N.Y. State Finance Law § 179-f: Determination of eligibility for payment of interest on amounts owed to contractors

§ 179-f. Determination of eligibility for payment of interest on

amounts owed to contractors. 1. Each state agency which is required to

make a payment from state funds pursuant to a contract and which does

not make such contract payment by the required payment date shall make

an interest payment to the contractor in accordance with this article on

the amount of the contract payment which is due, unless failure to make

such contract payment is the result of a lien, attachment, or other

legal process against the money due said contractor, or unless the

amount of the interest payment as computed in accordance with the

provisions of section one hundred seventy-nine-g of this article is less

than ten dollars. A pro rata share of such interest shall be paid by the

contractor or subcontractor, as the case may be, to subcontractors and

materialmen in a proportion equal to the percentage of their pro rata

share of the contract payment. Such pro rata share of interest shall be

due to such subcontractors and materialmen only for those payments which

are not paid to such subcontractors and materialmen prior to the date

upon which interest begins to accrue between the state agency and the

contractor. Such pro rata share of interest shall be computed daily

until such payments are made to the subcontractors and materialmen.

2. The required payment date shall be thirty calendar days, excluding

legal holidays, provided, however, that for a small business the

required payment date shall be fifteen calendar days, excluding legal

holidays, absent a showing by the contracting agency of circumstances

beyond its control, provided that the small business submits its invoice

electronically, in conformance with the policies and procedures of the

accounting and financial management system of state government and

identifies that it is seeking expedited payment as a small business, or

in the case of final payments on highway construction contracts

seventy-five calendar days, excluding legal holidays, after receipt of

an invoice for the amount of the contract payment due; except when:

(a) the state comptroller in the course of his or her audit determines

that there is reasonable cause to believe that payment may not properly

be due, in whole or in part;

(b) 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;

(c) the necessary state government appropriation required to authorize

payment has yet to be enacted;

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

to payment;

(e) the goods or property have not been delivered or the services have

not been rendered by the contractor in compliance with the terms or

conditions of the contract;

(f) the required payment date is modified in accordance with

subdivision three of this section; or

(g) in the case of final payments on highway construction contracts

the commissioner of transportation determines that the contractor has

failed to properly submit the necessary documents and other submissions

prescribed by the contract specifications and requirements, by the

provisions of subdivision eight of section thirty-eight of the highway

law, and by all other applicable state and federal laws in order to

enable the department of transportation to process the final payment

properly and expeditiously.

Any time taken to satisfy or rectify any of the types of conditions

described in paragraphs (a) through (e) or (g) of this subdivision shall

extend the required payment date by an equal period of time, provided,

however, that for small businesses, the required payment date shall be

fifteen calendar days, excluding legal holidays, after such conditions

have been satisfied or rectified, and provided further that all

reasonable and practicable efforts shall be taken to satisfy or rectify

such conditions as soon as possible.

3. Each state agency shall have fifteen calendar days after receipt of

an invoice by the state agency at its designated payment office, or in

the case of an invoice received from a small business, seven calendar

days, 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 two of this section. When a state agency fails

to notify a contractor of such defects or suspected improprieties within

fifteen calendar days, or seven calendar days if such contractor is a

small business, 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, or seventh day if payment of such proper

invoice is for a small business, and the day that notification was

transmitted to the contractor. If the state agency, in such situations,

fails to provide reasonable grounds for its contention that a defect or

impropriety exists, the required payment date shall be calculated from

the date of receipt of an invoice.

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

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

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

interest payments on invoices submitted by public utilities to state

agencies.

5. 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, in which case the

state agency responsible for making the purchase shall submit an

approvable voucher to the state comptroller for the payment that is due

and, for the purposes of determining eligibility for payment of interest

and subject to the exception and time-to-rectify provisions of

subdivision two of this section, the required payment date shall be the

payment due date specified in accordance with the contract.

6. As used in this section, "small business" shall mean a business

whose primary place of business is in New York state, has a significant

business presence in the state, is independently owned and operated, not

dominant in its field, and employs no more than two hundred employees at

the time of payment. The small business shall, upon request, provide the

contracting entity with sufficient documentation to reflect and confirm

its status as a small business.