Current through Register Vol. 48, No. 12, March 22, 2024
The requirements set forth in this Section establish the
criteria for participation by participating vendors and qualified purchasers in
a vendor payment program. Information regarding the program may be found at
http://www.payments.illinois.gov.
a)
Authority. The State Comptroller and the Department are authorized to establish
and implement the program pursuant to Section 3-3 of the Prompt Payment
Act.
b) Applicability. This Section
applies to all qualified accounts receivable not otherwise excluded from
receiving prompt payment interest pursuant to Section
900.120.
Section
900.125
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.
c) Definitions
"Applicant" is any entity seeking to be designated as a
qualified purchaser.
"Application Period" is the time period when the program is
accepting applications as determined by the Department.
"Assigned Penalties" are penalties payable by the State in
accordance with the Prompt Payment Act and this Part that are assigned to the
qualified purchaser of an assigned receivable.
"Assigned Receivable" is the base invoice amount of a qualified
account receivable and any associated assigned penalties due, currently and in
the future, in accordance with the Prompt Payment Act.
"Assignment Agreement" is an agreement executed and delivered
by a participating vendor and a qualified purchaser pursuant to which the
participating vendor will assign one or more qualified accounts receivable to
the qualified purchaser and make certain representations and warranties in
respect thereof.
"Base Invoice Amount" is the unpaid principal amount of the
invoice associated with an assigned receivable.
"Department" is the Department of Central Management
Services.
"Medical Assistance Program" is any program which provides
medical assistance pursuant to Article V of the Illinois Public Aid Code [305
ILCS 5/5 ], including Medicaid.
"Participating Vendor" is a vendor whose application for the
sale of a qualified account receivable is accepted for purchase by a qualified
purchaser pursuant to the program terms.
"Program" is a vendor payment program.
"Prompt Payment Act" is the State Prompt Payment Act [30 ILCS
540 ].
"Prompt Payment Penalties" are penalties payable by the State
in accordance with the Prompt Payment Act and this Part.
"Purchase Price" is 100% of the base invoice amount associated
with an assigned receivable minus:
* any deductions against the assigned receivable arising from
State offsets; and
* if and to the extent exercised by a qualified purchaser,
other deductions for amounts owed by the participating vendor to the qualified
purchaser for State offsets applied against other accounts receivable assigned
by the participating vendor to the qualified purchaser pursuant to the
program.
"Qualified Account Receivable" is an account receivable due and
payable by the State that is outstanding for 90 days or more, is eligible to
accrue prompt payment penalties under the Prompt Payment Act and is verified by
the relevant State agency. A qualified account receivable shall not include any
account receivable related to medical assistance program (including Medicaid)
payments or any other accounts receivable, the transfer or assignment of which
is prohibited by, or otherwise prevented by, applicable law.
"Qualified Purchaser" is any entity that, during any
application period, is approved by the Department to participate in the program
on the basis of certain qualifying criteria as determined by the
Department.
"State" is the State of Illinois.
"State Comptroller" is the Illinois Office of the
Comptroller.
"State Offsets" is any amount deducted from payments made by
the State in respect of any qualified account receivable due to the State's
exercise of any offset or other contractual rights against a participating
vendor. For the purpose of this Section, State offsets include statutorily
required administrative fees imposed pursuant to the State Comptroller Act [15
ILCS 405 ].
"Sub-Participant" is any individual or entity that intends to
purchase assigned receivables, directly or indirectly, by or through an
applicant or qualified purchaser for the purposes of the program.
"Sub-Participant Certification" is an instrument executed and
delivered to the Department by a sub-participant pursuant to which the
sub-participant certifies its agreement, among others, to be bound by the terms
and conditions of the program as a condition to its participation in the
program as a sub-participant.
d) Criteria for a vendor payment program.
1) 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.
2) 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 relating to that qualified account receivable in accordance with
the Prompt Payment Act.
e) Criteria for vendor participation. A
vendor may apply to participate in the program if:
1) the vendor is owed an account receivable
by the State for which prompt payment penalties have commenced
accruing;
2) the vendor's account
receivable is eligible to accrue prompt payment penalty interest under the
Prompt Payment Act;
3) the vendor's
account receivable is not for payments under a medical assistance program;
and
4) the vendor's account
receivable is not prohibited by, or otherwise prevented by, applicable law from
being transferred or assigned pursuant to this Section.
