor.
Nothing within the text of the amendment sheds light on the legislature's intent in passing this amendment. As of the date of this article, neither the House nor Senate transcripts pertinent to debate of the amendment were available. Regardless, the amendment can be interpreted as nothing more than additional hurdles to trap subcontractors and allow the State to avoid paying for services and/or labor received. The additional notices are to be directed to the same entities; both the political subdivision and the contractor will now each receive two copies of the notice with the only difference being the addressee. The extension of the limitations period, while seemingly a benefit, is immaterial if a subcontractor fails to comport with the duplicative notice requirements.
The amendment to the Act becomes effective on January 1, 2012. Subcontractors planning to perform under contracts for public improvement projects would be wise to become familiar with the statute's new obligations and revise their notice documents accordingly well in advance of the new year.
