XI.4.A Not-for-Profit Prompt Contracting

BACKGROUND

Chapter 166 of the Laws of 1991 added Article XI-B (The Prompt Contracting Law) to the State Finance Law, promoting prompt contracting with not-for-profit (NFP) organizations.

More specifically, the Prompt Contracting Law establishes time frames for processing contracts and related documents; provides for written directives, waivers of interest, advances, and loans to NFPs when those time frames cannot be met; and requires interest payments to NFPs when contract payments are late due to untimely processing of contracts and no advance or loan was provided. For information on loans for NFPs from the Not-For-Profit Short-Term Loan Fund, refer to Section 4.E - Not-for-Profit Short-Term Loan Fund of this Chapter.

Chapter 648 of the Laws of 1992 made several changes to Article XI-B. The 1992 revisions provided more reasonable time frames for processing local grant awards and federally funded contracts; allowed for State agencies and NFPs to waive interest payments under certain circumstances; eliminated interest penalties for contracts executed and funded in whole or in part for services rendered in a prior fiscal year; and limited the amount of time a State agency may suspend time frames to four and one-half months.

Chapter 292 of the Laws of 2007 further amended Article XI-B. The amendments:

prohibit State agencies from generally requiring NFP organizations to waive claims for interest that would otherwise be due;
provide that the term of the contract is automatically deemed to continue in effect when a State agency does not timely notify a NFP of an intent to terminate the contract;
require that any waivers of interest be subject to the Office of State Comptroller’s (OSC) approval and provide for the calculation and payment of interest to NFPs when OSC disapproves a waiver;
require State agencies to report prompt contracting information to the Comptroller for inclusion in the annual reports;
expand the NFP Contracting Advisory Committee to sixteen members; and
require NFP Contracting Advisory Committee meetings at least quarterly and expand the scope of what the NFP Contracting Advisory Committee evaluates.

On November 18, 2009, a revised Part 22 of 2 NYCRR entitled Prompt Contracting and Interest Payments for NFP Organizations became effective. These regulations provided guidance to State agencies regarding Article XI-B of the State Finance Law, specifically:

Determining when prompt contracting interest is due and the manner in which to calculate that interest.
Use of written directives for both new and renewal contracts.

GUIDING PRINCIPLES OF THE PROMPT CONTRACTING LAW

The Prompt Contracting Law contains provisions to ensure that funding is available for new and existing grant contracts in a timely manner. The established statutory time frames for grant contracting are associated with the appropriation of program funding upon passage of the annual State budget. The objective of the law is to avoid administrative delays.

Another objective of the Prompt Contracting Law is to expedite the process for establishing contracts with and making corresponding payments to NFPs to avoid service interruptions and financial hardships for these organizations.

In addition, the law provides for interest payments to NFPs when a grant contract is not fully executed and subsequently payments due the NFP are not paid according to the time frames established in the contract payment schedule. The purpose is to offset interest costs incurred when an NFP obtains a loan in order to continue service delivery.

TIME FRAMES

The Prompt Contracting Law requires processing of NFP contracts and related documents within the following time frames for both new and renewal contracts.

