§ 2880 — Prompt payment

§ 2880. Prompt payment. 1. Definitions. As used in this section, the\nfollowing terms shall have the following meanings unless the context\nshall indicate another or different meaning or intent:\n (a) "Corporation" means every public authority and public benefit\ncorporation a majority of the governing board members of which are\neither appointed by the governor or serve as members by virtue of their\nservice as an officer of a state department, division, agency, board or\nbureau, or combination thereof.\n (b) "Contract" means an enforceable agreement entered into between a\ncorporation and a contractor.\n (c) "Contractor" means any person, partnership, private corporation or\nassociation:\n (i) selling materials, equipment, or supplies or leasing property or\nequipment to a corporation;\n (ii) constructing, reconstructing, rehabilitating or repairing\nbuildings, highways or other improvements for or on behalf of a\ncorporation; or\n (iii) rendering or providing services to a corporation pursuant to a\ncontract.\n (d) "Designated payment office" means the office designated by the\ncorporation to which a proper invoice is to be submitted by a\ncontractor.\n (e) "Prompt payment" means payment of a debt due and owing by a\ncorporation before interest accrues thereon pursuant to a statement\nadopted in accordance with this section.\n (f) "Proper invoice" means a written request for a contract payment\nthat is submitted by a contractor setting forth the description, price\nand quantity of goods, property, or services delivered or rendered, in\nsuch form and supported by such other substantiating documentation as\nthe corporation may reasonably require.\n (g) "Receipt of an invoice" means (i) the date on which a proper\ninvoice is actually received in the designated payment office, or (ii)\nthe date on which the corporation receives the purchased goods,\nproperty, or services covered by the proper invoice, whichever is later.\n (h) "Set-off" means the reduction by the corporation of a payment due\nto a contractor by an amount equal to the amount of an unpaid legally\nenforceable debt owed by the contractor to the corporation.\n (i) "Statement" means the rules and regulations adopted by a\ncorporation pursuant to subdivision two of this section and any\namendments thereto.\n 2. Statement adoption. Within one hundred twenty days after either the\neffective date of this section or the beginning of the existence of the\nrespective corporation, whichever is later, each corporation shall\npromulgate rules and regulations detailing its prompt payment policy.\n 3. Statement contents. (a) The statement shall include, but not be\nlimited to, a reference to this section and the following for each type\nor category of contract as determined by the corporation:\n (i) a description of the procedure to be followed by a contractor in\nrequesting payment under a contract;\n (ii) a schedule setting forth the time in which the corporation will\nmake prompt payment under a contract;\n (iii) a declaration that interest will be paid when prompt payment is\nnot made and a statement of the rate at which such interest will accrue;\n (iv) a list of the sources of funds available to the corporation to\npay an interest penalty on each type or category of contract; and\n (v) a list of facts and conditions which in the opinion of the\ncorporation's governing body reasonably justify extension of the date by\nwhich contract payment must be made in order for the corporation not to\nbecome liable for interest payments in accordance with subdivision seven\nof this section.\n (b) Such facts and conditions may include, but shall not be limited\nto, the following when:\n (i) in accordance with specific statutory or contractual provisions,\npayment must be preceded by an inspection period or by an audit to\ndetermine the resources applied or used by a contractor in fulfilling\nthe terms of the contract;\n (ii) the necessary state government appropriation required to\nauthorize payment has yet to be enacted;\n (iii) a proper invoice must be examined by the federal government\nprior to payment; and\n (iv) such date by which contract payment must be made is modified in\naccordance with subdivision eight of this section.\n 4. Statement amendment. Each corporation shall have the power to amend\nits statement by promulgating amended rules and regulations.\n 5. Statement filing. Each corporation shall, within thirty days after\nthe statement's adoption, file a copy of such statement, and amendments\nthereto, with the state comptroller, the state director of the budget,\nthe chairman of the senate finance committee, and the chairman of the\nassembly ways and means committee.\n 6. Contract incorporation. The statement in effect at the time of\ncreation of a contract is hereby incorporated into and made a part of\nthat contract.\n 7. Interest eligibility and computation. (a) In order for the\ncorporation not to be liable for the payment of interest, contract\npayment must be made within thirty calendar days, excluding legal\nholidays, after the receipt of an invoice for the amount of the contract\npayment due; except when the contract payment is of the type where the\nfacts and conditions are as defined pursuant to subparagraph (v) of\nparagraph (a) of subdivision three of this section. Any time taken to\nsatisfy or rectify any of the facts or conditions described in\nsubdivision three (except for subparagraph (iv) of paragraph (b) of\nsubdivision three) of this section shall extend the date by which\ncontract payment must be made in order for the corporation not to become\nliable for interest payments by an equal period of time.\n (b) A corporation, which must process payments through the state\ndepartment of audit and control, the department of taxation and finance,\nor some other entity not under the corporation's control, shall not be\nliable for interest due to the process time taken by such entity.\n (c) Notwithstanding any other provision of law to the contrary,\ninterest shall be computed at the rate equal to the overpayment rate set\nby the commissioner of taxation and finance pursuant to subsection (e)\nof section one thousand ninety-six of the tax law.