BILL NUMBER: S9761
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
 
PURPOSE OF BILL:
To make targeted statutory clarifications and procedural improvements to
strengthen the administration of the Prompt Contracting Law, improve
transparency in written directives, expand access to the existing not-
forprofit short-term revolving loan fund, and reduce unnecessary payment
delays
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subdivisions 9 and 14 of section 179-q of the state
finance law to clarify that the definition of "renewal contract"
includes new contracts between a state agency and a not-for-profit
organization to provide the same or similar services as were provided
under a previously approved contract. This section also requires that
all written directives include a schedule for the submission of
invoices, the agency's scheduled payment dates for such invoices, and
instructions on how to access the not-for-profit short-term revolving
loan fund.
Section 2 amends section 179-s of the state finance law to require that
when a state agency requests that a not-for-profit organization commence
services prior to full execution of a contract, the written directive
must include a commencement date for services, a procedure and schedule
for submission of invoices, and a schedule under which the organization
can expect payment.
Section 3 amends section 179-z of the state finance law to increase the
maximum loan amount available under the not-for-profit short-term
revolving loan fund from one-half of the first quarter payment to the
full payment of the subject contract. This section also requires that
instructions on how to access the loan fund be provided to every not-
for-profit organization receiving a written directive, contract, or
renewal contract, and that such information be posted conspicuously on
relevant state websites.
Section 4 amends section 179-aa of the state finance law to require the
not-for-profit contracting advisory committee to comment and report on
the implementation and operation of the revolving loan fund, evaluate
improvements to the statewide financial system, and ensure that annual
reports are made publicly available.
Section 5 amends section 179-f of the state finance law to clarify that
only material defects in delivered goods, services, or invoices may
pause the statutory payment clock. It further specifies that minor cler-
ical or rounding errors resulting in a variance of less than one hundred
dollars shall not constitute material defects and clarifies subcontrac-
tor payment procedures.
Section 6 sets the effective date.
 
JUSTIFICATION:
New York State has long contracted with not-for-profit organizations to
provide critical services in communities throughout the state from early
childhood education and mental health services to homeless housing
programs and substance abuse treatment. These essential social safety
net services are delivered as an extension of the state to millions of
New Yorkers every day.
However, delays in payment and a cumbersome contracting process have
long challenged not-for-profit providers. A recent statewide survey
found that 33 percent of not-for-profit organizations awarded state
funds reported being owed more than $58 million for services already
delivered. Reimbursement delays regularly last for months and, in some
cases, more than a year. As a result, not-for-profits are often forced
to draw on lines of credit and incur interest costs simply to meet
payroll and maintain operations. In a recent survey conducted by the New
York Council of Nonprofits, 65 percent of respondents reported concern
about funding basic operations in 2025, up from 62 percent the prior
year.
These challenges are exacerbated when not-for-profit organizations are
directed to begin or continue providing services prior to full contract
execution, often without clear timelines for invoicing or payment. The
absence of predictable payment schedules and consistent procedures
creates uncertainty for providers and increases administrative burdens
for both not-for-profits and state agencies.
This bill seeks to make targeted clarifications and procedural improve-
ments to the Prompt Contracting Law to improve transparency and predict-
ability in the contracting process. The Governor vetoed a similar bill
in 2025 (Veto 94), citing concerns related to advance payments and
automatic interest provisions.
This legislation directly addresses those concerns by removing
provisions mandating automatic advance payments and automatic interest
adjustments, and instead focuses on targeted procedural reforms that
enhance transparency without creating new fiscal mandates. Specifically,
the bill requires written directives to include clear schedules for
invoice submission and payment, ensures that not-for-profit organiza-
tions receive information on accessing the not-for-profit short-term
revolving loan fund, and clarifies the operation of statutory payment
timelines and invoice review procedures.
By promoting greater clarity, consistency, and predictability in the
contracting process, this legislation will help ensure that not-for-pro-
fit organizations can continue to provide critical services without
disruption, reduce administrative inefficiencies, and strengthen
accountability in state contracting practices.
 
PRIOR LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.

Statutes affected:
S9761: 179-s state finance law, 179-s(1) state finance law, 179-aa state finance law