PRIOR PRINTER'S NO. 3044 PRINTER'S NO. 4132
No. 2380 Session of 1992
INTRODUCED BY F. TAYLOR, GALLEN, G. SNYDER, CALTAGIRONE,
M. N. WRIGHT, LUCYK, NOYE, ARGALL, HECKLER, PETRARCA,
E. Z. TAYLOR, SERAFINI, ALLEN, KUKOVICH, KRUSZEWSKI, SALOOM,
OLASZ, HERMAN, McCALL, GODSHALL, FLICK, LESCOVITZ,
CAPPABIANCA, BUSH, TIGUE, FREEMAN, SAURMAN, PRESTON, COY,
VEON, TRELLO, MICOZZIE, PESCI, STISH, KOSINSKI, BELARDI,
JOHNSON, COLAIZZO, BARLEY, FAIRCHILD, STABACK, STEIGHNER,
MERRY, STETLER, GEIST, THOMAS, STURLA, LINTON, D. W. SNYDER,
KASUNIC, CESSAR, CLYMER, HAGARTY, PISTELLA, NAILOR, FAJT,
RICHARDSON, RAYMOND, ITKIN, FARMER AND DeWEESE,
FEBRUARY 3, 1992
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, NOVEMBER 16, 1992
AN ACT
1 Providing for the payment of interest on purchases by political
2 subdivisions.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Political
7 Subdivision Procurement Interest Payment Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Business concern." Any person engaged in a trade or <--
13 business and operating as a contractor with a political
1 subdivision, including a nonprofit entity operating as a
2 contractor with a political subdivision.
3 "Local authority." A municipal authority or any other body
4 corporate and politically created by one or more political
5 subdivisions pursuant to statute.
6 "Payment made." A payment shall be considered made on the
7 date on which a check for such payment is dated.
8 "Political subdivision." Any county, city, borough,
9 incorporated town, township, school district, vocational school
10 district, county institution district, local authority or any
11 joint or cooperative body of political subdivisions having the
12 power to enter into contracts.
13 "Proper invoice." An invoice which contains or is
14 accompanied by such substantiating documentation as the
15 political subdivision involved may require by regulation or
16 contract.
17 "QUALIFIED SMALL BUSINESS CONCERN." ANY INDEPENDENTLY OWNED <--
18 AND OPERATED FOR-PROFIT BUSINESS CONCERN, INCLUDING ANY PERSON
19 ENGAGED IN A TRADE, EMPLOYING 100 OR FEWER EMPLOYEES OPERATING
20 AS A CONTRACTOR WITH A POLITICAL SUBDIVISION.
21 "Received invoice." Any invoice received by a political
22 subdivision on the later of:
23 (1) the date on which the political subdivision's
24 designated payment office or finance center actually receives
25 a proper invoice; or
26 (2) the date on which the political subdivision accepts
27 the property or service concerned.
28 Section 3. Political subdivision interest payments.
29 (a) General rule.--
30 (1) In accordance with the provisions of paragraph (2),
19920H2380B4132 - 2 -
1 each political subdivision which acquires property or
2 services from a QUALIFIED SMALL business concern but which <--
3 does not make payment for each complete delivered item of
4 property or service by the required payment date shall pay an
5 interest penalty to such business concern in accordance with
6 this section on the amount of the payment which is due, <--
7 PROVIDED THAT THE INTEREST RATE TO BE ASSESSED AGAINST ANY
8 SUCH LATE PAYMENTS, AS DETERMINED BY THE SECRETARY OF REVENUE
9 UNDER SUBSECTION (B)(2), SHALL BE INCLUDED IN EITHER THE
10 CONTRACT OR THE INVOICE ACCOMPANYING THE ITEM OF PROPERTY OR
11 SERVICE AND PROVIDED FURTHER THAT ANY QUALIFIED SMALL
12 BUSINESS CONCERN SHALL CONSPICUOUSLY PRESENT A STATEMENT, ON
13 OR WITH THE INVOICE STATEMENT, THAT IT MEETS THE DEFINITION
14 OF A QUALIFIED SMALL BUSINESS CONCERN CONTAINED IN THIS ACT.
15 (2) All of the following conditions shall apply for the
16 payment of interest by a political subdivision:
17 (i) The required payment date shall be:
18 (A) the date on which payment is due under the
19 terms of the contract for the provision of such
20 property or service; or
21 (B) thirty calendar days after receipt of a
22 proper invoice for the amount of the payment due, if
23 a specific date on which payment is due is not
24 established by contract.
