NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2740B
SPONSOR: Paulin TITLE OF BILL:
An act to amend the state finance law, in relation to state agency
contracts with not-for-profit corporations
PURPOSE:
To ensure a timely procurement process for not-for-profits contracting
with the state
SUMMARY OF PROVISIONS:
Section one of the bill amends section 179-q of the state finance law to
define "noncompliant state agency"
Section two of the bill amends section 179-t of the state finance law to
specify what categories a state agency as noncompliant with prompt
contracting law.
Section three amends section 179-bb of the state finance law by provid-
ing steps a noncompliant state agency would be required to take, includ-
ing reporting.
Section four amends the definition of written directive. Section five
provides the effective date.
JUSTIFICATION:
New York State often outsources crucial programs to not-for-profits,
like early childhood education programs, mental health counseling, and
shelter for the homeless. The state relies on the important work not-
for-profits do because without them, these vital programs may not exist.
However, not-for-profit organizations contracting with the state have
repeatedly expressed concerns with the timeliness, or lack thereof, of
the current contract and procurement process in New York State for
years. In an effort to address these concerns, the state enacted the
Prompt Contracting Law in 1991 to help expedite contracts and reduce the
fiscal stress on not-for-profits. Thirty years later, the problem
persists and not-for-profits are facing immense financial hardships as a
result.
In May of 2020, the Office of the NYS Comptroller released their "Not-
For-Profit Prompt Contracting Annual Report" that found 50* of contracts
in 2019 had not been, approved until, after the start date of such
contracts compared to 47% of contracts in 2018. A not-for-profit cannot
receive payment from the state until the contract is formally approved
by the state comptroller. So, while not-for-profits are required to
start providing services by the start date of their contracts, the state
is not required to pay them within the same time-frame.
In order for the not-for-profits to begin their work, they often have to
take out lines of credit to get by in the meantime. The May 2020 NYS
Comptroller report states, "the failure of the state agencies to process
contracts on time harms not-for-profit service providers, which in turn
erodes service delivery to vulnerable populations." The report recom-
mends "state agencies should take responsibility for their critical
roles, and make prompt contracting a priority."
PRIOR LEGISLATIVE HISTORY:
A.9741a of 2022, referred to governmental operations. Same as, 5.8792 of
2022, passed senate.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
2740--B
2023-2024 Regular Sessions
IN ASSEMBLY
January 27, 2023
___________
Introduced by M. of A. PAULIN, WALLACE, SIMONE, SIMON, LAVINE, RAGA,
HEVESI, LEVENBERG, SAYEGH, BURDICK, SHIMSKY, OTIS, BURGOS, GIBBS,
TAYLOR, ZACCARO, DAVILA, McDONALD -- read once and referred to the
Committee on Governmental Operations -- recommitted to the Committee
on Governmental Operations in accordance with Assembly Rule 3, sec. 2
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee -- reported and referred to the
Committee on Codes -- reported and referred to the Committee on Ways
and Means -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the state finance law, in relation to state agency
contracts with not-for-profit corporations
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 179-q of the state finance law is amended by adding
2 a new subdivision 15 to read as follows:
3 15. "Noncompliant state agency" means a state agency that has failed
4 to execute certain contracts within required time frames.
5 § 2. Section 179-t of the state finance law is amended by adding a new
6 subdivision 4-a to read as follows:
7 4-a. A state agency shall be deemed to be noncompliant if, for six of
8 the last twelve preceding months, it has (a) failed to submit any
9 renewal contracts to the attorney general within the time frame required
10 by subdivision four of this section when not-for-profit organizations
11 are parties to such contracts and a written directive has been issued,
12 (b) failed to submit any renewal contracts to the attorney general prior
13 to commencement when not-for-profit organizations are parties to such
14 contracts, and/or (c) in any other manner failed to fully execute a
15 contract before its start date.
16 § 3. Section 179-bb of the state finance law is amended by adding a
17 new subdivision 4 to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05711-04-4
A. 2740--B 2
1 4. (a) A noncompliant state agency shall prepare and transmit to the
2 office of the state comptroller, by the end of every month for which it
3 is noncompliant, a report addressing those renewal contracts which have
4 not been submitted to the attorney general within the time frame
5 required by subdivision four of section one hundred seventy-nine-t of
6 this article. In addition, such agency shall provide notification
7 regarding the submission of such report to the not-for-profit organiza-
8 tion it is contracting with. Such report shall (i) describe the
9 contracts that have not been submitted, (ii) detail the reasons the
10 contract has not been submitted, (iii) detail the steps the agency is
11 taking to submit and fully execute the contract, and (iv) provide an
12 estimate of when it shall submit and fully execute the contract. The
13 agency shall also make such reports publicly accessible on its website.
14 (b) Within six months of becoming a noncompliant state agency, such
15 agency shall prepare and transmit to the office of the state comp-
16 troller, the temporary president of the senate, and the speaker of the
17 assembly, a report describing its efforts to become compliant with the
18 requirements of section one hundred seventy-nine-t of this article. Such
19 report shall describe in detail efforts to revise internal policies and
20 procedures, identify bottlenecks and other barriers to efficient
21 contracting, retrain staff and management, incorporate improved manage-
22 ment practices, reform procurement processes, and any other factor which
23 will enable the agency to meet the requirements of section one hundred
24 seventy-nine-t of this article as related to not-for-profit organiza-
25 tions. The agency shall also prepare and deliver updated reports every
26 six months after the delivery of the first report describing the
27 progress it has made. Such reports shall also be posted on the agency's
28 website.
29 § 4. Subdivision 14 of section 179-q of the state finance law, as
30 added by chapter 166 of the laws of 1991, is amended to read as follows:
31 14. "Written directive" means a written request by a state agency to a
32 not-for-profit organization authorizing such organization either to
33 begin providing services during the negotiation of a contract or to
34 continue providing services during the negotiation of a renewal
35 contract. All written directives shall state that payment for the
36 services provided is subject to the availability of appropriations[,
37 execution of either the contract or renewal contract, and approval of
38 the contract or renewal contract by the comptroller and the attorney
39 general]. All written directives shall also include the state's payment
40 schedule, which will remain in effect until a contract is approved. Any
41 late payments from the state based on the schedule will be subject to
42 interest.
43 § 5. This act shall take effect immediately.