\n (d) A corporation shall not be liable for payment of interest when\nsuch interest as computed pursuant to the provisions of paragraph (c) of\nthis subdivision is less than ten dollars.\n 8. Each corporation shall have fifteen calendar days after receipt of\nan invoice by the corporation at its designated payment office to notify\nthe contractor of (a) defects in the delivered goods, property, or\nservices, (b) defects in the invoice, or (c) suspected improprieties of\nany kind; and the existence of such defects or improprieties shall\nprevent the commencement of the time period specified in subdivision\nseven of this section. When a corporation fails to notify a contractor\nof such defects or suspected improprieties within fifteen calendar days\nof receiving the invoice, the number of days allowed for payment of the\ncorrected proper invoice will be reduced by the number of days between\nthe fifteenth day and the day that notification was transmitted to the\ncontractor. If the corporation, in such situations, fails to provide\nreasonable grounds for its contention that a defect or impropriety\nexists, the date by which contract payment must be made in order for the\ncorporation not to become liable for interest payments shall be\ncalculated from the date of receipt of an invoice.\n 9. Notwithstanding any provision of the public service law or any\ntariffs promulgated pursuant to that law to the contrary, the provisions\nof this section shall provide the sole basis for determining and making\ninterest payments on invoices submitted by public utilities to\ncorporations.\n 10. A proper invoice submitted by the contractor shall be required to\ninitiate any payment, except where the contract provides that the\ncontractor will be paid at predetermined intervals without having to\nsubmit an invoice for each such scheduled payment and, for the purposes\nof determining eligibility for payment of interest and subject to the\nexception and time-to-rectify provisions of subdivisions three and seven\nof this section, the date by which contract payment must be made in\norder for the corporation not to become liable for interest payments\nshall be the payment due date specified in accordance with the contract.\n 11. Annual report. (a) Each corporation shall annually prepare a\nreport on the scope and implementation of its prompt payment policy\nwhich shall include, but not be limited to:\n (i) A listing of the types or categories of contracts which the\ncorporation entered into during the twelve month period covered by the\nreport, together with a brief indication of whether each such type or\ncategory of contract was subject to the prompt payment requirements\npromulgated by the corporation and, if not, why not;\n (ii) The number and amounts of interest payments made for contracts\narranged according to each such type or category;\n (iii) The number of interest chargeable days and the total number of\ndays taken to process each late contract payment; and\n (iv) A summary of the principal reasons that such late payments\noccurred.\n (b) Within ninety days after the completion of its fiscal year, each\ncorporation shall file copies of the report required by paragraph (a) of\nthis subdivision with the state comptroller, the state director of the\nbudget, the chairman of the senate finance committee, and the chairman\nof the assembly ways and means committee.\n 12. Public access. (a) Each corporation shall make available to the\npublic, upon a reasonable request therefor, copies of its statement and\nannual report.\n (b) Each contractor doing business with a corporation shall be given a\ncopy of that corporation's statement.\n 13. Inapplicability of section. The provisions of this section shall\nnot apply to payments due and owing by a corporation:\n (a) under the eminent domain procedure law;\n (b) as interest allowed on judgments rendered by a court pursuant to\nany provision of law other than those contained in this section;\n (c) to the federal government; to any state agency or its\ninstrumentalities; to any duly constituted unit of local government\nincluding, but not limited to, counties, cities, towns, villages, school\ndistricts, special districts, or any of their related instrumentalities;\nto any other public authority or public benefit corporation; or to its\nemployees when acting in, or incidental to, their public employment\ncapacity;\n (d) in situations where the corporation exercises a legally authorized\nset-off against all or part of the payment due the contractor.\n 14. The provisions of this section shall not apply to the facilities\ndevelopment corporation or the state university construction fund.\n 15. Judicial review. Any determination made by a corporation pursuant\nto this section which prevents the commencement of the time in which\ninterest will be paid shall be subject to judicial review in a\nproceeding pursuant to article seventy-eight of the civil practice law\nand rules. Such proceedings shall only be commenced in the absence, or\nupon completion, of other review procedures specified in the contract or\nby regulation.\n 16. Court action or other legal processes. (a) Notwithstanding any\nother provisions of law to the contrary, the liability of a corporation,\ninsofar as incurring an obligation to make an interest payment to a\ncontractor pursuant to the terms of this section is concerned, shall not\nextend beyond the date of a notice of intention to file a claim, the\ndate of a notice of a claim, or the date commencing a legal action for\nthe payment of such interest, whichever occurs first.\n (b) With respect to the court action or other legal processes referred\nto in paragraph (a) of this subdivision, any interest obligation\nincurred by a corporation after the date specified therein pursuant to\nany provision of law other than this section shall be determined as\nprescribed by such separate provision of law, shall be paid as directed\nby the court, and shall be paid from any source of funds available for\nthat purpose.\n