NY State Senate Bill 2025-S7001

Senate Bill S7001

2025-2026 Legislative Session

Relates to contracts between state agencies and not-for-profit organizations; repeals a provision of the state finance law relating thereto

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Current Bill Status - In Senate Committee Procurement And Contracts Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 28, 2025	referred to procurement and contracts

2025-S7001 (ACTIVE) - Details

See Assembly Version of this Bill:: A7616
Current Committee:: Senate Procurement And Contracts
Law Section:: State Finance Law
Laws Affected:: Amd §§179-q, 179-s, 179-u, 179-v, 179-z, 179-aa, 179-ee & 179-f, rpld §179-v sub 7, St Fin L

2025-S7001 (ACTIVE) - Summary

Relates to provisions governing contracting between state agencies and not-for-profit organizations including new, renewal, and extension contracts and advance payments and interest for such contracts; repeals provisions relating to interest payments.

2025-S7001 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7001

SPONSOR: MAYER
 
TITLE OF BILL:

An act to amend the state finance law, in relation to contracting
between state agencies and not-for-profit organizations; and to repeal
subdivision 7 of section 179-v of such law relating thereto

 
PURPOSE OF BILL:

To make changes to the prompt contracting law to address nonprofits'
challenges with state funding.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subdivisions 9 and 14 of section 179-q of the state
finance law to include within the definition of "renewal contract" a new
contract providing similar services delivered under a previous contract
and to amend the definition of "written directive" to require the inclu-
sion of a schedule of invoices and payments within the written directive
and to require written directives to include instructions on how to

access the not-for-profit short term revolving loan fund program.

Section 2 amends subdivision 1 of section 179-s of the state finance law
to establish rules for when an agency requests that a not-for-profit
commence services prior to execution of a contract, including, estab-
lishing a work and payment schedule, and requiring late payments be
subject to interest.

Section 3 amends subdivisions 1, 2, 3, and 4 of section 179-u of the
state finance law to establish automatic advance payments after a
contract has been executed and to establish rules for advance payments,
including the creation of a written directive, when the execution of a
contract is delayed more than 30 days.

Section 4 repeals subdivision 7 and amends subdivisions 1 and 2 of
section 179-v of the state finance law to remove the ability of a state
agency and a not-for-profit to waive interest due; to require all inter-
est due to a not-for-profit be paid in full with the first payment made
to the not-for-profit; and to establish that interest due shall be at
the current prime interest rate.

Section 5 amends subdivisions 1 and 4, and adds a new subdivision '5 to
section 179-z of the state finance law to increase the maximum loan
amount from one-half of the first quarter payment to the full contract
amount and to require that information on the revolving loan funds be
provided to every not-for-profit that receives a written directive,
contract, or renewal contract.

Section 6 amends section 179-aa of the state finance law to require the
not-for-profit advisory committee to comment and report on the not-for-
profit revolving loan fund and to require that the advisory committee
reports be made available to the public via the web.

Section 7 amends subdivision 3 and adds new subdivisions 4 and 5 to
section 179-ee of the state finance law to establish a time period for
approval of contract modifications and to require that modification be
deemed approved when a state agency fails to respond to a request for
modification; to establish that the minimum indirect cost for a not-for-
profit be 15%; and to define certain expenses as direct expenses.

Section 8 amends paragraphs (a) and (e) of subdivision 2, and subdivi-
sion 3 of section 179-f of the state finance law to clarify that
contractors who do not receive advances may pay subcontractors after
receipt of payment on an invoice and to clarify that stop the clock
notifications should only be used for material defects, not scrivener's
or rounding errors.

Section 9 sets the effective date.

 
JUSTIFICATION:

New York State has long contracted with not-for-profits to provide crit-
ical services in communities throughout the state - from early childhood
education and mental health services to homeless housing programs and
substance abuse treatment. These social safety net services are provided
as an "extension of the state" to millions of New Yorkers every day.

But delays in receiving funds to provide such services and a cumbersome
contractual process have long challenged not-for-profits.  A recent
statewide survey of not-for-profits found that 33% of those awarded
state funds reported being owed more than $58 million in payments by New
York State for services already delivered. Using these findings for all
contracts held by nonprofits, New York State owes nonprofits an esti-
mated $650 million statewide.