RESPONSIBILITY	REQUIREMENTS	TIME FRAMES
State Agency	Prepare and submit program plan to Division of the Budget (DOB), Senate Finance and Assembly Ways and Means.	Not more than 45 days after the latest date on which related appropriations are enacted.
DOB	Issue a Certificate of Approval for each appropriation included in the program plan.	Not more than 90 days after the latest date on which any appropriation included in the program plan is enacted.
NEW CONTRACTS
RESPONSIBILITY	REQUIREMENTS	TIME FRAMES
State Agency	Execute* new competitive grant contracts using a Request for Proposal (RFP).	Not more than 150 days after the latest date on which any appropriation included in the program plan is enacted.
State Agency	Execute* new non-competitive grant contracts (such as legislative initiatives).	Not more than 120 days after the NFP is identified to the State agency.
State Agency	Execute* new federally funded grant contracts. (*requires State agency and NFP signatures)	Not more than 120 days after the State agency is in receipt of Federal funds for a particular program.
Office of the Attorney General (OAG)	Approve new or renewal contracts and forward to the Comptroller or non-approve and return to the agency with the reason(s).	Within 15 days of receipt of a new or renewal contract.
Office of the State Comptroller	Approve new or renewal contracts or non-approve and return to agency with the reason(s).	Within 15 days of receipt of a new or renewal contract.
State Agency	If contract is non-approved by the Attorney General or the Comptroller, notify affected NFP and work with the NFP to remedy deficiencies.	Immediately upon receipt of non-approval.
RENEWAL CONTRACTS
RESPONSIBILITY	REQUIREMENTS	TIME FRAMES
State Agency	If a State agency intends to renew a contract, notify the NFP by issuing either a letter of the State agency’s intent to renew or the renewal contract documents with a dated cover letter. If the State agency’s intent is to terminate the contract, notify the NFP in writing of intent and provide the reasons.	Not later than 90 days prior to the end of the contract, or any periods specified within the contract that require further contract documents in order to continue contract payments, or 30 days after enactment of appropriation providing funding for continued payments, whichever is later.
State Agency	Upon notifying the NFP of its intention to execute a renewal contract, the State agency shall negotiate contract terms and shall issue a written directive to the NFP. Submit renewal contracts to the Attorney General (to be forwarded directly to the Comptroller after approval). Submit renewal contracts consisting of simplified contract documents directly to the Comptroller.	Immediately No later than 60 days prior to the start of the renewal contract. No later than 60 days prior to the start of the renewal contract.
Office of the Attorney General (OAG)	Approve new or renewal contracts and forward to the Comptroller or non-approve and return to the agency with the reason(s).	Within 15 days of receipt of a new or renewal contract.
Office of the State Comptroller (OSC)	Approve new or renewal contracts or non-approve and return to agency with the reason(s).	Within 15 days of receipt of a new or renewal contract.
State Agency	If contract is non-approved by the Attorney General or the Comptroller, notify affected NFP and work with the NFP to remedy deficiencies.	Immediately upon receipt of non-approval.

Additional information regarding requirements:

State agencies should submit the Procurement Record for new contracts to OSC for approval prior to submitting the contract to the OAG. This should be done at least 30 days prior to the start date of the contract.¹

The time frame for prompt execution of 100% federally funded grant contracts is 120 days from the date that the State agency receives the notice of federal grant award. This notice needs to be provided to OSC either with the contract transaction or with documents submitted as a part of the Grant Procurement Record.²

For those grant contracts funded by a mix of state and federal funds, the time frame for prompt execution is 150 days after the latest date on which any state appropriation included in the program is enacted.

The time frame for prompt execution of Legislative Initiatives is 120 days from the date the NFP is identified to a State agency. As such, OSC requires that the State agency date stamp the receipt of the Local Grant Awards Form (Legislative Initiative) and include it with the contract transaction.

The Prompt Contracting Law requirements pertain to all grant contracts with NFPs, including those that fall below the $50,000 threshold for the Comptroller’s prior approval.

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¹ See Chapter XI, Section 15A – Competitive Grants Procurement Record, for additional information.
² Ibid.

POST AWARD - PRE-EXECUTION OF NEW GRANT CONTRACT

Written Directives

The Prompt Contracting Law formalizes the process for authorizing NFPs to begin/continue services without a fully executed contract through the use of written directives. (A fully executed contract means a contractual agreement signed by both the State agency and the NFP, and subsequently approved by the Attorney General and OSC). A State agency may use a written directive to authorize commencement of services for a new contract.

With respect to new contracts, a State agency is deemed to have issued a written directive when it provides the NFP organization with a proposed contract containing a start date. Alternatively, a State agency may elect to more formally issue a written directive to a NFP for a new contract using the format provided in Attachment C - Written Directive – New Contract.

