State agencies were late more than 77 percent of the time in approving contracts with not-for-profit providers (NFPs) in 2014, according to a report released today by State Comptroller Thomas P. DiNapoli. The late approvals prompted interest payments, mandated under the Prompt Contracting Law, that cost the state $195,663 last year, the report found. Despite the modest improvement from 2013 when contracts were late 87 percent of the time, a review of the trend for more than two decades indicates that late contracting remains as serious a problem for NFPs today as when the Prompt Contracting Law was enacted in 1991. Over that time, the majority of contracts have been late every year, averaging nearly 70% late for more than twenty years. The number of contracts varies year to year. Click here for a breakdown of not-for-profit contracts by organization, region and length of days for approval.
“The state needs to show much more progress in executing its contracts with its service providers. We can’t continue to ask NFPs to help care for our children, look after the elderly and provide so many other important services without holding up our end of the bargain,” DiNapoli said. “Although recent improvements provide for some optimism, state agencies must do their job and make prompt contracting a priority.”
The report noted that the most recent initiative known as the Grants Gateway leverages technology to streamline contracting, monitor contracting timeframes and improve communications about grant opportunities. Agencies recently submitted the first electronic contracts for approval in the system (after the end of the 2014 reporting period). However, DiNapoli’s report cautioned that a sustained commitment by agencies is needed to show significant progress in timely contracting.
“Nonprofits provide critical human services on behalf of government, and the continued late payment on State contracts hinders service to communities and can force providers to take out loans to cover costs,” said Michelle Jackson, Associate Director & General Counsel of the Human Services Council. “We applaud efforts by the Governor’s Office to streamline contracting, however, seventy-seven percent of contracts are still late. We join with the Comptroller in his recommendations to further reduce late payments.”
“The Comptroller’s report is essential to the nonprofit sector,” said Reg Foster, President and CEO of United Way of New York State. “Its data and analysis are critical tools in trying to achieve the purposes of the prompt contracting legislation, and will guide our efforts at improvement. This year’s report shows that some basic problems persist, and demonstrates the need for continued attention to prompt contracting.”
“On behalf of our 3,000 members, we commend Comptroller DiNapoli’s for his sustained leadership in tackling this important issue,” said Doug Sauer, Chief Executive Officer of the New York Council of Nonprofits, Inc. “It is clear that the State’s efforts are beginning to make a dent in the problem, at least for now. As the report indicates, however, significant issues remain and nonprofits, their donors and constituents are still paying the price.”
In 2014, 3,568 of 4,630 contracts were approved late. The bulk of the interest was paid by three agencies:
| Agency | Amount | Percent of NYS Interest Paid |
|---|---|---|
| Department of Health | $136,076 | 70% |
| Office of Children and Family Services | $30,648 | 16% |
| State Education Department | $23,746 | 12% |
The state’s Prompt Contracting Law was enacted in 1991 to prevent payment delays that could impair services to New York’s most vulnerable citizens. The law requires agencies to process contracts within 150 to 180 days. A 2007 amendment requires the Comptroller to report annually on whether agencies meet the time frame, reasons for delay, with recommendations to improve timely contracting.
The Comptroller’s report recommends:
- Quarterly reports using the new Grants Gateway data on the timeliness of prompt contracting and interest paid on late contracts.
- Automatic calculation and assessment of interest.
- Broader use of multiyear contracting timeframes, early renewal of existing contracts where appropriate, and early release of grant information and solicitation documents to potential providers.
- Development of bridge funding mechanisms to help NFPs who face cash flow issues as a result of any delayed contracting process.
- Enforcement of consistent standards and best practices across state agencies for grant contracting, particularly timely renewals.
To view the full report, visit:
www.osc.state.ny.us//sites/default/files/state-agencies/documents/pdf/2019-01/prompt-contracting-report-2014.pdf
To view late contracts by region, visit:
www.osc.state.ny.us/press/releases/may15/late_contracts_subject_pcl_by_region.pdf