Delays in reimbursement regularly last months and can sometimes last
more than a year. Not-for-profits are often forced to pay interest on
credit lines so they can make payroll while waiting for reimbursement by
New York state interest that is not reimbursed by the state. In a recent
survey among the New York Council of Nonprofits' 3,100 members, the
statewide organization found that 65% said they are concerned about
funding basic operations in 2025, up from 62% the year before.

This bill seeks to make changes to the prompt contracting law to help
address not-for-profits' largest challenges with state funding.  Changes
include clarifying language in the existing law, expanding the use of
written directives, mandating and increasing the interest rate on late
payments and more. Similarly, clarifying, standardizing, and streamlin-
ing these processes will benefit the state agencies that process these
contracts.

Addressing these challenges is particularly critical now, as an increas-
ing number of not-for-profits report they are struggling financially.
These financial struggles are also directly impacting agencies' ability
to recruit and retain staff to deliver services, a problem that is being
further compounded by funding cuts,and the further threat of funding
cuts, to not-for-profit services providers at the federal level.

 
PRIOR LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS:

None.
 
EFFECTIVE DATE:
This act shall 180 days after it shall have become a law.

2025-S7001 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7001
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                              March 28, 2025
                                ___________
 
 Introduced  by  Sen.  MAYER  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Procurement and Contracts
 
 AN ACT to amend the  state  finance  law,  in  relation  to  contracting
   between state agencies and not-for-profit organizations; and to repeal
   subdivision 7 of section 179-v of such law relating thereto

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivisions 9 and 14 of section 179-q of the state finance
 law, as added by chapter 166 of the laws of 1991, are amended to read as
 follows:
   9. "Renewal contract" means the documents  necessary  to  continue  in
 effect  an  existing  contract between a state agency and not-for-profit
 organization, including any simplified  contract  documents  in  a  form
 approved  by  the  office  of the state comptroller.  "RENEWAL CONTRACT"
 SHALL ALSO INCLUDE ANY NEW CONTRACT BETWEEN A STATE AGENCY  AND  A  NOT-
 FOR-PROFIT  ORGANIZATION TO PROVIDE THE SAME OR SIMILAR SERVICES AS WERE
 PROVIDED BY SUCH NOT-FOR-PROFIT ORGANIZATION TO THE STATE AGENCY UNDER A
 PREVIOUSLY APPROVED CONTRACT. SIMILAR SERVICES  ARE  SERVICES  THAT  ARE
 COMPARABLE  TO THOSE PROVIDED IN A PRIOR EXECUTED CONTRACT FROM THE SAME
 AGENCY.
   14. "Written directive" means a written request by a state agency to a
 not-for-profit organization  authorizing  such  organization  either  to
 begin  providing  services  during  the  negotiation of a contract or to
 continue  providing  services  during  the  negotiation  of  a   renewal
 contract.     ALL  WRITTEN  DIRECTIVES  SHALL  INCLUDE  A  SCHEDULE  FOR
 SUBMISSION OF INVOICES FOR WORK COMPLETED BY THE  NOT-FOR-PROFIT  ORGAN-
 IZATION  AND  THE  STATE  AGENCY'S SCHEDULED PAYMENT DATES FOR SUBMITTED
 INVOICES. All written  directives  shall  state  that  payment  for  the
 services  provided  is  subject  to  the availability of appropriations,
 execution of either the contract or renewal contract,  and  approval  of
 the  contract  or  renewal  contract by the comptroller and the attorney
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10809-02-5