f) Criteria for qualified purchasers. Factors
to be considered by the Department in determining qualification to be a
qualified purchaser shall include but are not limited to:
1) the qualified purchaser's agreement to
commit a minimum purchase amount as established from time to time by the
Department based upon the current needs of the program and the qualified
purchaser's demonstrated ability to fund its commitment;
2) the demonstrated ability of a qualified
purchaser's sub-participants to fund their portions of a qualified purchaser's
minimum purchase commitment;
3) the
ability of a qualified purchaser and its sub-participants to meet standards of
responsibility substantially in accordance with the requirements of the
Standards of Responsibility found in 44 Ill. Adm. Code
1.2046(b)
(Government Contracts, Procurement, and Property Management);
4) the agreement of each qualified purchaser,
at its sole cost and expense, to administer and facilitate the operation of the
program with respect to that qualified purchaser, including without limitation,
assisting potential participating vendors with the application and assignment
process;
5) the agreement of each
qualified purchaser, at its sole cost and expense, to establish a website that
is determined by the Department to be sufficient to administer the program in
accordance with the terms and conditions of the program;
6) the agreement of each qualified purchaser,
at its sole cost and expense, to market the program to potential participating
vendors;
7) the agreement of each
qualified purchaser, at its sole cost and expense, to educate participating
vendors about the benefits and risks associated with participation in the
program;
8) the agreement of each
qualified purchaser, at its sole cost and expense, to deposit funds into,
release funds from, and otherwise maintain all required accounts in accordance
with the terms and conditions of the program. Subject to the program terms, all
required accounts shall be maintained and controlled by the qualified purchaser
at the qualified purchaser's sole cost and at no cost, whether in the form of
fees or otherwise, to the participating vendors;
9) the agreement of each qualified purchaser,
at its sole cost and expense, to submit a monthly written report, in both hard
copy and Excel format, to the State Comptroller or its designee and the
Department or its designee, within 10 days after the end of each month, which,
unless otherwise specified by the Department, at a minimum, shall contain:
A) a listing of each assigned receivable
purchased by that qualified purchaser during the month, specifying the base
invoice amount and invoice date of that assigned receivable and the name of the
participating vendor, State contract number, voucher number and State agency
associated with that assigned receivable;
B) a listing of each assigned receivable with
respect to which the qualified purchaser has received payment of the base
invoice amount from the State during that month, including the amount of and
date on which that payment was made and the name of the participating vendor,
State contract number, voucher number, and State agency associated with the
assigned receivable, and identifying the relevant application period for each
assigned receivable;
C) a listing
of any payments of assigned penalties received from the State during the month,
including the amount of and date on which the payment was made, the name of the
participating vendor, the voucher number for the assigned penalty receivable,
and the associated assigned receivable, including the State contract number,
voucher number and State agency associated with the assigned receivable and
identifying the relevant application period for each assigned
receivable;
D) the aggregate number
and dollar value of assigned receivables purchased by the qualified purchaser
from the date on which such qualified purchaser commenced participating in the
program through the last day of the month;
E) the aggregate number and dollar value of
assigned receivables purchased by the qualified purchaser for which no payment
by the State of the base invoice amount has yet been received, from the date on
which the qualified purchaser commenced participating in the program through
the last day of the month; and
F)
such other data as the State Comptroller and the Department may reasonably
request from time to time.
10) the agreement of each qualified purchaser
to use its reasonable best efforts, and for any sub-participant to cause a
qualified purchaser to use its reasonable best efforts, to diligently pursue
receipt of assigned penalties associated with the assigned receivables,
including, without limitation, by promptly notifying the relevant State agency
that an assigned penalty is due and, if necessary, seeking payment of assigned
penalties through the Illinois Court of Claims; and
11) the agreement of each qualified purchaser
and any sub-participant to use their reasonable best efforts to implement the
program terms and to perform their obligations under the program in a timely
fashion.
g) Right to
review performance of qualified purchaser's obligations.
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 such 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 in accordance with
subsection (i) of this Section. 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) Right to
Review Sub-Participants.
1) 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.
2) 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.
3) 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.
4) Each sub-participant
shall be required to execute a sub-participant certification that will be
attached to the corresponding qualified purchaser designation.
5) Sub-participants shall meet, at a minimum,
the requirements of subsections (f)(2), (3), (10), and (11).
i) Term and termination.
1) The program shall commence in March 2011
and shall continue until terminated:
A) by
the State Comptroller, after consulting with the Department, by giving 10 days
prior written notice to the Department and the qualified purchasers in the
program;
B) by the Department,
after consulting with the State Comptroller, by giving 10 days prior written
notice to the State Comptroller and the qualified purchasers in the
program.
2) In the event
a qualified purchaser or sub-participant breaches or fails to meet any of the
terms or conditions of the program, that qualified purchaser or sub-participant
may be terminated from the program:
A) by the
State Comptroller, after consulting with the Department. The termination shall
be effective immediately upon the State Comptroller giving written notice to
the Department and the qualified purchaser or sub-participant; or
B) by the Department, after consulting with
the State Comptroller. The termination shall be effective immediately upon the
Department giving written notice to the State Comptroller and the qualified
purchaser or sub-participant.
3) A qualified purchaser or sub-participant
may terminate its participation in the program, solely with respect to its own
participation in the program, in the event of any change to the Prompt Payment
Act or this Part from the form that existed on the date that the qualified
purchaser or the sub-participant, as applicable, submitted the necessary
documentation for admission into the program if the change materially and
adversely affects the qualified purchaser's or the sub-participant's ability to
purchase and receive payment on receivables on the terms described in this
Section.
4) If the program, a
qualified purchaser, or a sub-participant is terminated under subsection (i)(1)
or (2), the program, qualified purchaser, or sub-participant may be reinstated
only by written agreement of the State Comptroller and the
Department.
5) No termination under
subsections (i)(1), (2), or (3) 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.