{"data":{"id":"us-ky/krs-45a.137","jurisdiction":"us-ky","citation":"KRS 45A.137","heading":"Definitions for section -- Required contract provisions -- Terms for","body":"undisputed and disputed invoices -- Interest penalty -- Secretary to promulgate\nadministrative regulations -- Payment resolution process -- Required\nreporting.\n(1) As used in this section:\n(a) \"Purchasing agency\" means a unit or body of state government that receives\ngoods or services from a contractor or vendor; and\n(b) \"Undisputed amount\" means a good -faith, valid, accurate, and timely request\nfor payment that has been subm itted to an entity owing money, and for which\nthe entity has reviewed and confirmed that the money is due and owing.\n(2) All contracts shall include but not be limited to the following provisions for:\n(a) Timely payments in accordance with KRS 45.451;\n(b) Penalties for nonpayment. Payments that are not timely received shall be\nsubject to a penalty:\n1. In accordance with KRS 45.454, and except as provided in KRS\n371.405, an interest penalty of one percent (1%) shall be applied and\nadded to any undisputed amount for each month or fraction thereof after\nthirty (30) business days following the receipt of the goods or services,\nor receipt of the invoice by the purchasing agency; or\n2. In accordance with the payment terms of the contract;\n(c) Addressing partial payment. Partial payment terms shall be included to:\n1. Allow disbursement of partial payment for undisputed amounts in the\ninvoice or an agreed -upon payment process for goods received or\nservices performed that are not rejected or deficient; or\n2. Not allow disbursement of partial payment for goods received or\nservices performed that are not rejected or deficient;\n(d) A payment process for the disbursement of funds. When invoices are utilized\nfor payment, terms shall be included for the invoice requirements, including\nform, format, delivery, necessary information, supporting documentation, and\ncommunication and notification procedures for complete invoices. For\ndeliverables-based contracts, terms shall be included to establish milestones\nthat shall be fully met before payment;\n(e) A payment schedule that may include an initial disbursement of funds upon\nexecution of the contract for project initiation; and\n(f) A payment resolution process in accordance with subsection (7)(c) of this\nsection.\n(3) Any undisputed amount shall be paid:\n(a) Within thirty (30) business days of receipt of the goods, services, or\ncontractor's invoice; or\n(b) In accordance with the negotiated payment terms of the contract.\n(4) (a) The purchasing agency shall make a good-faith effort of notifying the\ncontractor or vendor that an invoice has been rejected, of any errors in an\ninvoice, or any requirement of additional or missing information in an invoice\nwithin fifteen (15) business days from receipt of the goods, servi ces, or\ninvoice, or in accordance with the terms of the contract.\n(b) 1. If the purchasing agency transmits a rejection notice to the contractor or\nvendor, there shall be a ten (10) calendar day correction period for the\ncontractor or vendor to remedy any problems in the delivery of a good\nor service or submit a corrected invoice to fulfill the approval\nrequirements. Utilization of the ten (10) calendar day correction period\nshall not create a new date of submission or receipt for all items\nincluded in the invoice or terms of the contract and shall not be\nconsidered a new invoice for calculation of the late payment fee\npursuant to KRS 45.454.\n2. If a contractor or vendor fails to remedy the problem with the good or\nservice, or fails to submit a corrected inv oice within the ten (10)\ncalendar day correction period, the submitted invoice shall be\nconsidered a new invoice with a new date of submission for calculation\nof the late payment fee pursuant to KRS 45.454.\n(5) In accordance with KRS 45.458, the interest penalty shall be paid by the purchasing\nagency and the amount of the payments shall not be deducted from the contract\nbudget, and modifications shall not be made to the budget of the contract, the total\naward of the contract, funds encumbered or obligated f or the contract, or total\namount available to fulfill the contract agreement as awarded by the contracting\nagency.\n(6) If a contractor or vendor has not received payment within thirty (30) business days\nfor an undisputed amount and has executed a loan, lin e of credit, revolving credit,\nor other financial instrument in order to fulfill the obligations and continue\nperformance of the contract, the contractor or vendor may recover from the\npurchasing agency the interest and costs of credit borne until the date  payment has\nbeen issued.\n(7) The secretary shall promulgate administrative regulations in accordance with KRS\nChapter 13A relating to contract payments no later than October 1, 2026, to\nimplement this section. The administrative regulations shall include:\n(a) Procedures for correcting an invoice submission error when the purchasing\nagency does not reject the goods or services received;\n(b) Procedures for partial payment of invoices by a purchasing agency for\nportions of an invoice; and\n(c) A payment resolution process to resolve late payment claims by contractors or\nvendors that includes but is not limited to:\n1. That a contractor may notify the purchasing agency the payment is\noverdue and information to include when a payment has not been\nreceived within the thirty (30) day period after receipt of an invoice;\n2. The method and manner payment disputes shall be submitted to the\npurchasing agency for resolution by the secretary;\n3. Information required to be included when a contractor or vendor submits\nan administrative payment dispute;\n4. The time period by which the purchasing agency shall submit a response\nto the secretary and contractor or vendor, not to exceed ten (10) days;\n5. The time period for the secretary to issue a determination or written\nnotice no t to exceed thirty (30) days from submission of a payment\ndispute; and\n6. The requirement for the purchasing agency to issue payment within five\n(5) business days from when the determination or written notice\nestablishes the total payment due. The secretar y may grant an extension\nto pay upon receipt of a joint request between the contractor and\npurchasing agency.\n(8) The Finance and Administration Cabinet shall make the payment resolution process\nto resolve a late payment claim with instructions for contractors and vendors\navailable on its website no later than October 1, 2026.\n(9) (a) Beginning on July 1, 2027, the Fi nance and Administration Cabinet shall\nsubmit a written report every six (6) months to the Legislative Research\nCommission for referral to:\n1. The Interim Joint Committee on Appropriations and Revenue, or House\nand Senate Standing Committees on Appropriati ons and Revenue, as\nappropriate; and\n2. The Interim Joint Committee on State Government, or Senate Standing\nCommittee on State and Local Government and House Standing\nCommittee on State Government, as appropriate.\n(b) The report shall include the quantity of late payment contract disputes\nsubmitted to the secretary of the Finance and Administration Cabinet,\nincluding but not limited to:\n1. Purchasing agency at issue;\n2. Unpaid amount alleged or disputed;\n3. Duration of late payment claimed; and\n4. Determination issued.","path":["KRS Chapter 45A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57850","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:06Z","sha256":"a767341e481db50440f8ee4b0b1b7533441298fbf649e940d5125a671b878c4e","source_id":"us-ky","stale":false,"prev":"us-ky/krs-45a.135","next":"us-ky/krs-45a.140"},"notice":"GroundRules: Original legal text. Not legal advice."}