STATE OF NEW YORK ________________________________________________________________________ 7001 2025-2026 Regular Sessions IN SENATE March 28, 2025 ___________ Introduced by Sen. MAYER -- read twice and ordered printed, and when printed to be committed to the Committee on Procurement and Contracts 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 The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivisions 9 and 14 of section 179-q of the state finance 2 law, as added by chapter 166 of the laws of 1991, are amended to read as 3 follows: 4 9. "Renewal contract" means the documents necessary to continue in 5 effect an existing contract between a state agency and not-for-profit 6 organization, including any simplified contract documents in a form 7 approved by the office of the state comptroller. "Renewal contract" 8 shall also include any new contract between a state agency and a not- 9 for-profit organization to provide the same or similar services as were 10 provided by such not-for-profit organization to the state agency under a 11 previously approved contract. Similar services are services that are 12 comparable to those provided in a prior executed contract from the same 13 agency. 14 14. "Written directive" means a written request by a state agency to a 15 not-for-profit organization authorizing such organization either to 16 begin providing services during the negotiation of a contract or to 17 continue providing services during the negotiation of a renewal 18 contract. All written directives shall include a schedule for 19 submission of invoices for work completed by the not-for-profit organ- 20 ization and the state agency's scheduled payment dates for submitted 21 invoices. All written directives shall state that payment for the 22 services provided is subject to the availability of appropriations, 23 execution of either the contract or renewal contract, and approval of 24 the contract or renewal contract by the comptroller and the attorney EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10809-02-5
S. 7001 2 1 general. All written directives shall also include instructions on how 2 to access the not-for-profit short-term revolving loan fund pursuant to 3 section one hundred seventy-nine-z of this article. 4 § 2. Subdivision 1 of section 179-s of the state finance law, as added 5 by chapter 166 of the laws of 1991, is amended and a new subdivision 4 6 is added to read as follows: 7 1. A state agency shall have not more than one hundred fifty days 8 following the latest date on which any of the appropriations covered by 9 the program plan become law to execute contracts with not-for-profit 10 organizations pursuant to the program plan. Upon execution of each 11 contract by the state agency and the not-for-profit organization, the 12 contract shall immediately be delivered to the attorney general for 13 approval. The attorney general shall within fifteen days of receipt 14 either approve such contract or disapprove and return the contract to 15 the state agency with reasons therefor. Upon approval, the contract 16 shall be delivered to the comptroller who shall within fifteen days of 17 receipt either approve and file such contract or disapprove and return 18 the contract to the state agency with [his] such comptroller's reasons 19 therefor. 20 4. When a state agency deems it necessary for a not-for-profit organ- 21 ization to commence the provision of services prior to full execution of 22 a new, renewal, or extension contract and issues a written directive to 23 the not-for-profit organization requesting the commencement of such 24 services, the written directive shall provide a schedule and procedure 25 for the not-for-profit organization to receive payment for work 26 performed, including a commencement date for services that the state 27 agency is requesting, a schedule and procedure for the not-for-profit 28 organization to submit invoices to the state agency for work performed, 29 and a schedule under which the not-for-profit organization can expect 30 payment from the state agency. All late payments shall be subject to 31 interest pursuant to section one hundred seventy-nine-v of this article. 32 § 3. Section 179-u of the state finance law, as added by chapter 166 33 of the laws of 1991, is amended to read as follows: 34 § 179-u. Advance payments. 1. When a state agency administering a 35 contract enters a new, renewal or extension contract with a not-for-pro- 36 fit organization, the agency shall provide within thirty days of execut- 37 ing the contract an automatic advance payment of an amount equal to 38 twenty-five percent of the total award to cover expenses incurred and 39 services provided in the first quarter. Recoupment of such advances 40 shall be recovered in the final quarter of the contract through a recon- 41 ciliation with the final voucher of the contract. If the total amount 42 submitted in the voucher for the final quarter of the contract is less 43 than the advance payment, the not-for-profit organization shall return 44 the amount of the difference between the advance and the final voucher 45 to the agency within ninety days of the end of the contract. 46 2. When a state agency administering a contract shall advise the not- 47 for-profit organization of the agency's intention to renew the contract, 48 the not-for-profit organization[, may] shall, upon receipt of a written 49 directive, be entitled to an advance payment of an amount equal to twen- 50 ty-five percent of the total award to cover expenses incurred and 51 services provided in the first quarter pending execution of the renewal 52 contract if such contract is not fully executed by the commencement date 53 of the succeeding contract; the written directive shall specifically set 54 forth the dollar amount and the period of time covered by the advance 55 payment. Such advance payment shall offset future payments due to the 56 organization for services provided during the term of the prospective