 S. 7001                             2
 
 general.  ALL WRITTEN DIRECTIVES SHALL ALSO INCLUDE INSTRUCTIONS ON  HOW
 TO  ACCESS THE NOT-FOR-PROFIT SHORT-TERM REVOLVING LOAN FUND PURSUANT TO
 SECTION ONE HUNDRED SEVENTY-NINE-Z OF THIS ARTICLE.
   § 2. Subdivision 1 of section 179-s of the state finance law, as added
 by  chapter  166 of the laws of 1991, is amended and a new subdivision 4
 is added to read as follows:
   1. A state agency shall have not more  than  one  hundred  fifty  days
 following  the latest date on which any of the appropriations covered by
 the program plan become law to  execute  contracts  with  not-for-profit
 organizations  pursuant  to  the  program  plan.  Upon execution of each
 contract by the state agency and the  not-for-profit  organization,  the
 contract  shall  immediately  be  delivered  to the attorney general for
 approval.  The attorney general shall within  fifteen  days  of  receipt
 either  approve  such  contract or disapprove and return the contract to
 the state agency with reasons  therefor.  Upon  approval,  the  contract
 shall  be  delivered to the comptroller who shall within fifteen days of
 receipt either approve and file such contract or disapprove  and  return
 the  contract  to the state agency with [his] SUCH COMPTROLLER'S reasons
 therefor.
   4. WHEN A STATE AGENCY DEEMS IT NECESSARY FOR A NOT-FOR-PROFIT  ORGAN-
 IZATION TO COMMENCE THE PROVISION OF SERVICES PRIOR TO FULL EXECUTION OF
 A  NEW, RENEWAL, OR EXTENSION CONTRACT AND ISSUES A WRITTEN DIRECTIVE TO
 THE NOT-FOR-PROFIT ORGANIZATION  REQUESTING  THE  COMMENCEMENT  OF  SUCH
 SERVICES,  THE  WRITTEN DIRECTIVE SHALL PROVIDE A SCHEDULE AND PROCEDURE
 FOR  THE  NOT-FOR-PROFIT  ORGANIZATION  TO  RECEIVE  PAYMENT  FOR   WORK
 PERFORMED,  INCLUDING  A  COMMENCEMENT  DATE FOR SERVICES THAT THE STATE
 AGENCY IS REQUESTING, A SCHEDULE AND PROCEDURE  FOR  THE  NOT-FOR-PROFIT
 ORGANIZATION  TO SUBMIT INVOICES TO THE STATE AGENCY FOR WORK PERFORMED,
 AND A SCHEDULE UNDER WHICH THE NOT-FOR-PROFIT  ORGANIZATION  CAN  EXPECT
 PAYMENT  FROM  THE  STATE  AGENCY. ALL LATE PAYMENTS SHALL BE SUBJECT TO
 INTEREST PURSUANT TO SECTION ONE HUNDRED SEVENTY-NINE-V OF THIS ARTICLE.
   § 3. Section 179-u of the state finance law, as added by  chapter  166
 of the laws of 1991, is amended to read as follows:
   §  179-u.  Advance  payments. 1.   WHEN A STATE AGENCY ADMINISTERING A
 CONTRACT ENTERS A NEW, RENEWAL OR EXTENSION CONTRACT WITH A NOT-FOR-PRO-
 FIT ORGANIZATION, THE AGENCY SHALL PROVIDE WITHIN THIRTY DAYS OF EXECUT-
 ING THE CONTRACT AN AUTOMATIC ADVANCE PAYMENT  OF  AN  AMOUNT  EQUAL  TO
 TWENTY-FIVE  PERCENT  OF  THE TOTAL AWARD TO COVER EXPENSES INCURRED AND
 SERVICES PROVIDED IN THE FIRST QUARTER.   RECOUPMENT  OF  SUCH  ADVANCES
 SHALL BE RECOVERED IN THE FINAL QUARTER OF THE CONTRACT THROUGH A RECON-
 CILIATION  WITH  THE  FINAL VOUCHER OF THE CONTRACT. IF THE TOTAL AMOUNT
 SUBMITTED IN THE VOUCHER FOR THE FINAL QUARTER OF THE CONTRACT  IS  LESS
 THAN  THE  ADVANCE PAYMENT, THE NOT-FOR-PROFIT ORGANIZATION SHALL RETURN
 THE AMOUNT OF THE DIFFERENCE BETWEEN THE ADVANCE AND THE  FINAL  VOUCHER
 TO THE AGENCY WITHIN NINETY DAYS OF THE END OF THE CONTRACT.
   2.  When a state agency administering a contract shall advise the not-
 for-profit organization of the agency's intention to renew the contract,
 the not-for-profit organization[, may] SHALL, upon receipt of a  written
 directive, be entitled to an advance payment OF AN AMOUNT EQUAL TO TWEN-
 TY-FIVE  PERCENT  OF  THE  TOTAL  AWARD  TO  COVER EXPENSES INCURRED AND
 SERVICES PROVIDED IN THE FIRST QUARTER pending execution of the  renewal
 contract if such contract is not fully executed by the commencement date
 of the succeeding contract; the written directive shall specifically set
 forth  the  dollar  amount and the period of time covered by the advance
 payment. Such advance payment shall offset future payments  due  to  the
 organization  for  services  provided during the term of the prospective
 S. 7001                             3
 
