§ 179-F — Determination of eligibility for payment of interest on amounts owed to contractors

§ 179-f. Determination of eligibility for payment of interest on\namounts owed to contractors. 1. Each state agency which is required to\nmake a payment from state funds pursuant to a contract and which does\nnot make such contract payment by the required payment date shall make\nan interest payment to the contractor in accordance with this article on\nthe amount of the contract payment which is due, unless failure to make\nsuch contract payment is the result of a lien, attachment, or other\nlegal process against the money due said contractor, or unless the\namount of the interest payment as computed in accordance with the\nprovisions of section one hundred seventy-nine-g of this article is less\nthan ten dollars. A pro rata share of such interest shall be paid by the\ncontractor or subcontractor, as the case may be, to subcontractors and\nmaterialmen in a proportion equal to the percentage of their pro rata\nshare of the contract payment. Such pro rata share of interest shall be\ndue to such subcontractors and materialmen only for those payments which\nare not paid to such subcontractors and materialmen prior to the date\nupon which interest begins to accrue between the state agency and the\ncontractor. Such pro rata share of interest shall be computed daily\nuntil such payments are made to the subcontractors and materialmen.\n 2. The required payment date shall be thirty calendar days, excluding\nlegal holidays, provided, however, that for a small business the\nrequired payment date shall be fifteen calendar days, excluding legal\nholidays, absent a showing by the contracting agency of circumstances\nbeyond its control, provided that the small business submits its invoice\nelectronically, in conformance with the policies and procedures of the\naccounting and financial management system of state government and\nidentifies that it is seeking expedited payment as a small business, or\nin the case of final payments on highway construction contracts\nseventy-five calendar days, excluding legal holidays, after receipt of\nan invoice for the amount of the contract payment due; except when:\n (a) the state comptroller in the course of his or her audit determines\nthat there is reasonable cause to believe that payment may not properly\nbe due, in whole or in part;\n (b) 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 (c) the necessary state government appropriation required to authorize\npayment has yet to be enacted;\n (d) a proper invoice must be examined by the federal government prior\nto payment;\n (e) the goods or property have not been delivered or the services have\nnot been rendered by the contractor in compliance with the terms or\nconditions of the contract;\n (f) the required payment date is modified in accordance with\nsubdivision three of this section; or\n (g) in the case of final payments on highway construction contracts\nthe commissioner of transportation determines that the contractor has\nfailed to properly submit the necessary documents and other submissions\nprescribed by the contract specifications and requirements, by the\nprovisions of subdivision eight of section thirty-eight of the highway\nlaw, and by all other applicable state and federal laws in order to\nenable the department of transportation to process the final payment\nproperly and expeditiously.\n Any time taken to satisfy or rectify any of the types of conditions\ndescribed in paragraphs (a) through (e) or (g) of this subdivision shall\nextend the required payment date by an equal period of time, provided,\nhowever, that for small businesses, the required payment date shall be\nfifteen calendar days, excluding legal holidays, after such conditions\nhave been satisfied or rectified, and provided further that all\nreasonable and practicable efforts shall be taken to satisfy or rectify\nsuch conditions as soon as possible.\n 3. Each state agency shall have fifteen calendar days after receipt of\nan invoice by the state agency at its designated payment office, or in\nthe case of an invoice received from a small business, seven calendar\ndays, to notify the contractor of (a) defects in the delivered goods,\nproperty, or services, (b) defects in the invoice, or (c) suspected\nimproprieties of any kind; and the existence of such defects or\nimproprieties shall prevent the commencement of the time period\nspecified in subdivision two of this section. When a state agency fails\nto notify a contractor of such defects or suspected improprieties within\nfifteen calendar days, or seven calendar days if such contractor is a\nsmall business, of receiving the invoice, the number of days allowed for\npayment of the corrected proper invoice will be reduced by the number of\ndays between the fifteenth day, or seventh day if payment of such proper\ninvoice is for a small business, and the day that notification was\ntransmitted to the contractor. If the state agency, in such situations,\nfails to provide reasonable grounds for its contention that a defect or\nimpropriety exists, the required payment date shall be calculated from\nthe date of receipt of an invoice.\n 4. Notwithstanding any provision of the public service law or any\ntariffs promulgated pursuant to that law to the contrary, the provisions\nof this article shall provide the sole basis for determining and making\ninterest payments on invoices submitted by public utilities to state\nagencies.\n 5. 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, in which case the\nstate agency responsible for making the purchase shall submit an\napprovable voucher to the state comptroller for the payment that is due\nand, for the purposes of determining eligibility for payment of interest\nand subject to the exception and time-to-rectify provisions of\nsubdivision two of this section, the required payment date shall be the\npayment due date specified in accordance with the contract.\n 6. As used in this section, "small business" shall mean a business\nwhose primary place of business is in New York state, has a significant\nbusiness presence in the state, is independently owned and operated, not\ndominant in its field, and employs no more than two hundred employees at\nthe time of payment. The small business shall, upon request, provide the\ncontracting entity with sufficient documentation to reflect and confirm\nits status as a small business.\n