N.Y. Public Authorities Law § 2880: Prompt payment

§ 2880. Prompt payment. 1. Definitions. As used in this section, the

following terms shall have the following meanings unless the context

shall indicate another or different meaning or intent:

(a) "Corporation" means every public authority and public benefit

corporation a majority of the governing board members of which are

either appointed by the governor or serve as members by virtue of their

service as an officer of a state department, division, agency, board or

bureau, or combination thereof.

(b) "Contract" means an enforceable agreement entered into between a

corporation and a contractor.

(c) "Contractor" means any person, partnership, private corporation or

association:

(i) selling materials, equipment, or supplies or leasing property or

equipment to a corporation;

(ii) constructing, reconstructing, rehabilitating or repairing

buildings, highways or other improvements for or on behalf of a

corporation; or

(iii) rendering or providing services to a corporation pursuant to a

contract.

(d) "Designated payment office" means the office designated by the

corporation to which a proper invoice is to be submitted by a

contractor.

(e) "Prompt payment" means payment of a debt due and owing by a

corporation before interest accrues thereon pursuant to a statement

adopted in accordance with this section.

(f) "Proper invoice" means a written request for a contract payment

that is submitted by a contractor setting forth the description, price

and quantity of goods, property, or services delivered or rendered, in

such form and supported by such other substantiating documentation as

the corporation may reasonably require.

(g) "Receipt of an invoice" means (i) the date on which a proper

invoice is actually received in the designated payment office, or (ii)

the date on which the corporation receives the purchased goods,

property, or services covered by the proper invoice, whichever is later.

(h) "Set-off" means the reduction by the corporation of a payment due

to a contractor by an amount equal to the amount of an unpaid legally

enforceable debt owed by the contractor to the corporation.

(i) "Statement" means the rules and regulations adopted by a

corporation pursuant to subdivision two of this section and any

amendments thereto.

2. Statement adoption. Within one hundred twenty days after either the

effective date of this section or the beginning of the existence of the

respective corporation, whichever is later, each corporation shall

promulgate rules and regulations detailing its prompt payment policy.

3. Statement contents. (a) The statement shall include, but not be

limited to, a reference to this section and the following for each type

or category of contract as determined by the corporation:

(i) a description of the procedure to be followed by a contractor in

requesting payment under a contract;

(ii) a schedule setting forth the time in which the corporation will

make prompt payment under a contract;

(iii) a declaration that interest will be paid when prompt payment is

not made and a statement of the rate at which such interest will accrue;

(iv) a list of the sources of funds available to the corporation to

pay an interest penalty on each type or category of contract; and

(v) a list of facts and conditions which in the opinion of the

corporation's governing body reasonably justify extension of the date by

which contract payment must be made in order for the corporation not to

become liable for interest payments in accordance with subdivision seven

of this section.

(b) Such facts and conditions may include, but shall not be limited

to, the following when:

(i) in accordance with specific statutory or contractual provisions,

payment must be preceded by an inspection period or by an audit to

determine the resources applied or used by a contractor in fulfilling

the terms of the contract;

(ii) the necessary state government appropriation required to

authorize payment has yet to be enacted;

(iii) a proper invoice must be examined by the federal government

prior to payment; and

(iv) such date by which contract payment must be made is modified in

accordance with subdivision eight of this section.

4. Statement amendment. Each corporation shall have the power to amend

its statement by promulgating amended rules and regulations.

5. Statement filing. Each corporation shall, within thirty days after

the statement's adoption, file a copy of such statement, and amendments

thereto, with the state comptroller, the state director of the budget,

the chairman of the senate finance committee, and the chairman of the

assembly ways and means committee.

6. Contract incorporation. The statement in effect at the time of

creation of a contract is hereby incorporated into and made a part of

that contract.

7. Interest eligibility and computation. (a) In order for the

corporation not to be liable for the payment of interest, contract

payment must be made within thirty calendar days, excluding legal

holidays, after the receipt of an invoice for the amount of the contract

payment due; except when the contract payment is of the type where the

facts and conditions are as defined pursuant to subparagraph (v) of

paragraph (a) of subdivision three of this section. Any time taken to

satisfy or rectify any of the facts or conditions described in

subdivision three (except for subparagraph (iv) of paragraph (b) of

subdivision three) of this section shall extend the date by which

contract payment must be made in order for the corporation not to become

liable for interest payments by an equal period of time.

(b) A corporation, which must process payments through the state

department of audit and control, the department of taxation and finance,

or some other entity not under the corporation's control, shall not be

liable for interest due to the process time taken by such entity.