If a written directive does not contain a start date, the NFP is authorized to provide services immediately.³

Notification of Suspension of Interest

The law provides the ability to start and stop the time frames associated with Prompt Contracting Law through the use of notification and suspension letters.

Upon determining that significant and substantive differences exist between the State agency and the NFP in the negotiation of a contract or renewal contract, or when the State agency makes a determination that the NFP is not negotiating in good faith, the State agency may suspend a written directive and subsequent interest payments or subsequent advance payments required by the Prompt Contracting Law. With notice of such suspension, the State agency will be required to provide the affected NFP and OSC with a written notification of such determination and the reasons therefore. OSC will include these suspension documents in the procurement record.

To meet these requirements, State agencies must submit suspension letters to OSC, preferably with the contract transaction.

All suspension letters must be dated and include the contract number.
Suspension letters must clearly document the circumstances for the suspension of time frames and specify the length of the suspension.
The cumulative length of suspensions declared by a State agency when added together shall not exceed 4 ½ months in any fiscal year.
If the State agency determines that the NFP is not negotiating in good faith, or that significant and substantive differences exist between the State agency and the NFP, the State agency may suspend the time frame indefinitely.

Extenuating Circumstances

In the event that a State agency (including OSC, DOB or the Attorney General), determines that extenuating circumstances exist that prevent the State agency from complying with the time frames required by the Prompt Contracting Law, the State agency must immediately provide written notification of such determination of suspension of time frames to any directly affected NFP, OSC, the Chairman of the Senate Finance Committee, and the Chairman of the Assembly Ways and Means Committee. The notification will include an explanation of the circumstances and state the specific amount of time for which the time frames will be suspended. No suspension will be valid unless it states the specific amount of time of suspension, provided that the cumulative length of the suspension declared will not be for a period greater than 4½ months in any fiscal year.

Waivers of Interest

If the time frames for processing a contract have been met and the State agency is liable for interest due to a retroactive start date, the State agency and the NFP may mutually agree in writing to waive any interest owed to the NFP under provisions of State Finance Law, Article XI-B. However, a State agency may not require a waiver of interest as a prerequisite to the execution to a contract. State agencies must use Attachment D - Waiver of Interest Agreement to execute such agreement. The waiver of interest must be determined to be warranted by OSC. For a written agreement waiving interest to be determined warranted by OSC, the agreement must include:

a statement that the time frames in Article XI-B of the State Finance Law were met, and that such agreement is null and void if the time frames required by Article XI-B of the State Finance Law were not met by the State agency;
documentation explaining the reasons for a retroactive contract start date; and
the signature of a person authorized to sign a binding contract on behalf of the NFP organization.

A waiver of interest agreement shall be immediately provided to OSC, DOB, and to the NFP. OSC will review waivers of interest submitted with grant contract transactions with NFPs to determine if: (i) all the time frames required by the Prompt Contracting Law have been met, (ii) the State agency and the NFP have mutually agreed in writing to waive any interest due, and (iii) the applicable information as to the reason for waiving the interest has been included and properly justified.

To avoid a waiver of interest being determined unwarranted, the suspension letter should clearly indicate all required information.

Upon OSC’s determination of a waiver being warranted or unwarranted, the State agency will receive a notification letter within 20 days of receipt of the waiver at OSC.

If the waiver is deemed to be unwarranted, the State agency must immediately submit a voucher to OSC for payment of the interest to the NFP. If the voucher is not received within 30 days of OSC determination, OSC will assess the amount of unpaid interest in the manner prescribed by law. For information about voucher preparation and submission requirements refer to Chapter XII, Section 6.C - Paying Prompt Contract Interest of this Guide.

Prompt Contracting interest and Prompt Payment interest are not the same. Prompt Payment interest is due when a State agency does not issue payment within 30 days of receipt of goods or services and proper invoice see Chapter XII, Section 5.I - Merchandise/Invoice Received Dates and Prompt Payment Interest Calculations of this Guide. Prompt Contracting interest is due when grant contracts are executed after the contract start date and payments are missed.