 renewal contract and shall not exceed the maximum  contract  amount  set
 forth  in  said  renewal  contract.    IF  THE CONTRACT HAS NOT YET BEEN
 EXECUTED BY THE END OF EACH SUBSEQUENT QUARTER, THEN ADDITIONAL ADVANCES
 EQUAL  TO  TWENTY-FIVE  PERCENT  OF THE TOTAL AWARD SHALL BE MADE WITHIN
 FOURTEEN DAYS OF THE COMMENCEMENT OF EACH SUBSEQUENT QUARTER.
   [2.] 3. A state agency providing an advance  OF  AN  AMOUNT  EQUAL  TO
 TWENTY-FIVE  PERCENT  OF THE TOTAL AWARD payment pursuant to subdivision
 one of this section shall submit a written directive, a voucher and such
 other documents as may be required to the comptroller for approval.
   4. WHEN THE FULL EXECUTION OF A CONTRACT IS DELAYED MORE  THAN  THIRTY
 CALENDAR  DAYS, THE STATE AGENCY SHALL PROVIDE THE NOT-FOR-PROFIT ORGAN-
 IZATION WITH A WRITTEN DIRECTIVE ALONG WITH AN AUTOMATIC ADVANCE PAYMENT
 OF AN AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE TOTAL  AWARD  TO  COVER
 EXPENSES  INCURRED  AND SERVICES PROVIDED IN THE FIRST QUARTER. THE NOT-
 FOR-PROFIT ORGANIZATION MAY REQUEST, AND THE AGENCY SHALL PROVIDE, ADDI-
 TIONAL ADVANCE PAYMENTS  WHEN  THE  FULL  EXECUTION  OF  A  CONTRACT  IS
 DELAYED,  AT  QUARTERLY INTERVALS, UNTIL SUCH TIME THE CONTRACT IS FULLY
 EXECUTED. THE WRITTEN DIRECTIVE SHALL SPECIFICALLY SET FORTH THE  DOLLAR
 AMOUNT  AND  THE  PERIOD  OF  TIME  COVERED BY THE ADVANCE PAYMENT OF AN
 AMOUNT EQUAL TO TWENTY-FIVE PERCENT OF THE  TOTAL  AWARD.  SUCH  ADVANCE
 PAYMENT  SHALL  OFFSET  FUTURE  PAYMENTS  DUE  TO  THE  ORGANIZATION FOR
 SERVICES PROVIDED DURING THE TERM OF THE  PROSPECTIVE  RENEWAL  CONTRACT
 AND  SHALL  NOT  EXCEED  THE  MAXIMUM  CONTRACT  AMOUNT SET FORTH IN THE
 RENEWAL CONTRACT.
   § 4. Subdivision 7 of section  179-v  of  the  state  finance  law  is
 REPEALED  and  subdivisions 1 and 2, as added by chapter 166 of the laws
 of 1991, are amended to read as follows:
   1.  A  not-for-profit  organization  shall  be  entitled  to  interest
 payments pursuant to this section: (a) on those moneys that would be due
 under  the  terms  of  the  contract  [or],  EXTENSION CONTRACT, renewal
 contract OR WRITTEN DIRECTIVE from the scheduled  commencement  date  or
 the  date  the  organization  begins  to  provide services, whichever is
 later, until the date the payment  is  made  under  the  contract  [or],
 EXTENSION  CONTRACT,  renewal contract OR WRITTEN DIRECTIVE; or (b) if a
 not-for-profit organization borrows funds to provide  services  pursuant
 to a CONTRACT, EXTENSION CONTRACT, RENEWAL CONTRACT OR written directive
 by  a  state agency, provided however that a not-for-profit organization
 may only receive interest payments on such funds when such  not-for-pro-
 fit  organization  [has received a written directive but has been denied
 payment pursuant to section one hundred seventy-nine-u of  this  article
 or]  did  not obtain a loan from the not-for-profit short-term revolving
 loan fund.  ALL INTEREST DUE AND OWING SHALL BE PAID IN  FULL  WITH  THE
 FIRST  PAYMENT  MADE  TO A NOT-FOR-PROFIT ORGANIZATION UNDER A CONTRACT,
 EXTENSION CONTRACT OR RENEWAL CONTRACT.
   2. Such organizations shall receive such interest payments at  a  rate
 equal  to  the [rate set by the commissioner of taxation and finance for
 corporate taxes pursuant to paragraph one of subsection (e)  of  section
 one  thousand  ninety-six  of  the tax law] CURRENT PRIME INTEREST RATE.
 THE COMMISSIONER OF TAXATION AND FINANCE, ON A  QUARTERLY  BASIS,  SHALL
 COMMUNICATE THE CURRENT PRIME INTEREST RATE IN EFFECT TO THE COMPTROLLER
 AND  ALL STATE AGENCIES AND NOT-FOR-PROFIT ORGANIZATIONS CURRENTLY UNDER
 CONTRACT, EXTENSION CONTRACT, RENEWAL CONTRACT,  OR  WRITTEN  DIRECTIVE.
 THE  COMMISSIONER OF TAXATION AND FINANCE SHALL ALSO PUBLISH THE CURRENT
 APPLICABLE PRIME INTEREST RATE PROMINENTLY ON THE DEPARTMENT OF TAXATION
 AND FINANCE'S  WEBSITE.    In  order  for  a  state  agency  to  approve
 reimbursement  of a not-for-profit organization at a rate other than the
 S. 7001                             4
 