(c) Notwithstanding any other provision of law to the contrary,

interest shall be computed at the rate equal to the overpayment rate set

by the commissioner of taxation and finance pursuant to subsection (e)

of section one thousand ninety-six of the tax law.

(d) A corporation shall not be liable for payment of interest when

such interest as computed pursuant to the provisions of paragraph (c) of

this subdivision is less than ten dollars.

8. Each corporation shall have fifteen calendar days after receipt of

an invoice by the corporation at its designated payment office to notify

the contractor of (a) defects in the delivered goods, property, or

services, (b) defects in the invoice, or (c) suspected improprieties of

any kind; and the existence of such defects or improprieties shall

prevent the commencement of the time period specified in subdivision

seven of this section. When a corporation fails to notify a contractor

of such defects or suspected improprieties within fifteen calendar days

of receiving the invoice, the number of days allowed for payment of the

corrected proper invoice will be reduced by the number of days between

the fifteenth day and the day that notification was transmitted to the

contractor. If the corporation, in such situations, fails to provide

reasonable grounds for its contention that a defect or impropriety

exists, the date by which contract payment must be made in order for the

corporation not to become liable for interest payments shall be

calculated from the date of receipt of an invoice.

9. Notwithstanding any provision of the public service law or any

tariffs promulgated pursuant to that law to the contrary, the provisions

of this section shall provide the sole basis for determining and making

interest payments on invoices submitted by public utilities to

corporations.

10. A proper invoice submitted by the contractor shall be required to

initiate any payment, except where the contract provides that the

contractor will be paid at predetermined intervals without having to

submit an invoice for each such scheduled payment and, for the purposes

of determining eligibility for payment of interest and subject to the

exception and time-to-rectify provisions of subdivisions three and seven

of this section, the date by which contract payment must be made in

order for the corporation not to become liable for interest payments

shall be the payment due date specified in accordance with the contract.

11. Annual report. (a) Each corporation shall annually prepare a

report on the scope and implementation of its prompt payment policy

which shall include, but not be limited to:

(i) A listing of the types or categories of contracts which the

corporation entered into during the twelve month period covered by the

report, together with a brief indication of whether each such type or

category of contract was subject to the prompt payment requirements

promulgated by the corporation and, if not, why not;

(ii) The number and amounts of interest payments made for contracts

arranged according to each such type or category;

(iii) The number of interest chargeable days and the total number of

days taken to process each late contract payment; and

(iv) A summary of the principal reasons that such late payments

occurred.

(b) Within ninety days after the completion of its fiscal year, each

corporation shall file copies of the report required by paragraph (a) of

this subdivision with the state comptroller, the state director of the

budget, the chairman of the senate finance committee, and the chairman

of the assembly ways and means committee.

12. Public access. (a) Each corporation shall make available to the

public, upon a reasonable request therefor, copies of its statement and

annual report.

(b) Each contractor doing business with a corporation shall be given a

copy of that corporation's statement.

13. Inapplicability of section. The provisions of this section shall

not apply to payments due and owing by a corporation:

(a) under the eminent domain procedure law;

(b) as interest allowed on judgments rendered by a court pursuant to

any provision of law other than those contained in this section;

(c) to the federal government; to any state agency or its

instrumentalities; to any duly constituted unit of local government

including, but not limited to, counties, cities, towns, villages, school

districts, special districts, or any of their related instrumentalities;

to any other public authority or public benefit corporation; or to its

employees when acting in, or incidental to, their public employment

capacity;

(d) in situations where the corporation exercises a legally authorized

set-off against all or part of the payment due the contractor.

14. The provisions of this section shall not apply to the facilities

development corporation or the state university construction fund.

15. Judicial review. Any determination made by a corporation pursuant

to this section which prevents the commencement of the time in which

interest will be paid shall be subject to judicial review in a

proceeding pursuant to article seventy-eight of the civil practice law

and rules. Such proceedings shall only be commenced in the absence, or

upon completion, of other review procedures specified in the contract or

by regulation.

16. Court action or other legal processes. (a) Notwithstanding any

other provisions of law to the contrary, the liability of a corporation,

insofar as incurring an obligation to make an interest payment to a

contractor pursuant to the terms of this section is concerned, shall not

extend beyond the date of a notice of intention to file a claim, the

date of a notice of a claim, or the date commencing a legal action for

the payment of such interest, whichever occurs first.

(b) With respect to the court action or other legal processes referred

to in paragraph (a) of this subdivision, any interest obligation

incurred by a corporation after the date specified therein pursuant to

any provision of law other than this section shall be determined as

prescribed by such separate provision of law, shall be paid as directed

by the court, and shall be paid from any source of funds available for

that purpose.