Boilerplate

Master Grant Contract Boilerplate

The New York State Master Contract for Grants supersedes several documents for purposes of processing State and federally funded grant contracts, including: State of New York Agreement; Appendix A, Standard Clauses for New York State Contracts; Appendix A-1, Agency Specific Clauses; Appendix C, Payment and Reporting Schedule; and associated Cover Page and Signature Page.

The components of the Master Contract for Grants are:

Face Page;
Signature Page;
New York State Standard Terms and Conditions;
Attachment A-1, Program Specific Terms and Conditions;
Attachment A-2, Federally Funded Grants;
Attachments B-1, Expenditure Budget; B-2, Performance Based Budget; B-3 Capital Budget;
B-4 Net Deficit Budget (and related Budget Amendment Attachments);
Attachment C, Work Plan; and
Attachment D, Payment and Reporting Schedule.

As detailed in the New York State Grants Reform Budget Bulletin H1032 (Revised July 16, 2014), the Division of Budget (DOB) requires the use of the Master Grant Contract for all grant contracts.

Other Boilerplates

Any grant-making State agency that receives an exemption from using the Master Grant Contract Boilerplate should use the Standard Grant Contract Boilerplate (see Section 4.B - Standard Contract Language for Grant Contracts: Fixed Term, Multiyear Contracts and Simplified Renewals of this Chapter). Under no circumstances should a State agency use another boilerplate without first receiving approval from both the OAG and OSC.

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³ See 2 CRR-NY 22.5(a)(ii) PROMPT CONTRACTING AND INTEREST PAYMENTS FOR NOT-FOR-PROFIT ORGANIZATIONS.

GRANT AMENDMENT CONTRACTS – RENEWALS

Notification of Intent to Renew

State agencies are required either by mail or electronic mail to notify the NFP organization of their intent to renew the contract 90 days prior to the contract end date. A State agency is deemed to have issued a written directive when it has provided notice or a renewal contract to the NFP.

Notification of Termination

Notices of termination must be filed with OSC ninety (90) days prior to the end of the initial contract term for those contracts that contain language providing for optional renewal. If the State agency does not intend to renew the contract, it must notify the NFP in writing with the reasons. If the notice is not sent in a timely manner, the contract will continue and remain in effect until such time as the NFP receives 90 days’ notice of termination. Expenses incurred during the extension will be reimbursable under the terms of the existing contract.

To allow for payment of such expenses, the State agency must create a transaction in SFS extending the term of the contract for the necessary additional time, and submit to OSC a completed STS or AC 340-S, accompanied by a copy of the dated notification of termination.

When a contract will not be continued, despite the State agency’s original intent to renew the contract, the State agency is required to notify the contractor of the termination. This situation may arise when a renewal contract is returned non-approved by either the OAG or OSC, or when a State agency receives information that causes the vendor responsibility determination to change. In such circumstances, the contract will continue and remain in effect until the NFP has received the required 90-day notice - State Finance Law, Section 179-t (2).

Renewal and Termination of Existing Contracts - Notices of intent to renew or terminate an existing contract must be provided to the NFP, with copies provided to OSC, the Chairman of the Senate Finance Committee, and the Chairman of the Assembly Ways and Means Committee.

Note: Each contract which provides for renewals and does not utilize the Master Grant Contract Boilerplate should include the following or similar language:

Where (the agency) does not provide notice to (the NFP) of its intent to renew or terminate this contract by the date by which such notice is required by Section 179-t(1) of the State Finance Law, then this contract shall be deemed to be extended until ninety days after the date that the agency provides the notice required by Section 179-t, and the expenses incurred during such extension shall be reimbursable under the terms of this contract.

Notification of Suspension of Interest

Extenuating Circumstances

For renewal contracts, State agency’s determination of extenuating circumstances shall not operate to relieve the State agency of liability for interest unless the agency shall also determine, and OSC concurs, that such circumstances are unusual circumstances which warrant the denial of interest.

