State agencies were late 61 percent of the time in approving contracts with not-for-profit providers (NFPs) last year, with half of all agencies reporting contracts as late as 90 to 100 percent of the time, according to a report released today by State Comptroller Thomas P. DiNapoli. In 2015, the state paid $129,824 in interest payments for late contracts.

“Chronic delays create financial problems for not-for-profit organizations that often provide care for our most vulnerable citizens,” DiNapoli said. “While there was an improvement in the timeliness of contract approvals, more needs to be done so delays are avoided and taxpayers don't foot the bill for interest charges.”

The report notes that the number of late contracts decreased from 77 percent in 2014 to 61 percent in 2015. Interest paid on late contracts was also down from $195,663 the year before to $129,824. Another encouraging sign was the decreased number of contract renewals due to the use of multi-year contracting as recommended by DiNapoli.

In 2015, 2,332 contracts were approved late by agencies. The agencies with the highest number of late contracts were the Office of Children & Family Services, the Department of Health and the Office of Temporary Disability Assistance, the report found. In addition, some agencies were late 100 percent of the time, including the Education Department, the Department for Economic Development and the Office of People with Developmental Disabilities

See a breakdown of self-reported agency performance on late contracting.

“The state relies on nonprofit human services providers to deliver essential programs that contribute directly to the health, safety and productivity of its residents,” said Michelle Jackson, Associate Director and General Counsel, Human Services Council of New York. “But 25 years after the adoption of the Prompt Contracting Law, New York is still executing six out of every ten human service contracts late. We applaud Comptroller DiNapoli for drawing attention to this issue, which destabilizes nonprofit organizations and forces providers to ‘float’ the government by taking out loans, furloughing staff, or scaling back services, compromising the quality of important programs and services on which countless individuals and families depend.”

“Progress is being made, but unfortunately, the overall problem has not been solved as promised and continues to seriously strain, if not break, the financial backs of the state’s charitable partners,” said Doug Sauer, Chief Executive Officer of the New York Council of Nonprofits, Inc. “This can’t continue, and NYCON encourages the legislative and executive branches to fully support and act on the Comptroller’s recommendations.” 

“Once again, the New York State Catholic Conference and the Catholic non-profit organizations it represents are grateful to Comptroller DiNapoli for the comprehensive report on prompt contracting, which demonstrates that state compliance with statutory time frames is still unacceptably low,” said Richard E.  Barnes, Executive Director, New York State Catholic Conference. “However, real progress is being made, demonstrated by the ability of state agencies to dramatically improve as they focus on the problem. We believe this improvement in some agencies will be the guide for all others in the future.”

“Prompt contracting and prompt payment remain critical issues for the well-being of the nonprofit sector and the people who need services,” said Reg Foster, President and CEO, United Way of New York State. “Comptroller DiNapoli’s annual report provides our best assessment of how well we are doing. The current report indicates progress, but overall improvement is slow. We need to reinvigorate the collaboration process between the state and the nonprofit sector, with the Comptroller’s recommendations providing a guide to the critical issues to tackle.”

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 and reasons for delay, with recommendations to improve timely contracting. 

DiNapoli also noted that while the law requires the state to pay interest when contracts are processed late, the amount actually paid varies because it may have been waived, not paid or reported in a different time frame.  

The Comptroller’s report included these recommendations for state agencies:

• Make prompt contracting a priority to reduce costs to the state and not-for-profits;
•    Ensure that prompt contracting interest is paid timely. The Legislature and the Executive should enact the Comptroller’s recommendation that interest be paid with the first payment due on the late contract; and
•     Expand the use of technology, such as the Grants Gateway, to improve contracting efficiency.

To view the full report, visit: http://www.osc.state.ny.us/contracts/reports/2015/pcl_report.pdf