Procurement & Contracting
Payment Processing

The purpose of this bulletin is to clarify year-end contracting procedures for commodities. The procedures for service and construction contracts remain unchanged.

This bulletin outlines the procedures to be followed by State agencies and the Office of the State Comptroller (OSC) in the processing of contracts, purchase orders, purchase authorizations, and payments that occur before, after, or overlap the end of one fiscal year and the beginning of the next. These procedures will also apply when a State budget is not in place by April 1 of any succeeding fiscal year.

In accordance with State Finance Law §40.2(a), liabilities must be incurred by the close of the fiscal year. In the absence of an enacted budget or an interim appropriation, contracts, contract amendments, all-copy purchase orders, purchase authorizations and vouchers generally cannot be approved by OSC for liabilities incurred after the close of the fiscal year (March 31). Exceptions are SUNY and CUNY state operations appropriations, special revenue funds type-federal, and agencies receiving specific appropriation authority beyond the close of the fiscal year.

This bulletin does not apply to contracts or projects funded by the Community Projects Fund (see State Finance Law Section 99-d.). Contracts or projects funded by the Community Projects Fund contain 007 coding after the applicable appropriations. Any contract or project funded by the Community Projects Fund is addressed in Budget Bulletin B-1156.

1. A liability for service and construction contracts is incurred when the service is rendered or the construction work is performed. For the purpose of this bulletin, a liability for a commodity is considered to be incurred contingently, when the procurement is approved by OSC and the commodity is ordered by the agency.
   
2. New contracts, contract amendments (including construction change orders), and purchase orders for services and construction that have start and end dates prior to April 1 can be approved. The full amount of the liability must be encumbered and charged to the proper fiscal year appropriation or re-appropriation.
   
3. New contracts, contract amendments, and purchase orders for services and construction that have start and end dates that overlap two fiscal years can be approved. Only the contract liability amount expected to be incurred through March 31 must be encumbered. (Note: Liabilities anticipated to occur in a subsequent fiscal year cannot be encumbered until the appropriation for that fiscal year is enacted. The exceptions are Capital Construction Contracts, let and awarded in accordance with Section 136a of the State Finance Law, Section 38 of the Highway Law, Section 8-20 of the Public Buildings Law, Sections 4408-4409 of the Unconsolidated Laws, and Sections 375-376 and 6218 of the Education Law, that have traditionally been appropriated and encumbered for the total contract amount.)
   
4. New contracts, contract amendments, and all-copy purchase orders for services and construction that have start dates after March 31 cannot be approved until the necessary appropriation is enacted. Agencies may continue to submit contracts and amendments to be audited, attaching an AC340 without an encumbrance. Once the audit is completed, the AC340 will be rejected off the Central Accounting System and returned to the agency. The contract documents will be held at OSC. Upon enactment of the new State budget or an interim appropriation, agencies should then resubmit an AC340 with the applicable fiscal year's appropriation or re-appropriation properly encumbered and enclose with the AC340 a copy of the rejection notice. Purchase orders should not be submitted until the budget or an interim appropriation is enacted.
   
5. New contracts, contract amendments, and purchase orders for commodities must be approved and the order placed by March 31; delivery may occur after this date. (Exception: Commodities generally considered operating expenses for the new fiscal year, such as postage, office supplies, and consumable supplies will not be approved. These should be paid for with new fiscal year appropriations.) To assure approval by March 31, new contracts, contract amendments, and all-copy purchase orders must be received by OSC's Bureau of Contracts by March 7. Any commodity transaction not approved by March 31 will be rejected and returned to the agency. Thereafter, purchase orders should not be submitted or re-submitted until the budget or an interim appropriation is enacted.
   
6. Office of General Services statewide centralized contracts for commodities having start dates after March 31 may be approved. This exception is to allow for use of the contracts by authorized users other than State agencies, such as political subdivisions, where appropriations are not contingent upon the enactment of a new State budget. Use by State agencies is not authorized until the budget or an interim appropriation is enacted.

For questions regarding contract procedures for the fiscal year end, please contact:

Office of the State Comptroller
Bureau of Contracts
110 State Street
Albany, NY 12236
(518) 474-4622