Failure to Comply Due to Unusual Circumstances

In the event that a State agency is unable to comply with the time frames for notice of intent to renew or terminate due to unusual circumstances beyond the control of the State, no payment of interest is due to the NFP.

If a State agency is not able to provide timely notification to a NFP of its preliminary intent to renew or terminate a contract due to unusual circumstances beyond the control of the State, the State agency may request that OSC determine whether the unusual circumstances warrant the denial of interest to a NFP, due to late execution of the contract renewal. A determination of unusual circumstances being warranted will be based on exceptional and unforeseeable reasons, such as natural disasters, homeland security issues, or other emergency situations. Unusual circumstances does not mean a State agency’s:

failure to plan for implementation of a program;
failure to assign sufficient staff resources to implement a program;
failure to establish a schedule for the implementation of a program;
failure to anticipate any other reasonably foreseeable circumstances; or
contract negotiations

Requests for OSC determination of unusual circumstances for failure to notify a NFP of the State agency’s intent to renew or terminate a contract must be in writing and where appropriate include the Procurement Record ID Number, and an explanation of the basis for the State agency’s inability to comply with the time frames for notification as established in the Prompt Contracting Law. The request must be submitted to the Office of the State Comptroller, Bureau of Contracts (Attn: Grants Team Leader), the Division of the Budget, and the NFP. The request must be received by OSC within 90 days prior to the beginning of the renewal period.

In situations where the State agency is requesting a determination of unusual circumstances for failure to notify a NFP of its intent to terminate a contract, the contract continues and remains in effect until such time as the State agency provides a 90-day notice of termination.

Upon OSC’s determination of unusual circumstances being warranted or unwarranted, the State agency will receive a notification letter from OSC within 20 days of receipt of the letter requesting unusual circumstances. If OSC’s determination concludes that the circumstances do not warrant a denial of interest and interest is due, once the contract is fully executed, the State agency shall immediately submit a voucher requesting the payment of interest to the NFP.

Waivers of Interest

Refer to the section above on waivers of interest.

Waivers of interest for grant contracts with NFPs valued below the OSC prior approval threshold (see Section 2.A - Thresholds of this Chapter) must be sent to OSC for pre-audit approval. Send these waiver requests to the attention of the Office of the State Comptroller, Bureau of Contracts, Attn: Grants Team Leader. Complete the “Transaction Under $50,000 Threshold Waiver of Interest Transmittal” form and include any notification letters, and the associated “T contract”. Provide the following information on the transmittal: Agency Name, Business Unit, Department ID, Contract Number, Contractor Name, NYS Vendor ID, Contract Amount, and Contract Period. Enter “Waiver of Interest” in the description field. Enter the Procurement Record ID number or the contract reporter exemption request number, if applicable, in the second description field.

All notifications not accompanied by an STS/AC 340-S and contract transaction, including notifications of termination, should be sent to the Office of the State Comptroller, Bureau of Contracts, Attn: Grants Team Leader.

Advance Payments Prior to Full Execution of Grant Contract Renewals

Grant NFP contractors may be entitled to an advance payment pending execution of the renewal contract if such contract is not fully executed by the commencement date of the succeeding contract. By providing a written directive to the NFP that the State agency intends to renew the grant contract an advance payment may be made.

State agencies can make an advance payment to an NFP using written directives in the form contained in (Attachment B - Written Directive - Renewal Contract: Advance Payment). The written directive should include the specific advance amount, not to exceed twenty-five percent of the existing or prior contract value without OSC approval; and the period of time covered by the advance payment. The advance represents the first dollars that have been paid under the renewal contract when fully executed. Any advance payment should be applied against future payments.

