Bill Text: IL SR0541 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Urges all stakeholders and policymakers to collaborate and consider how to best upgrade public works law in 2024 from retention's across-the-board, capital-draining policy of taking money from all contractors on all projects to a more efficient, nuanced, and tailored approach that protects agencies without forcing cash-strapped contractors to go into debt by providing no interest loans to their government. clients

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced) 2023-10-25 - Added as Co-Sponsor Sen. Emil Jones, III [SR0541 Detail]

Download: Illinois-2023-SR0541-Introduced.html

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SR0541 LRB103 34974 ECR 64868 r
SENATE RESOLUTION
WHEREAS, State law forces contractors who do construction
for government agencies to lend money back to their government
clients at a zero percent interest rate pursuant to retention
laws; and
WHEREAS, Under retention laws, for every pay period after
the project bill is approved, the government agency pays only
90% of the bill; and
WHEREAS, The government agency keeps 10% of the bill,
which is known as the retention or retainage; and
WHEREAS, The government agency will pay back this forced
loan months or even years after the contractor has performed
the work and paid for all the supplies and labor required; and
WHEREAS, The forced loan of retainage has an enormous
impact on contractors' ability to grow; and
WHEREAS, Instead of improving access to capital, the
retention law drains capital from employers; and
WHEREAS, Defenders of retention laws argue that without
the leverage of keeping the contractors in debt from the costs

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they have incurred for doing the approved work for agencies,
the agencies wouldn't be able to require contractors to
perform to the agencies' satisfaction; and
WHEREAS, Agencies have many other tools to manage
contractors, including, but not limited to, their existing
vigorous approval and verification process for every pay
period or invoice, liquidated damages clauses if a contractor
doesn't perform, warranties on all work performed by
contractors, and a more nuanced contract for those few
circumstances where the quality of the work needs to be
verified later; and
WHEREAS, Retention takes 10% of the contract value from
all contractors as a forced loan from everyone, whether the
subcontractor simply delivered materials or the prime
contractor is working on a complicated project that needs some
later examination; and
WHEREAS, Under State law, this forced loan drops to 5% of
the contract value halfway through the project until close
out, a paperwork exercise that can take months after the work
is performed; and
WHEREAS, Sometimes, government agencies are understaffed
and aren't able to close out a project in a reasonable period

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of time, or some required paperwork isn't in from one vendor,
leading all the contractors to suffer with a forced loan until
the agency is satisfied; and
WHEREAS, Retention is a punishing, blunt, and expensive
policy; and
WHEREAS, Subcontractors will regularly and successfully
complete major work, fronting all the money for supplies and
labor, only to be caught waiting for the prime contractor to
pay out while they muddle through a retention dispute with a
government agency, putting the subcontractor in debt;
therefore, be it