§ 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.