 interest rate stated in this  section  the  not-for-profit  organization
 shall  submit documentation indicating the rate at which such funds were
 borrowed, the lender of such funds and any other  information  requested
 by  the  state  agency,  attorney  general or the comptroller. The comp-
 troller may disallow such portions of the interest that the  comptroller
 deems unreasonable.
   §  5.  Subdivisions 1 and 4 of section 179-z of the state finance law,
 as added by chapter 166 of the laws of  1991,  are  amended  and  a  new
 subdivision 5 is added to read as follows:
   1.  The state comptroller is authorized to provide loans from the not-
 for-profit short-term revolving loan fund established by  section  nine-
 ty-seven-jj  of  this  chapter  to  any  not-for-profit  organization in
 receipt of a written directive from a  state  agency.  The  state  comp-
 troller  may  provide  such a loan to a not-for-profit organization upon
 receipt of a written agreement providing reasonable assurances of repay-
 ment that is satisfactory to the comptroller. Such loan shall  not  bear
 interest and repayment of such loan may be prorated over the term of the
 expected  or  renewal  contract,  provided the term of the loan does not
 exceed one year. The amount of each such loan shall not exceed [one-half
 of the first quarter] THE FULL payment of the subject contract.
   4. Any not-for-profit organization receiving a loan from the  not-for-
 profit  short-term  revolving  loan fund shall be ineligible [to receive
 interest from a state agency, notwithstanding the provisions of  section
 one  hundred  seventy-nine-v of this article and shall be ineligible] to
 receive advance payments FOR THE AMOUNT THAT THEY RECEIVED IN THE  LOAN,
 notwithstanding section one hundred seventy-nine-u of this article.
   5. INSTRUCTIONS ON HOW TO ACCESS THE NOT-FOR-PROFIT SHORT-TERM REVOLV-
 ING  LOAN  FUND  SHALL  BE PROVIDED TO EVERY NOT-FOR-PROFIT ORGANIZATION
 THAT RECEIVES A WRITTEN DIRECTIVE, CONTRACT, OR RENEWAL CONTRACT FROM  A
 STATE  AGENCY.  SUCH  INSTRUCTIONS SHALL ALSO BE POSTED IN A CONSPICUOUS
 MANNER ON THE WEBSITES OF THE STATE COMPTROLLER AND THE NEW  YORK  STATE
 NONPROFIT UNIT.
   §  6.  Section  179-aa of the state finance law, as amended by chapter
 672 of the laws of 2019, is amended to read as follows:
   § 179-aa. Advisory committee. There is hereby established  a  not-for-
 profit  contracting  advisory  committee.  The  advisory committee shall
 consist of sixteen members which shall include eight appointed  members,
 four  to  be  appointed  by the governor who shall be representatives of
 not-for-profit organizations providing services in the  state,  and  two
 each  to  be appointed by the governor upon recommendation of the tempo-
 rary president of the senate and speaker of the assembly, and  eight  ex
 officio  members of the committee, one each designated from the division
 of the budget, the department of law, the  office  of  the  state  comp-
 troller, and the education department. The governor shall also designate
 four members from among the following agencies: the department of state,
 the  office of children and family services, the office of temporary and
 disability assistance, the department of health, the  office  of  mental
 hygiene,  the office for people with developmental disabilities, and the
 department of labor. The governor shall designate an appointee to  serve
 as  chair  of  the committee. The advisory committee shall meet at least
 quarterly and [upon its own initiative may] SHALL:   comment and  report
 on  the  implementation  and  operation of the not-for-profit short-term
 revolving loan fund;  advise  the  governor,  comptroller,  LEGISLATURE,
 ATTORNEY  GENERAL and state agencies on the implementation and operation
 of this article; evaluate the benefits of requiring all  state  agencies
 to  use  standard  contract  language  and  the extent to which standard
 S. 7001                             5
 