Fifth Quarter Financing

State agencies should make use of advances or fifth quarter financing if a renewal contract is not, or is not expected to be, "fully executed" by the start date of the renewal contract. Where a fifth quarter financing provision has been included in the contract, State agencies should use written directives in the form contained in Attachment A - Written Directive - Renewal Contract: Fifth Quarter Financing. If the State agency plans to utilize fifth quarter financing:

Contract documents must include language that provides payment for the first quarter of the new or renewal contract.
The Transmittal Form accompanying a new or renewal contract must clearly indicate the contract number of the contract providing the funding for the fifth quarter.
- The Single Transaction Summary (STS) must clearly indicate the contract number of the contract providing the funding for the fifth quarter in the description field (or in the first Description field if an AC 340-S is used). This information should be handwritten and not data entered.
- If the transaction is being submitted through the Grants Gateway using the E-DOCS Contract Transmittal Form (AC 3308-S), the contract number of the contract providing the funding for the fifth quarter should be data entered in the Special Circumstances "Other" field on the AC 3308-S.
Both new and renewal contracts should include a worksheet that reconciles the “Contract Amount” on the STS/AC 340-S with the total contract value.

INTEREST PAYMENTS

For all payments required under new or renewal contracts, State agencies must determine whether late contract interest is due under the Prompt Contracting Law (State Finance Law Article XI-B). Additionally, all subsequent contract payments are subject to interest provisions under the Prompt Payment Law (State Finance Article XI-A).

Generally, late contract interest will be due to the NFP if:

The initial payment(s) are not made to the NFP by the payment date(s) required in the contract; or
The NFP borrows funds from an outside source to provide services pursuant to a written directive issued by the State agency.

However, the NFP will be due interest only if all of the following conditions are satisfied.

A required written directive was not suspended.
The initial payment required under the contract was paid after all of the following:
1. the contract term began;
2. the date services began;
3. the required payment was due.
The necessary Federal funds (cash) were available to make the required payment.
No loan fund payment was made to the NFP.
The contract transaction was approved by OSC or the Attorney General.
There is no warranted waiver of interest.

Procedurally, State agencies should determine whether interest is due, and how much, by using the Late Contract Interest Worksheet.

State agency should include on the voucher the appropriate code (58403) to document the payment of prompt contracting interest in SFS.

Key factors to consider when calculating prompt contracting interest include:

Interest shall be due a NFP organization for each payment that would have been due if the contract had been fully executed before the scheduled commencement date.
Interest shall be calculated for the period commencing thirty calendar days after the end of each billing period as specified in the contract and ending on the date payment is actually made, except where under the terms of the contract the NFP organization is entitled to a payment or payments on specified dates without the submission of an invoice or voucher, in which case interest shall run from each such specified date or dates.
Interest shall be calculated separately with respect to each payment due under the contract.
If a contract does not specify billing periods or a payment schedule, it shall be presumed that the NFP is authorized to submit invoices or vouchers at the end of each month for a pro rata portion of the total contract amount.
A State agency may not deny interest to a NFP organization on the basis that it failed to submit invoices or vouchers during the period prior to final execution of the contract. However, where the NFP fails to submit an invoice or voucher for such payment within thirty calendar days of the contract becoming fully executed, no additional interest shall accrue after such thirtieth day.
The State agency is responsible for calculating interest due and preparing a separate voucher to pay such interest.

The following examples illustrate how late contract interest provisions and calculations apply.

Example 1
A State agency entered into a new contract with a NFP. A written directive was issued on January 1st requesting the NFP to begin services on April 1st. The NFP began providing services on April 1st. The terms and conditions of the contract call for an advance payment in the amount of $100,000 to be paid on the first day of the contract term. Due to delays, the contract is not approved until April 16th. The payment to the NFP is made on May 14th. Interest is due from April 1st to May 14th. The payment is 43 days late; therefore, the amount of late contract interest is $354.04.

$100,000 X .003540354* = $354.04

*Interest factor for 43 days at 3 percent.

