OLR Bill Analysis

sHB 5824 (as amended by House “A”)*

AN ACT CONCERNING THE PAYMENT OF PERSONAL SERVICE AND PURCHASE OF SERVICE CONTRACTS.

SUMMARY:

This bill sets deadlines by which (1) state agencies must submit state personal service and purchase of service contracts, including those with health and human services providers, to the attorney general for review; (2) the attorney general must approve or reject them; and (3) state agencies must pay such contractors or explain why they refuse to do so.

*House Amendment “A” (1) eliminates a requirement for mandatory provisions in these contracts, (2) sets a firm deadline by which state contracting agencies and the attorney general must approve the contracts, and (3) eliminates a requirement that the agency pay the contract price regardless of the quality or timeliness of services provided.

EFFECTIVE DATE: Upon passage

PERSONAL SERVICE AND PURCHASE OF SERVICE CONTRACTS

By law, a state contract is not considered finalized until after the contractor signs and returns it to the issuing state agency and the agency and the attorney general sign-off and approve it. Concerning personal service and purchase of service contracts, the bill requires (1) state contracting agencies to submit contracts they approve to the attorney general within 30 days of receiving them from the contractor and (2) the attorney general to approve or reject each one within 21 days of receiving it from the agency.

The bill exempts state agency personal service and purchase of service contracts from the prompt payment laws. But like the prompt payment laws, it requires state contracting agencies to submit payments no later than 45 days after receiving a written request for payment or the expiration of the contractual deadline for payment. Since the bill does not specify that contracting agencies make the payment by the earlier or later of these two dates, agencies appear to have some discretion about when to make payment.

If an agency refuses to pay a contractor, in whole or in part, it must notify the contractor of its refusal and the basis for doing so. The bill does not impose a penalty for failure to make timely payment.

BACKGROUND

Prompt Payment Laws

Under the prompt payment laws, state agencies (1) must pay for services provided on the date specified in the contract or, if no date is specified, within 45 days of a properly completed claim or receipt of services, whichever is later; (2) do not have to promptly pay claims that are the subject of a good faith dispute that is timely noticed; and (3) must pay interest on payments that are not timely (CGS §§ 4a-71 to 4a-73).

COMMITTEE ACTION

Government Administration and Elections Committee

Joint Favorable Substitute