S. 7001 3 1 renewal contract and shall not exceed the maximum contract amount set 2 forth in said renewal contract. If the contract has not yet been 3 executed by the end of each subsequent quarter, then additional advances 4 equal to twenty-five percent of the total award shall be made within 5 fourteen days of the commencement of each subsequent quarter. 6 [2.] 3. A state agency providing an advance of an amount equal to 7 twenty-five percent of the total award payment pursuant to subdivision 8 one of this section shall submit a written directive, a voucher and such 9 other documents as may be required to the comptroller for approval. 10 4. When the full execution of a contract is delayed more than thirty 11 calendar days, the state agency shall provide the not-for-profit organ- 12 ization with a written directive along with an automatic advance payment 13 of an amount equal to twenty-five percent of the total award to cover 14 expenses incurred and services provided in the first quarter. The not- 15 for-profit organization may request, and the agency shall provide, addi- 16 tional advance payments when the full execution of a contract is 17 delayed, at quarterly intervals, until such time the contract is fully 18 executed. The written directive shall specifically set forth the dollar 19 amount and the period of time covered by the advance payment of an 20 amount equal to twenty-five percent of the total award. Such advance 21 payment shall offset future payments due to the organization for 22 services provided during the term of the prospective renewal contract 23 and shall not exceed the maximum contract amount set forth in the 24 renewal contract. 25 § 4. Subdivision 7 of section 179-v of the state finance law is 26 REPEALED and subdivisions 1 and 2, as added by chapter 166 of the laws 27 of 1991, are amended to read as follows: 28 1. A not-for-profit organization shall be entitled to interest 29 payments pursuant to this section: (a) on those moneys that would be due 30 under the terms of the contract [or], extension contract, renewal 31 contract or written directive from the scheduled commencement date or 32 the date the organization begins to provide services, whichever is 33 later, until the date the payment is made under the contract [or], 34 extension contract, renewal contract or written directive; or (b) if a 35 not-for-profit organization borrows funds to provide services pursuant 36 to a contract, extension contract, renewal contract or written directive 37 by a state agency, provided however that a not-for-profit organization 38 may only receive interest payments on such funds when such not-for-pro- 39 fit organization [has received a written directive but has been denied 40 payment pursuant to section one hundred seventy-nine-u of this article 41 or] did not obtain a loan from the not-for-profit short-term revolving 42 loan fund. All interest due and owing shall be paid in full with the 43 first payment made to a not-for-profit organization under a contract, 44 extension contract or renewal contract. 45 2. Such organizations shall receive such interest payments at a rate 46 equal to the [rate set by the commissioner of taxation and finance for 47 corporate taxes pursuant to paragraph one of subsection (e) of section 48 one thousand ninety-six of the tax law] current prime interest rate. 49 The commissioner of taxation and finance, on a quarterly basis, shall 50 communicate the current prime interest rate in effect to the comptroller 51 and all state agencies and not-for-profit organizations currently under 52 contract, extension contract, renewal contract, or written directive. 53 The commissioner of taxation and finance shall also publish the current 54 applicable prime interest rate prominently on the department of taxation 55 and finance's website. In order for a state agency to approve 56 reimbursement of a not-for-profit organization at a rate other than the