 language may be effectively included in  contracts  with  not-for-profit
 organizations;  EVALUATE  AND  PROVIDE  FEEDBACK  ON IMPROVEMENTS TO THE
 STATEWIDE FINANCIAL SYSTEM; review annually the report of the office  of
 the state comptroller made pursuant to section one hundred seventy-nine-
 bb  of  this article; and propose any legislation they deem necessary to
 improve the fund and this article. The committee  shall  report  to  the
 COMPTROLLER'S  OFFICE,  THE OFFICE OF THE ATTORNEY GENERAL, THE governor
 and the legislature with recommendations on  improving  the  contracting
 procedures  with  not-for-profit organizations which receive state funds
 through the intermediary of municipalities.  Such reports shall  be  due
 annually  not  later than December first, AND SHALL BE MADE AVAILABLE TO
 THE GENERAL PUBLIC, INCLUDING A CONSPICUOUS POSTING ON  THE  WEBSITE  OF
 THE NEW YORK STATE NONPROFIT UNIT.
   §  7.  Subdivision  3  of  section 179-ee of the state finance law, as
 added by section 38 of part L of chapter 55 of  the  laws  of  2012,  is
 amended and two new subdivisions 4 and 5 are added to read as follows:
   3.  A  modification  to  a contract that would result in a transfer of
 funds among program activities or budget cost categories  but  does  not
 affect  the amount, consideration, scope or other terms of such contract
 shall not, by itself, require  such  contract  and  modification  to  be
 submitted  to  the  comptroller for review; provided, however, where the
 amount of such modification is, as a portion of the total value  of  the
 contract,  equal  to  or  greater than ten percent for contracts of less
 than five million dollars, or five percent for contracts  of  more  than
 five million dollars, the comptroller may require that such modification
 be  submitted to [him or her] SUCH COMPTROLLER for review. ALL MODIFICA-
 TIONS THAT DO NOT REQUIRE COMPTROLLER REVIEW SHALL  BE  APPROVED  WITHIN
 THIRTY DAYS, AND ALL MODIFICATIONS THAT REQUIRE COMPTROLLER REVIEW SHALL
 BE  APPROVED  WITHIN SIXTY DAYS. A FAILURE BY THE AGENCY TO RESPOND TO A
 REQUEST FOR MODIFICATION DURING THE  TIME  PERIOD  SHALL  BE  DEEMED  AN
 APPROVAL  OF  THE PROPOSED MODIFICATION. WHEN A CONTRACTOR SUBMITS THEIR
 FINAL VOUCHERS OR INVOICE, IF SUCH VOUCHER OR INVOICE WOULD RESULT IN  A
 MODIFICATION  BETWEEN  BUDGET  CATEGORIES  OF, AS A PORTION OF THE TOTAL
 VALUE OF THE CONTRACT, EQUAL TO OR LESSER THAN TEN PERCENT FOR CONTRACTS
 OF LESS THAN FIVE MILLION DOLLARS, OR FIVE PERCENT FOR CONTRACTS OF MORE
 THAN FIVE MILLION DOLLARS, THEN THE AGENCY SHALL CONSIDER THE VOUCHER OR
 INVOICE A REQUEST  FOR  CONTRACT  MODIFICATION  AND  SHALL  PROCESS  THE
 MODIFICATION AS SUCH.
   4.  NOTWITHSTANDING  ANY  OTHER  PROVISIONS OF THIS ARTICLE, A MINIMUM
 INDIRECT COST RATE OF AT LEAST FIFTEEN  PERCENT  OR  THE  NOT-FOR-PROFIT
 ORGANIZATION'S  FEDERALLY-APPROVED  DE MINIMIS INDIRECT COST RATE OR THE
 NOT-FOR-PROFIT ORGANIZATION'S ACTUAL INDIRECT COSTS RELATED TO ALLOWABLE
 EXPENSES UNDER THE CONTRACT, WHICHEVER IS HIGHER, SHALL BE  INCLUDED  IN
 ALL  NOT-FOR-PROFIT ORGANIZATION CONTRACTS WITH STATE AGENCIES. INDIRECT
 COSTS MAY BE INCURRED AT A HIGHER RATE THAN FIFTEEN PERCENT IN ANY BUDG-
 ETED PERIOD SO LONG AS THE YEAR-TO-DATE INDIRECT COST  DOES  NOT  EXCEED
 FIFTEEN  PERCENT AT THAT TIME. EXPENSES INCLUDING PURCHASE OF FURNITURE,
 TECHNOLOGY, AND EQUIPMENT, AND EXPENSES RELATED TO OFFICE  SPACE  NECES-
 SARY  FOR THE PROGRAM STAFF TO PERFORM THEIR DUTIES UNDER THE GRANT, AND
 TRAINING AND CERTIFICATION NECESSARY TO MAINTAIN CREDENTIALS REQUIRED TO
 PERFORM THEIR  DUTIES  UNDER  THE  GRANT,  SHALL  BE  CONSIDERED  DIRECT
 EXPENSES IN ALL NOT-FOR-PROFIT ORGANIZATION CONTRACTS.
   5.  INTEREST ACCRUED DUE TO BORROWING FUNDS TO PROVIDE SERVICES PURSU-
 ANT TO A WRITTEN DIRECTIVE,  CONTRACT,  RENEWAL  CONTRACT  OR  EXTENSION
 CONTRACT   IS  A  DIRECT  REIMBURSABLE  COST  UNDER  ALL  NOT-FOR-PROFIT
 CONTRACTS.
 S. 7001                             6
 
