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S 9855

Relates to requirements associated with contracts between state agencies and not-for-profit organizations

2025 Regular Session Introduced by Shelley Mayer and 1 co-sponsor

Requires upfront 25% advance payments to not-for-profits for new and renewal contracts, with timelines, indirect cost limits, and comptroller review rules for substantial modificat

RETURNED TO SENATE
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Bill Summary · S 9855

Summary of Bill S. 9855-A (Session 2025-2026) – Relates to requirements associated with contracts between state agencies and not-for-profit organizations

Purpose and intent

  • Establishes or clarifies requirements for contracts between state agencies and not-for-profit (NFP) organizations.
  • Aims to provide upfront funding in the form of advance payments to cover initial expenses and services during the first quarter of contract performance.
  • Adds procedural requirements for contract renewals, modifications, and cost accounting related to NFP contracts.
  • Addresses treatment of indirect costs and special considerations where federal funding is involved.

Key provisions

1) Advance payments for new contracts with NFPs (State Finance Law § 179-u, amended)
- For new contracts when funds are appropriated, the state agency must provide an advance payment equal to 25% of the total award within 30 days of contract execution.
- For renewal or extension of an existing contract, if funds are appropriated and the agency intends to renew/extend, the agency must either fully execute the renewal/extension or issue a written directive prior to the start date of the new term. In either case, an advance payment of 25% of the total award must be issued before the new term begins to cover expenses in the first quarter, pending renewal/extension execution.
- The advance payments are applied as offsets to future payments due under the renewal/extension contract and shall not exceed the maximum amount of the renewal/extension contract.
- Agencies must submit the required advance payment directives and related documentation (voucher and other documents) to the comptroller for approval.
- The advance payment would not be required if federal funding terms prohibit such advances.

2) Modifications to contracts (State Finance Law § 179-ee, amended; new subdivision)
- Modifications that shift funds among program activities or budget categories but do not change the core terms (amount, consideration, scope) generally do not require comptroller review.
- If the modification is substantial—defined as equal to or greater than 10% of the total contract value for contracts under $5 million, or 5% for contracts over $5 million—the comptroller may require review. All non-reviewable modifications must be approved within 60 days; those requiring review must be approved within 90 days.
- When submitting final vouchers or invoices, if the resulting modification relative to the total contract value is within the de minimis thresholds (≤10% for contracts under $5 million, ≤5% for contracts over $5 million), the agency may treat the voucher/invoice as a contract modification request and process accordingly.

3) Indirect costs (new language in § 179-ee, subd. 4)
- Not-for-profit contracts with state agencies must include de minimis indirect costs.
- However, such indirect costs may be excluded if federal funding for the contract prohibits their inclusion.

Affected parties

  • State agencies entering into contracts with not-for-profit organizations.
  • Not-for-profit organizations receiving state contracts.
  • New York State Comptroller's Office (as the approval body for advance payments and certain contract modifications).
  • Potentially, vendors and contractors working under renewal/extension terms, given the change in funding mechanics.

Timeline and procedural aspects

  • Effective date: The act takes effect 180 days after becoming law.
  • Administration: Agencies must act promptly to issue advance payments (within 30 days for new contracts, prior to the start of the next term for renewals) and coordinate with the comptroller for approval.
  • Review cycles: Modifications subject to comptroller review have set review windows (60 days for non-reviewable items; 90 days for items requiring review).

Practical impact

  • Provides upfront financing to NFPs to support early project work and service delivery.
  • Introduces clearer rules for contract renewals and the handling of advance payments, with safeguards to ensure they align with contract totals.
  • Clarifies when comptroller review is required for modifications, potentially streamlining smaller adjustments while preserving oversight for larger changes.
  • Balances administrative efficiency with fiscal controls by specifying timelines and review thresholds.
  • Addresses potential federal funding constraints on advancing payments and indirect cost recovery.

Compiled from official sources — confirm details with the bill’s official record.

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