S. 7001 4 1 interest rate stated in this section the not-for-profit organization 2 shall submit documentation indicating the rate at which such funds were 3 borrowed, the lender of such funds and any other information requested 4 by the state agency, attorney general or the comptroller. The comp- 5 troller may disallow such portions of the interest that the comptroller 6 deems unreasonable. 7 § 5. Subdivisions 1 and 4 of section 179-z of the state finance law, 8 as added by chapter 166 of the laws of 1991, are amended and a new 9 subdivision 5 is added to read as follows: 10 1. The state comptroller is authorized to provide loans from the not- 11 for-profit short-term revolving loan fund established by section nine- 12 ty-seven-jj of this chapter to any not-for-profit organization in 13 receipt of a written directive from a state agency. The state comp- 14 troller may provide such a loan to a not-for-profit organization upon 15 receipt of a written agreement providing reasonable assurances of repay- 16 ment that is satisfactory to the comptroller. Such loan shall not bear 17 interest and repayment of such loan may be prorated over the term of the 18 expected or renewal contract, provided the term of the loan does not 19 exceed one year. The amount of each such loan shall not exceed [one-half 20 of the first quarter] the full payment of the subject contract. 21 4. Any not-for-profit organization receiving a loan from the not-for- 22 profit short-term revolving loan fund shall be ineligible [to receive 23 interest from a state agency, notwithstanding the provisions of section 24 one hundred seventy-nine-v of this article and shall be ineligible] to 25 receive advance payments for the amount that they received in the loan, 26 notwithstanding section one hundred seventy-nine-u of this article. 27 5. Instructions on how to access the not-for-profit short-term revolv- 28 ing loan fund shall be provided to every not-for-profit organization 29 that receives a written directive, contract, or renewal contract from a 30 state agency. Such instructions shall also be posted in a conspicuous 31 manner on the websites of the state comptroller and the New York State 32 Nonprofit Unit. 33 § 6. Section 179-aa of the state finance law, as amended by chapter 34 672 of the laws of 2019, is amended to read as follows: 35 § 179-aa. Advisory committee. There is hereby established a not-for- 36 profit contracting advisory committee. The advisory committee shall 37 consist of sixteen members which shall include eight appointed members, 38 four to be appointed by the governor who shall be representatives of 39 not-for-profit organizations providing services in the state, and two 40 each to be appointed by the governor upon recommendation of the tempo- 41 rary president of the senate and speaker of the assembly, and eight ex 42 officio members of the committee, one each designated from the division 43 of the budget, the department of law, the office of the state comp- 44 troller, and the education department. The governor shall also designate 45 four members from among the following agencies: the department of state, 46 the office of children and family services, the office of temporary and 47 disability assistance, the department of health, the office of mental 48 hygiene, the office for people with developmental disabilities, and the 49 department of labor. The governor shall designate an appointee to serve 50 as chair of the committee. The advisory committee shall meet at least 51 quarterly and [upon its own initiative may] shall: comment and report 52 on the implementation and operation of the not-for-profit short-term 53 revolving loan fund; advise the governor, comptroller, legislature, 54 attorney general and state agencies on the implementation and operation 55 of this article; evaluate the benefits of requiring all state agencies 56 to use standard contract language and the extent to which standard
S. 7001 5 1 language may be effectively included in contracts with not-for-profit 2 organizations; evaluate and provide feedback on improvements to the 3 statewide financial system; review annually the report of the office of 4 the state comptroller made pursuant to section one hundred seventy-nine- 5 bb of this article; and propose any legislation they deem necessary to 6 improve the fund and this article. The committee shall report to the 7 comptroller's office, the office of the attorney general, the governor 8 and the legislature with recommendations on improving the contracting 9 procedures with not-for-profit organizations which receive state funds 10 through the intermediary of municipalities. Such reports shall be due 11 annually not later than December first, and shall be made available to 12 the general public, including a conspicuous posting on the website of 13 the New York State Nonprofit Unit. 14 § 7. Subdivision 3 of section 179-ee of the state finance law, as 15 added by section 38 of part L of chapter 55 of the laws of 2012, is 16 amended and two new subdivisions 4 and 5 are added to read as follows: 17 3. A modification to a contract that would result in a transfer of 18 funds among program activities or budget cost categories but does not 19 affect the amount, consideration, scope or other terms of such contract 20 shall not, by itself, require such contract and modification to be 21 submitted to the comptroller for review; provided, however, where the 22 amount of such modification is, as a portion of the total value of the 23 contract, equal to or greater than ten percent for contracts of less 24 than five million dollars, or five percent for contracts of more than 25 five million dollars, the comptroller may require that such modification 26 be submitted to [him or her] such