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, 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:

1. (a) the state comptroller in the course of his audit determines that there is reasonable cause to believe that payment may not properly be due, in whole or in part;
2. (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;
3. (c) the necessary state government appropriation required to authorize payment has yet to be enacted;
4. (d) a proper invoice must be examined by the federal government prior to payment;
5. (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;
6. (f) the required payment date is modified in accordance with subdivision three of this section; or
7. (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. * NB Effective until March 31, 2017 * 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:
8. (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;
9. (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;
10. (c) the necessary state government appropriation required to authorize payment has yet to be enacted;
11. (d) a proper invoice must be examined by the federal government prior to payment;
12. (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;
13. (f) the required payment date is modified in accordance with subdivision three of this section; or
14. (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. * NB Effective March 31, 2017 * 3. Each state agency shall have fifteen calendar days after receipt of an invoice by the state agency at its designated payment office 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 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 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. * NB Effective until March 31, 2017 * 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. * NB Effective March 31, 2017
15. 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.
16. 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. * NB Effective March 31, 2017