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4.18. State Finance Law §§139-j(1)(g) and 139-k(1)(g) exclude a series of transactions from the statutory requirements. Can you provide additional guidance regarding these exclusions? (Last Updated: 6/14/2010)

Yes.  As noted in question 4.3, certain transactions are excluded from the definition of Procurement Contract and are not subject to these statutory requirements. The guidance is presented in order of appearance in the statute.

A.    Grants

While the term “grant” is not defined in the State Finance Law, or elsewhere in New York State law, the term “grant” is commonly used in the context of government spending or receiving funds or property. It usually refers to situations where the government gives, confers, or receives something of value for services or goods which benefit the public. Depending upon the underlying authority, a grant can be awarded to individuals, public or private entities, whether for-profit or not-for-profit, that provide support or stimulation to accomplish a public purpose. The kinds of public purposes supported by grants are wide-ranging, from the arts to criminal justice to health care and prevention to recreational activities. Underlying authority for the distribution of grants varies, and can include block/formula awards, specific statutory programs, and instances where an entity has been specifically designated by law or legislative resolution to receive such funding for a public purpose.

It is not possible to list or define all the types of grants that can be conferred or received by a Governmental Entity. Consistent with the directions in the NYS Accounting System User Procedures Manual, the guidance given under Bulletin G-217 issued by the Office of State Comptroller (updated 2/20/09), each Governmental Entity is responsible for determining if a transaction is a “grant.” Once the Governmental Entity determines that a transaction is a grant, such transaction is exempted from the requirements of State Finance Law §§139-j and 139-k.

B.    State Finance Law Article 11-B contracts

Article 11-B of the State Finance Law, entitled “Prompt Contracting and Interest Payments for Not-For Profit Organizations,” regulates the contract process between not-for-profit organizations (generally recognized as such pursuant to New York State and federal law) and state agencies. It sets forth prompt contracting and prompt payment procedures for contracts between not-for-profit organizations and state agencies. See State Finance Law §179-q through §179-ee. The term “not-for-profit organization” has a specific statutory definition. Such funding is provided through a “program appropriation” as the term is statutorily defined and is part of a program plan developed by a Governmental Entity. Thus, contracts between such not-for-profit organizations and state agencies covered by Article 11-B are not subject to the new State Finance Law provisions.

C.   Program Contracts between Not-For-Profits and the Unified Court System

The statute was amended in 2006, retroactive to January 1, 2006, to exempt program contracts between not-for-profit organizations (as defined in State Finance Law Article XI-B) and the Unified Court System from the new State Finance Law provisions.

D.   Intergovernmental agreements

An intergovernmental agreement can generally be defined as an agreement between two or more governments for accomplishing common goals, providing a service or solving a mutual problem. An intergovernmental agreement includes agreements between the federal government and New York State, New York State and other states, among state agencies, local governments (i.e., town, village, city or county), public authorities, and public benefit corporations created by the State, and between local governments and the State of New York. For example, the Attorney General has provided guidance on the definition of intergovernmental agreements in a 1980 opinion and stated that these agreements should simply be “understandings about who is to do what, whose budget is to support what expenditures and who is to report to whom about the progress of the undertaking and the like.” 1980 Op. Att'y Gen. 81. Therefore, the requirements of State Finance Law §§ 139-j and 139-k would not be applicable when a Governmental Entity enters into an agreement or similar document detailing the understanding of the parties with the federal government, another state, another agency, public authority or public benefit corporation created by the State or a local government body.

E.   Railroad and utility force accounts

A force account is an agreement between a governmental entity and the railroad or utility in which the expenses of the railroad and utility are reimbursed under a statutorily governed force account method of payment. This method of reimbursement provides for the actual costs of labor, fringe benefit and overhead, and materials used in support of the project. For example, this mechanism is used by the New York State Department of Transportation (DOT) to reimburse railroads and utilities that relocate or modify their facilities to accommodate the needs of DOT in the construction or safe operation of State highways where such reimbursement for relocation or modification is required. For example, see Highway Law § 10 (21), (24-b), (24-c) and (26).

F.    Utility Relocation project agreements or orders

Utility relocation project agreements or orders are a product of the need for the a Governmental Entity, in certain instances, to provide compensation for the removal, relocation, replacement or reconstruction of privately, publicly or cooperatively owned utilities as result of work on a project due to construction, reconstruction or maintenance thereof. For example, see Highway Law § 24-a regarding New York State Department of Transportation highway projects.

G.   Contracts Governing Organ Transplants

Organ transplant contracts involve a specific set of circumstances pertaining to the health, safety and welfare of the public. Arguably, the need for procurement lobbying restrictions in such situations is mitigated by public need and the controls imposed on these transactions by the federal government and laws.

H.   Contracts Allowing for State Participation in Trade Shows

Governmental entities often seek to participate in trade shows in order to represent or market the entity or the State of New York. Typically, these entities seek to participate in a particular trade show and there are no other competing shows available. The participation of the State in these shows provides space for New York State to showcase itself.

I.    Eminent domain transactions

In general, an eminent domain transaction results in the taking of private real property for government or public use which is subject to just compensation. There are a variety of different statutes authorizing eminent domain transactions. In general, these statutes set forth approved methods for determining just compensation. Thus, these transactions are exempted from the scope of the new State Finance Law provisions.


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