comptroller for review. All modifica- 27 tions that do not require comptroller review shall be approved within 28 thirty days, and all modifications that require comptroller review shall 29 be approved within sixty days. A failure by the agency to respond to a 30 request for modification during the time period shall be deemed an 31 approval of the proposed modification. When a contractor submits their 32 final vouchers or invoice, if such voucher or invoice would result in a 33 modification between budget categories of, as a portion of the total 34 value of the contract, equal to or lesser than ten percent for contracts 35 of less than five million dollars, or five percent for contracts of more 36 than five million dollars, then the agency shall consider the voucher or 37 invoice a request for contract modification and shall process the 38 modification as such. 39 4. Notwithstanding any other provisions of this article, a minimum 40 indirect cost rate of at least fifteen percent or the not-for-profit 41 organization's federally-approved de minimis indirect cost rate or the 42 not-for-profit organization's actual indirect costs related to allowable 43 expenses under the contract, whichever is higher, shall be included in 44 all not-for-profit organization contracts with state agencies. Indirect 45 costs may be incurred at a higher rate than fifteen percent in any budg- 46 eted period so long as the year-to-date indirect cost does not exceed 47 fifteen percent at that time. Expenses including purchase of furniture, 48 technology, and equipment, and expenses related to office space neces- 49 sary for the program staff to perform their duties under the grant, and 50 training and certification necessary to maintain credentials required to 51 perform their duties under the grant, shall be considered direct 52 expenses in all not-for-profit organization contracts. 53 5. Interest accrued due to borrowing funds to provide services pursu- 54 ant to a written directive, contract, renewal contract or extension 55 contract is a direct reimbursable cost under all not-for-profit 56 contracts.
S. 7001 6 1 § 8. Paragraphs (a) and (e) of subdivision 2 and subdivision 3 of 2 section 179-f of the state finance law, paragraphs (a) and (e) of subdi- 3 vision 2 as amended by chapter 36 of the laws of 2016 and subdivision 3 4 as amended by chapter 568 of the laws of 2015, are amended to read as 5 follows: 6 (a) the state comptroller in the course of [his or her] such comp- 7 troller's audit determines that there is reasonable cause to believe 8 that payment may not properly be due, in whole or in part; 9 (e) the goods or property have not been delivered or the services have 10 not been rendered by the contractor in compliance with the terms or 11 conditions of the contract, except that where the contractor presents an 12 invoice of a subcontractor as proof of the cost and may pay subcontrac- 13 tors upon receipt of payment on the invoice or voucher by the agency, 14 proof of such payment by the contractor to the subcontractor shall be 15 provided by the contractor to the state agency within thirty days of the 16 receipt of the voucher payment; 17 3. Each state agency shall have fifteen calendar days after receipt of 18 an invoice by the state agency at its designated payment office, or in 19 the case of an invoice received from a small business, seven calendar 20 days, to notify the contractor of (a) material defects in the delivered 21 goods, property, or services, (b) material defects in the invoice, or 22 (c) suspected improprieties of any kind[; and the]. The existence of 23 such material defects or improprieties shall [prevent the commencement 24 of] pause the calculation of the time period specified in subdivision 25 two of this section until such material defects or improprieties have 26 been corrected. [When a state agency fails to notify a contractor of 27 such defects or suspected improprieties within fifteen calendar days, or 28 seven calendar days if such contractor is a small business, of receiving 29 the invoice, the number of days allowed for payment of the corrected 30 proper invoice will be reduced by the number of days between the 31 fifteenth day, or seventh day if payment of such proper invoice is for a 32 small business, and the day that notification was transmitted to the 33 contractor.] If the agency notifies the contractor of a material defect 34 or impropriety that was present in the original invoice after the 35 initial fifteen calendar days from when the invoice was originally 36 submitted, then the time period specified in subdivision two of this 37 section shall continue to run and shall not be affected by such notifi- 38 cation. If the state agency, in such situations, fails to provide 39 reasonable grounds for its contention that a material defect or impro- 40 priety exists, the required payment date shall be calculated from the 41 date of receipt of an invoice. Scrivener's errors or rounding errors 42 that result in a variance of less than one hundred dollars shall not be 43 considered material defects for the purposes of this section. 44 § 9. This act shall take effect on the one hundred eightieth day after 45 it shall have become a law.