Example 2
A State agency entered into a new contract with an NFP. A written directive is issued on April 1st in the form of the contract document containing a start date of July 1st. The NFP began providing services on July 1st. The terms and conditions of the contract call for a quarterly advance payment in the amount of $75,000 to be paid on the first day of the quarter. In order to begin services, the NFP borrows funds from an outside source at an interest rate of 5 percent. The contract is approved on October 12th and payment is made on November 10th. Interest is due from July 1st to November 10th. The payment is 132 days late; therefore, the amount of late contract interest, calculated at 5 percent, is $1,368.41.

$75,000 X .018245403* = $1,368.41

*Interest factor for 132 days at 5 percent.

Example 3
A State agency entered into a new contract with an NFP. A written directive is issued on April 1st in the form of the contract document containing a start date of July 1st. The NFP began providing services on July 1st. The terms and conditions of the contract call for a quarterly reimbursement of actual expenses incurred. The contract is approved on November 1st and the first reimbursement payment for the quarter July- September in the amount of $75,000 is made on November 15th. The payment is 16 days late (thirty days after the end of the billing period as specified in the contract and ending on the date payment is actually made); therefore, the amount of late contract interest is $98.69

$75,000 X .001315879* = $98.69

*Interest factor for 16 days at 3 percent.

Example 4
A State agency notifies a NFP of its intent to renew a contract 90 days prior to the end of the term of the contract by forwarding the proposed renewal contract. The NFP continued providing services on July 1st, the start of the renewal period. The terms and conditions of the contract call for monthly reimbursement of actual expenses incurred. The renewal contract is approved on November 30th and the NFP submits vouchers for the months of July, August in the amount of $20,000 each on December 15th which are paid on December 30th. The NFP then submits vouchers for the months of September and October in the amount of $20,000 each on January 15th which are paid on February 1st. Interest would be calculated for each monthly reimbursement separately as follows:

Billing month	Payment Date	Payment Due Date for calculating late contracting interest	# of days late
July	12/30	8/30	122 (8/30 - 12/30)
August	12/30	9/30	91 (9/30 - 12/30)
September	2/01	10/30	61* (10/30 - 12/30)
October	2/01	11/30	30* (11/30 - 12/30)

* where the not-for-profit fails to submit an invoice or voucher within thirty days of the contract becoming fully executed, no additional interest shall accrue after the thirtieth day.

July $20,000*.010077424 (interest factor @ 3% for 122 days) =$201.55

August $20,000*.007507183(interest factor @ 3% for 91 days) =$150.14

September $20,000*..005026081(interest factor @ 3% for 61 days) =$100.52

October $20,000* ..002468694interest factor @ 3% for 30 days) = $49.37

Total late contracting interest payable $501.58

Example 5
A State agency intends to enter into a new contract with an NFP. A written directive is issued on January 1st requesting the NFP to begin services on April 1st. The NFP began providing services on April 1st. Before the contract is approved, the State agency determines that the NFP did not negotiate in good faith. On June 1st the State agency notifies the NFP, in writing, that the written directive is suspended; therefore, no late contract interest is due, however, the State agency owes the NFP for the services that were provided from April 1- June 1.

Example 6
The appropriation was enacted April 1st. A State agency entered into a new agreement with an NFP. Due to the seasonal nature of the services required, both parties agreed that the services must commence by July 1st. A written directive was issued April 1st directing the NFP to begin services on July 1st. The NFP began providing services on July 1st. The contract was approved on August 15th. The terms of the contract call for the initial payment 30 days after commencement of services. Because the contract start date occurred within 150 days of the enactment of the appropriation, the parties chose to sign an agreement to waive any potential interest obligations that may be due. OSC determined that the waiver of interest was warranted. Since time frames for processing the contract had been met, and a waiver of interest had been agreed upon and determined to be warranted by OSC, no interest is due. However, if the waiver of interest agreement had not been deemed warranted, interest would have been owed from July 31st through the date of initial payment.

Interest Rate

The interest rate used in the late contract interest calculation is based on the "overpayment" rate established by the Commissioner of Taxation and Finance. This rate is subject to change quarterly. Contact OSC’s Help Desk at (518) 408-4672 or 1-866-370-4672, or [email protected] for the interest rate in effect on the date of the late payment and the corresponding interest factor.

