Amd §§179-q, 179-s, 179-u, 179-v, 179-z, 179-aa, 179-ee & 179-f, rpld §179-v sub 7, St Fin L
Relates to provisions governing contracting between state agencies and not-for-profit organizations including new, renewal, and extension contracts and advance payments and interest for such contracts; repeals provisions relating to interest payments.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7616
SPONSOR: Paulin TITLE OF BILL:
An act to amend the state finance law, in relation to contracting
between state agencies and not-for-profit organizations; and to repeal
subdivision 7 of section 179-v of such law relating thereto
PURPOSE:
To make changes to the Prompt Contracting Law that would help address
nonprofits' largest challenges with state funding.
SUMMARY OF PROVISIONS:
Section one amends subdivision 9 and 14 of section 179-q of the state
finance law to ensure the definition of "renewal contracts" include any
new contracts between an NFP and state agency providing similar or the
same services as were provided under a previously approved contract.
Further this section requires the "written directive" to include a sche-
dule for submission of invoices for work completed by the NFP and agen-
cy's scheduled paymeht dates for submitted invoices.
Section two amends subdivision 1 of section 179-s of the state finance
law to require the written directive provide a schedule and procedure
for the NFP to receive payment for work performed, including a schedule
under which the NFP can expect payment. This section further clarifies
that all late payments are subject to interest pursuant to 179-v.
Section 3 amends section 179-u of the state finance law to require a
state agency to provide, within 30 days of executing the contract, an
automatic advance payment of an amount equal to 25 percent of the total
contract award and specifies recoupment process for such advances.
Further, this section states if the full execution of a contract is
delayed more than 30 days, the state agency shall provide the NFP with
an automatic advance payment of an amount equal to 25 percent of the
total contract award and requires the state agency to provide additional
advance payments when the full execution of the contract is delayed at
quarterly intervals until the contract is fully executed.
Section 4 repeals subdivision 7 of section 179-v of the state finance
law and amends subdivisions 1 and 2 to expand the instances when an NFP
would be entitled to interest payments. Further provides an NFP shall
receive interest payments at a rate equal to the current prime interest
rate, such rate shall be communicated to the comptroller and all state
agencies by the Commissioner of Taxation and Finance. Subdivision 5
amends section 179-z of the state finance law to require the
instructions on how to access the not-for-profit short-term revolving
loan funds be provided to every NFP that received a written directive,
contract, or renewal contract from a state agency. Also requires such
instructions to be conspicuously posted on the websites of the state
comptroller and NYS Nonprofit Unit.
Section 6 of the bill amends section 179-aa of the state finance law to
require the not-for-profit contracting advisory committee to addi-
tionally advise the legislature and attorney general on the implementa-
tion and operation of the prompt contracting law. Further requires the
committee to make reports available on the NYS Nonprofit Unit website.
Section 7 amends section 179-ee of the state finance law to state any
contract modifications that do not require comptroller review shall be
approved within 30 days and any modifications that require comptroller
review to be approved within 60 days. Failure by the agency to respond
to a request for modification within such timeframes shall be deemed an
approval of the proposed modification.
Section 8 amends section 179-f of the state finance law to state law to
say if an NFP presents an invoice of a subcontractor as proof of cost
for goods or services and may pay subcontractor upon receipt of payment
on the invoice or voucher by the agency, proof of such payment by the
NFP to the subcontractor shall be provided by the contractor to the
state agency within 30 days of the receipt of the voucher payment
Section 9 provides the effective date.
JUSTIFICATION:
New York State has long contracted with nonprofits to provide critical
services in communities throughout the state - from early childhood
education and mental health services to homeless housing programs and
substance abuse treatment. These social safety net services are provided
as an "extension of the state" to millions of New Yorkers'every day.
But delays in receiving funds to provide such services and a cumbersome
contractual process have long challenged nonprofits. A recent statewide
survey of nonprofits found that 33% of those awarded state funds
reported being owed more than $58 million in payments by New York State
for services already delivered. Using these findings for all contracts
held by nonprofits, New York State owes nonprofits an estimated $650
million statewide.
Delays in reimbursement regularly last months and can last more than a
year - and result in nonprofits financing New York State government.
Nonprofits are often forced to pay interest on credit lines so they can
make payroll while waiting for reimbursement by New York state - inter-
est that is not reimbursed by the state.
Addressing these challenges is particularly critical now, as an increas-
ing number of nonprofits report they are struggling financially: in a
recent survey among the New York Council of Nonprofit's 3,100 members,
the statewide organization found that 65% said they are concerned about
funding basic operations in 2025, up from 62% the year before. These
financial struggles are also directly impacting agencies' ability to
recruit and retain staff to deliver services, a problem that is being
further compounded by funding cuts (and the further threat of funding
cuts) to nonprofit services providers at the federal level.
This bill seeks to make changes to the Prompt Contracting Law that would
help to address nonprofits' largest challenges with state funding. Those
changes include clarifying language in the existing law, expanding the
use of written directives, mandating and increasing the interest rate on
late state payments and more., Similarly, clarifying, standardizing, and
streamlining these processes will benefit the state agencies that proc-
ess these contracts. The law is written in a manner that will ensure
continued integrity within the contracting process.
LEGISLATIVE HISTORY:
New Bill.
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the 180th day after it shall have become a
law.