25 (ii) Separate required payment dates for contracts
26 under which property or services are provided in a series
27 of partial executions or deliveries shall be established,
28 to the extent that such contract provides for separate
29 payment of such partial execution or delivery.
30 (iii) Prior to the date upon which payment without
19920H2380B4132 - 3 -
1 an interest penalty is due, a political subdivision shall
2 notify the QUALIFIED SMALL business concern of any defect <--
3 in goods and services or impropriety in such invoice
4 which would prevent the running of the time periods
5 specified in this paragraph.
6 (b) Due date of payment.--
7 (1) Interest penalties payable on amounts due to a
8 QUALIFIED SMALL business concern under this act shall be paid <--
9 to the business concern for the period beginning on the day
10 after the required payment date and ending on the date on
11 which payment on the amount due is made EXCEPT NO INTEREST <--
12 PENALTY SHALL BE PAID IF PAYMENT FOR THE COMPLETE DELIVERED
13 ITEM OF PROPERTY OR SERVICE CONCERNED IS MADE ON OR BEFORE
14 THE 15TH CALENDAR DAY AFTER THE REQUIRED PAYMENT DATE.
15 (2) Interest shall be computed at the rate determined by
16 the Secretary of Revenue for interest payments on overdue
17 taxes or the refund of taxes as provided in sections 806 and
18 806.1 of the act of April 9, 1929 (P.L.343, No.176), known as
19 The Fiscal Code, and any subsequent amendments to those
20 sections.
21 (3) Interest may be paid by separate payment made to a
22 QUALIFIED SMALL business concern within 30 days of payment of <--
23 the original invoice.
24 (4) Any amount of an interest penalty imposed because of
25 a debt which remains unpaid at the end of any 30-day period
26 shall be added to the principle amount of the debt and
27 thereafter interest penalties shall accrue on such added
28 amount.
29 (c) Funds for interest payment.--A political subdivision
30 shall pay any interest penalties required by this act out of
19920H2380B4132 - 4 -
1 funds made available for the administration or operation of the
2 program for which the penalty was incurred, or from general
3 administrative funds of the political subdivision. Nothing in
4 this act shall be construed to require payment of interest
5 penalties from Federal or State funds if such payment is
6 prohibited by Federal or State law or regulation.
7 (d) Claims.--Claims for interest penalties which a political
8 subdivision has failed to pay in accordance with the
9 requirements of this act shall be made in a formal civil action
10 against the offending political subdivision following the
11 exhaustion of all contractual remedies.
12 (e) Disputes.--This act shall not be construed to require
13 interest penalties on payments which are not made by the
14 required payment date by reason of a dispute between a political
15 subdivision and a QUALIFIED SMALL business concern over the <--
16 amount of that payment or other allegations concerning
17 compliance with a contract.
18 Section 4. Exception.
19 Section 3 shall not apply when the political subdivision's
20 nonpayment on a particular project is caused by failure of the
21 Federal or State government to pay funds designated for the
22 specific project. NOTHING IN THIS ACT SHALL BE CONSTRUED TO <--
23 REQUIRE PAYMENT OF INTEREST PENALTIES BY THE FEDERAL OR STATE
24 GOVERNMENT.
25 Section 5. Nonapplication of act.
26 This act shall not apply to any "public contracts" subject to
27 the act of November 26, 1978 (P.L.1309, No.317), referred to as
28 the Public Works Contract Regulation Law. THIS ACT SHALL NOT <--
29 APPLY TO THOSE INVOICES WHICH ARE PART OF, OR SUBJECT TO,
30 NEGOTIATION SESSIONS CONDUCTED BY THE COORDINATOR OF A
19920H2380B4132 - 5 -
1 MUNICIPALITY DETERMINED TO BE DISTRESSED UNDER THE ACT OF JULY
2 10, 1987 (P.L.246, NO.47), KNOWN AS THE MUNICIPALITIES FINANCIAL
3 RECOVERY ACT.
4 Section 6. Applicability.
5 This act shall apply to all contracts entered into on or
6 after July 1, 1992 1993. <--
7 Section 7. Effective date.
8 This act shall take effect in 60 180 days. <--
L5L53JLW/19920H2380B4132 - 6 -