   § 8. Paragraphs (a) and (e) of subdivision  2  and  subdivision  3  of
 section 179-f of the state finance law, paragraphs (a) and (e) of subdi-
 vision  2 as amended by chapter 36 of the laws of 2016 and subdivision 3
 as amended by chapter 568 of the laws of 2015, are amended  to  read  as
 follows:
   (a)  the  state  comptroller  in the course of [his or her] SUCH COMP-
 TROLLER'S audit determines that there is  reasonable  cause  to  believe
 that payment may not properly be due, in whole or in part;
   (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, EXCEPT THAT WHERE THE CONTRACTOR PRESENTS AN
 INVOICE OF A SUBCONTRACTOR AS PROOF OF THE COST AND MAY PAY  SUBCONTRAC-
 TORS  UPON  RECEIPT  OF PAYMENT ON THE INVOICE OR VOUCHER BY THE AGENCY,
 PROOF OF SUCH PAYMENT BY THE CONTRACTOR TO THE  SUBCONTRACTOR  SHALL  BE
 PROVIDED BY THE CONTRACTOR TO THE STATE AGENCY WITHIN THIRTY DAYS OF THE
 RECEIPT OF THE VOUCHER PAYMENT;
   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) MATERIAL defects in the delivered
 goods, property, or services, (b) MATERIAL defects in  the  invoice,  or
 (c)  suspected  improprieties  of  any kind[; and the]. THE existence of
 such MATERIAL defects or improprieties shall [prevent  the  commencement
 of]  PAUSE  THE  CALCULATION OF the time period specified in subdivision
 two of this section UNTIL SUCH MATERIAL DEFECTS  OR  IMPROPRIETIES  HAVE
 BEEN  CORRECTED.  [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 AGENCY NOTIFIES THE CONTRACTOR OF A MATERIAL DEFECT
 OR IMPROPRIETY THAT WAS  PRESENT  IN  THE  ORIGINAL  INVOICE  AFTER  THE
 INITIAL  FIFTEEN  CALENDAR  DAYS  FROM  WHEN  THE INVOICE WAS ORIGINALLY
 SUBMITTED, THEN THE TIME PERIOD SPECIFIED IN  SUBDIVISION  TWO  OF  THIS
 SECTION  SHALL CONTINUE TO RUN AND SHALL NOT BE AFFECTED BY SUCH NOTIFI-
 CATION. If the state  agency,  in  such  situations,  fails  to  provide
 reasonable  grounds  for its contention that a MATERIAL defect or impro-
 priety exists, the required payment date shall be  calculated  from  the
 date  of  receipt  of  an invoice. SCRIVENER'S ERRORS OR ROUNDING ERRORS
 THAT RESULT IN A VARIANCE OF LESS THAN ONE HUNDRED DOLLARS SHALL NOT  BE
 CONSIDERED MATERIAL DEFECTS FOR THE PURPOSES OF THIS SECTION.
   § 9. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.

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