NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A506
SPONSOR: Paulin TITLE OF BILL:
An act to amend the state finance law, in relation to state agency
contracts with not-for-profit corporations
PURPOSE:
To ensure a timely procurement process for not-for-profits contracting
with the state
SUMMARY OF PROVISIONS:
Section one of the bill amends section 179-q of the state finance law to
define "noncompliant state agency"
Section two of the bill amends section 179-t of the state finance law to
specify what categories a state agency as noncompliant with prompt
contracting law.
Section three amends section 179-bb of the state finance law by provid-
ing steps a noncompliant state agency would be required to take, includ-
ing reporting.
Section four amends the definition of written directive. Section five
provides the effective date.
JUSTIFICATION:
New York State often outsources crucial programs to not-for-profits,
like early childhood education programs, mental health counseling, and
shelter for the homeless. The state relies on the important work not-
for-profits do because without them, these vital programs may not exist.
However, not-for-profit organizations contracting with the state have
repeatedly expressed concerns with the timeliness, or lack thereof, of
the current contract and procurement process in New York State for
years. In an effort to address these concerns, the state enacted the
Prompt Contracting Law in 1991 to help expedite contracts and reduce the
fiscal stress on not-for-profits. Thirty years later, the problem
persists and not-for-profits are facing immense financial hardships as a
result.
In May of 2020, the Office of the NYS Comptroller released their "Not-
For-Profit Prompt Contracting Annual Report" that found 50* of contracts
in 2019 had not been, approved until, after the start date of such
contracts compared to 47% of contracts in 2018. A not-for-profit cannot
receive payment from the state until the contract is formally approved
by the state comptroller. So, while not-for-profits are required to
start providing services by the start date of their contracts, the state
is not required to pay them within the same time-frame.
In order for the not-for-profits to begin their work, they often have to
take out lines of credit to get by in the meantime. The May 2020 NYS
Comptroller report states, "the failure of the state agencies to process
contracts on time harms not-for-profit service providers, which in turn
erodes service delivery to vulnerable populations." The report recom-
mends "state agencies should take responsibility for their critical
roles, and make prompt contracting a priority."
PRIOR LEGISLATIVE HISTORY:
A. 2740b of 2023 and 2024, vetoed (memo .22) Same as S,4877a, vetoed
(memo .22)
A.9741a of 2022, referred to governmental operations. Same as, 5.8792 of
2022, passed senate.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:•
This act shall take effect immediately.
