SB 557: California Prompt Payment Act: nonprofit organizations.

Under the California Prompt Payment Act, a state agency that awards a grant or that acquires property or services pursuant to a contract is required to make timely payments pursuant to the grant or contract. If a state agency or the Controller fails to take certain timely actions, and payment is not issued within 45 calendar days from the state agency receipt of an undisputed invoice, the act requires the state agency or the Controller, as applicable, to pay certain penalties. The act provides an exception from those penalty provisions if the grant or contract was awarded to a nonprofit organization in an amount less than $500,000. The act defines the term grant to mean a signed final agreement between any state agency and a local government agency or organization authorized to accept grant funding for victim services or prevention programs administered by any state agency or restoration activities performed by a resource conservation district.

This bill would define the term grant to additionally mean a signed final agreement between any state agency and a nonprofit organization and would delete the $500,000 exception described above.

The act authorizes a state agency to dispute for reasonable cause an invoice, refund request, or claim for Medi-Cal reimbursement, as specified. The act defines reasonable cause to mean a determination by a state agency that any of certain conditions exist, including that there is a discrepancy between the invoice or claimed amount and either the claimants actual delivery of property or services to the state or the states acceptance of those deliveries.

This bill would revise the condition described above to apply if there is a discrepancy of an amount greater than $250 or 5% of the invoiced amount, whichever is lesser, between the invoice or claimed amount and either the claimants actual delivery of property or services to the state or the states acceptance of those deliveries.