Interest payments may be made to an NFP at a rate higher than the rate set by the Commissioner of Taxation and Finance if the NFP borrowed money from an outside source. If a higher rate is requested, the NFP is required to submit documentation to the state agency indicating the interest rate, lender of the funds and any other information requested by the state agency, Attorney General, or OSC. OSC may

See Chapter XII, Section 6.C - Paying Prompt Contract Interest of this Guide for further information on the determination of and procedural requirements for interest penalties.

See Chapter XII, Section 5.I - Merchandise/Invoice Received Dates and Prompt Payment Interest Calculations of this Guide for information on Prompt Payment interest.

OTHER REQUIREMENTS

Contracts with NFPs must contain a specific payment date indicating when the initial payment is due.

No State agency shall be liable for interest payments on contracts executed pursuant to appropriations made in whole, or in part, for liabilities incurred in a prior fiscal year, or if a waiver of interest agreement is executed and subsequently determined to be warranted by OSC. This usually pertains to legislative initiatives.

PROMPT CONTRACTING REPORTING REQUIREMENTS

State agencies are required to submit to OSC an annual report on programs affected by the Prompt Contracting Law. The annual report must include:

the number of programs affected by the Prompt Contracting Law;
the ability of the State agency to meet the time frames of the law;
the number of programs, contracts, and renewal contracts both complying and failing to comply with the time frames of the law;
the number of contracts on which interest was paid, and the amount of interest paid; and,
any other relevant information regarding the implementation of prompt contracting and payments affecting NFPs.

To ensure consistency in reporting, central agencies with multiple regional offices, such as the Office for People with Developmental Disabilities (OPWDD), Department of Corrections and Community Supervision (DOCCS), Department of Transportation (DOT), and the State University of New York (SUNY), among others, are requested to consolidate the required information for all their regional offices into one report.

Instructions for completion of the report will be made available annually by OSC. At the beginning of each year, State agencies will be electronically reminded to submit the form via e-mail to [email protected] by March 31 of the year.

By May 31 of each year, OSC will make available to the public a report aggregating the State agency information and will prepare an analysis examining the effectiveness and implementation of prompt contracting and payments, including recommendations deemed necessary to improve existing contracting and payment methods between State agencies and NFPs. A report will also be submitted to the Governor, the Temporary President and Minority Leader of the Senate, the Speaker and Minority Leader of the Assembly, the Director of DOB, the Chairman of the Senate Finance Committee, and the Chairman of the Assembly Ways and Means Committee.

NOT-FOR-PROFIT CONTRACTING ADVISORY COMMITTEE

A Not-for-Profit Contracting Advisory Committee is established by the Prompt Contracting Law. The committee is charged with meeting at least quarterly each year to comment and report on the implementation and operation of the NFP short-term revolving loan fund; advising the Governor, OSC, and State agencies on the implementation and operations of the Prompt Contracting Law; evaluating the benefits of requiring all State agencies to use standard contract language and the extent to which standard language may be effectively included in contracts with NFPs; reviewing the annual report submitted by OSC; proposing any legislation they deem necessary to improve the fund and the article; and making recommendations on improving contracting procedures with NFP organizations that receive State funds through the intermediary of municipalities.

This Advisory Committee is composed of 16 members:

eight members from the NFP community;
eight members representing State agencies:
- Ex officio – DOB, OAG, OSC, and State Education (SED);
- four members designated from among the following agencies: Office of Children and Family Services (OCFS), Department of State (DOS), Office of Mental Health (OMH), Office of Temporary and Disability Assistance (OTDA), Department of Health (DOH), Department of Labor (DOL), Office for People with Developmental Disabilities (OPWDD)

Guide to Financial Operations

REV. 01/14/2022

XI. Procurement and Contract Management

Guide to Financial Operations

XI.4.A Not-for-Profit Prompt Contracting

XI. Procurement and Contract Management
Guide to Financial Operations