The state legislature has passed a bill requiring state agencies to pay interest sooner for late contract payments to not-for-profit providers. According to a report released today by State Comptroller Thomas DiNapoli, state agencies were late more than 80 percent of the time in approving contracts subject to the Prompt Contracting Law, creating interest payments that cost taxpayers nearly $200,000.
“Not-for-profit organizations provide billions of dollars in essential services but are not paid on time as they should be,” DiNapoli said in a news release. “This prompts interest payments and taxpayers foot the bill.”
The legislation, sponsored by Sen. John DeFrancisco (R–Syracuse) and Assemblyman Steve Englebright (D-Setauket), is awaiting action by Gov. Andrew Cuomo.
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Not-for-profits provide an array of services in the state including health-care clinics and work-force development programs. There are currently 14,596 active grant contracts valued at $14.7 billion. In 2011, nearly 2,000 of the 3,060 contracts approved late by agencies were eligible for interest, according to the comptroller.
In the central region (which includes Cayuga, Cortland, Madison, Onondaga, and Oswego counties) there were 187 late contracts. In the Mohawk region (including Fulton, Hamilton, Herkimer, Montgomery, Oneida, and Schoharie counties) there were 90 late contracts, according to the comptroller.
The Prompt Contracting Law, enacted in 1991, requires agencies to process contracts within 150-180 days. Under a 2007, amendment, the comptroller’s office reports annually on whether agencies meet this time frame and reasons for delay.
In his report, DiNapoli recommends that state agencies make prompt contracting a priority to reduce costs to the state, pay prompt contracting interest with the first payment due, expand the use of multi-year contracts to streamline contract management, consider more effective use of advance payments, re-align contract start dates to reflect the time required for the procurement process, and ensure grant awards and contracting are automated in the new statewide financial system.
Contact DeLore at tdelore@tmvbj.com
