8474.1     ADDITIONAL INFORMATION AND PROVISIONS     
(Revised 06/08)

1. No Additional Invoice Required for Penalty Amount:  State agencies shall pay the applicable penalties without requiring a vendor invoice for the penalty amount whenever they fail to submit a correct claim schedule to the SCO by the required payment approval date. See SAM Section 8474.4, Definition of Terms.
2. Cessation of Penalty Accrual:  The State agency's liability for penalties shall cease to accrue on the date the State agency submits the claim schedule to the Controller.  Penalties accrued prior to that date shall be paid from the State agency's funds.
3. Use of Office Revolving Fund:  On an exception basis, State agencies may avoid penalty payments, for failure to submit a correct claim schedule to the SCO by the required payment approval date, by paying the claimant directly from the State agency's office revolving fund within 45 calendar days following the date upon which an undisputed invoice is received by the State agency.
4. Penalty Shall not be Waived:  Except for the 30-day extensions provided for in the event of emergencies during a declared fire season (see SAM Section 8474.1, paragraph [h], below), the late payment penalties specified in the Act may not be waived, altered, or limited by a State agency that acquires property or services pursuant to a contract or that awards a specific grant by any person or business that contracts with a State agency to provide property or services or that is a recipient of a specific grant.
5. Nonprofit Organizations:  A nonprofit organization shall only be eligible to receive a penalty payment if it has been awarded a contract or specific grant in an amount less than five hundred thousand dollars ($500,000).
6. No Additional Appropriation:  State agencies shall not seek any additional appropriation to pay penalties that accrue as a result of the State agency's failure to make timely payments as required.  Any State agency that requests a deficiency appropriation from the Legislature shall identify the portion, if any, of the requested amount attributable to penalties incurred.
7. Subcontractors:  State agencies shall encourage contractors to promptly pay their subcontractors and suppliers, especially those that are small businesses.  State agencies shall utilize expedited payment processes to enable faster payment by prime contractors to their subcontractors and suppliers, and shall promptly respond to any subcontractor or supplier inquiries regarding the status of payments made to prime contractors.
8. Fire Season Emergencies:  Except in the case of a contract with a certified small business, a nonprofit organization, or a nonprofit public benefit corporation, if an invoice from a business under a contract with the Department of Forestry and Fire Protection would become subject to late payment penalties during the annually declared fire season, then the required payment approval date shall be extended by 30 calendar days.
9. Budget Enactment Delays:  No nonprofit public benefit corporation shall be eligible for a late payment penalty if a State agency fails to make timely payment because a Budget Act has not been enacted.  Except for payments to nonprofit public benefit corporations, as specified above, in the event a State agency fails to make timely payment because a Budget Act has not been enacted, penalties shall continue to accrue until the invoice is paid.
10. Calamities, Disasters, and Criminal Acts:  If the DOF determines that a State agency or the SCO is unable to promptly pay an invoice, as required, due to a major calamity, disaster, or criminal act, the otherwise applicable late payment penalty provisions shall be suspended except as they apply to a claimant which is either a certified small business, a nonprofit organization, a nonprofit public benefit corporation, or a small business or nonprofit organization that provides services or equipment under the Medi-Cal program. The suspension shall remain in effect until the DOF determines that the suspended late payment penalty provisions of this section should be reinstated.
11. Liquidated Claims:  GC Section 926.10, regarding interest on liquidated claims filed against public entities, shall not apply to any contract covered by the Act.  See SAM Section 8473.
12. Invoice Dispute Notification:  A State agency may dispute an invoice for reasonable cause.  To dispute an invoice, the State agency must notify the claimant within 15 working days from receipt of the invoice, or delivery of the property or services, whichever is later.  See SAM Section 8474.1 ILLUSTRATION for the Invoice Dispute Notification form, STD. 209.  State employees shall not dispute an invoice based upon minor or technical defects in order to avoid late payment penalties.
13. Medi-Cal program:  These late payment penalty provisions shall not apply to claims for reimbursement for health care services provided under the Medi-Cal program, unless the Medi-Cal health care services provider is a small business or nonprofit organization.  In applying these provisions to claims submitted to the State or its fiscal intermediary, by providers of services or equipment under the Medi-Cal program, payment for claims shall be due 30 calendar days after a claim is received by the State or its fiscal intermediary, unless reasonable cause for nonpayment exists. With regard to Medi-Cal claims, reasonable cause shall include review of claims to determine medical necessity, review of claims from providers who are subject to special prepayment fraud and abuse controls, and review of claims by the fiscal intermediary or the Department of Health Care Services (DHCS) due to special circumstances. Claims requiring special review as specified above shall not be eligible for a late payment penalty.
14. Reporting Requirement:  State agencies shall annually report to the DGS by September 30, the amount of late payment penalties paid during the preceding fiscal year.  At a minimum, the report shall identify the total number and dollar amount of late payment penalties paid.  State agencies may, at their own initiative, provide the DGS with other relevant performance measures.  The DGS shall prepare a report listing the total number and dollar amount of all late payment penalties paid by each State agency during the preceding fiscal year, together with other relevant performance measures, and shall make the information available to the public.  Inquiries regarding additional information on this reporting requirement should be directed to the Prompt Payment Coordinator, DGS, Procurement Division, at (916) 375-4923.
15. Other Penalties:  State agencies will pay other legally authorized late payment penalties.  These include the Public Utilities Commission (PUC) approved late payment charges in invoices from utilities operating under the authority of the PUC.  However, when State agencies pay other authorized penalties, they must take care to do so in lieu of the penalties authorized in the California Prompt Payment Act.

INVOICE DISPUTE NOTIFICATION 8474.1 ILL