This bulletin outlines the procedures an agency manager should follow to approve the assignment of contracts and contract payments to some person or organization other than the original contract holder. Some contractors have been filing assignments with the State Comptroller's Offset Unit without disclosing the purpose of the assignment to the contracting agency. To help assure a uniform process, we are defining procedures to ensure the contracting agency is aware of all assignments and consents to assignments for work performance.

Contractors doing business with New York State may attempt to assign their rights and responsibilities under a contract to another person or organization. Agency contract managers should be aware of all assignments under a contract and must consent to certain assignments.

To perform this responsibility correctly, managers must understand the different types of assignments that could occur. The contractor's assignment of rights and responsibilities under the contract to another person or organization may take the form of:

• Contract assignment - assignment of performance
• Payment assignment - assignment of payment only

A related transaction that may appear to be an assignment - but isn't, is a vendor name change.

State Finance Law, Article 9, Section 138 states contracts cannot be assigned without the consent of the contracting agency officials.

Lien Law, Article 2, Section 16 requires assignments be filed with the originating agency and the Office of the State Comptroller within 20 days of the date of the assignment.

State Finance Law, Article 7, Section 112 requires that before any contract made for or by any state agency, department, board, officer, commission, or institution, shall be executed or become effective, whenever such contract exceeds fifteen thousand dollars in amount, it shall first be approved by the State Comptroller and filed in his or her office.

Payment assignments redirect all or a designated portion of payments due under a contract from the contractor to another entity. The contractor continues to fulfill all responsibilities under the contract, but assigns their right to payment to another entity. These assignments are sent to the State Comptroller's Bureau of State Expenditures' Offset Unit for approval before payment can be made to a new payee.

Contract assignments and payment assignments should not be confused with vendor name changes. A vendor name change is simply that. The vendor decides to make a change to their official name and there is no change in ownership.

Many contract assignments are due to a structural change on the part of the contractor (a partnership was incorporated or a firm was purchased by an other firm). This is an appropriate reason to execute a contract assignment. Other contract assignments are to independently owned firms who take responsibility for executing the contract terms.

When considering the appropriateness of a contract assignment the following should be considered:

• A contract assignment cannot be allowed if the contractor is attempting to avoid a lien, taxes or other legal responsibility relating to the contract.
• Article 9, Section 138 of the State Finance Law does not permit a state agency to approve contract assignments in all cases. To do so would frustrate the purposes of the competitive bidding requirements of section 163 of the State Finance Law and other procurement statutes.
  
  State Finance Law, Article 11, Section 163 requires commodity contracts be awarded based on lowest price to responsible and responsive vendors. This section also requires contracts for service be awarded based on best value that optimizes quality, cost and efficiency, among responsive and responsible offerers.
  
  For example, service contracts are awarded after a competitive process to the firms whose proposals appeared to provide best value to the State. To permit the winning offerer to assign its rights to a contract, where the contract has not been executed or where no substantial performance has begun, would frustrate the purpose of section 163 by permitting awards to vendors that have not been determined to provide best value to the State. Where the winning offerer is unwilling or unable to execute a contract in its own name or is unwilling to undertake performance of an executory contract (i.e., one for which performance has not begun), the contract should either be awarded to the next highest ranked firm or rebid.
  
• Where a vendor has performed significant work on a contract, but is no longer able or willing to perform, it may clearly be in the best interest of the State to allow that vendor to assign the remainder of the contract performance to a new contractor (with adequate technical capabilities in the judgment of the State) who will assume responsibility for the work of the original contractor (the assignor) at no additional cost to the State, rather than award a new contract to a contractor who will not be accountable for the work of its predecessor. Similarly, an award of a contract for a commodity awarded on the basis of lowest price pursuant to section 163(3) of the State Finance Law could also be assigned, with the State's consent, since such an arrangement will not frustrate the purpose of the bidding statute, which is to obtain the lowest price from a responsive and responsible vendor.

1) contract assignment,
2) payment assignment, or
3) vendor name change

The Bureau of State Expenditures will notify the appropriate agency of all assignments filed with the State Comptroller's Offset Unit. Agency managers must determine the purpose of the assignment and take appropriate action.

We will provide the following information to the agency: assignor name and address, assignee name and address, date of assignment, contract number, a response due date and a section for the agency manager to review the assignment and to advise us the purpose of the assignment. Based on the type of assignment, the agency manager will follow the appropriate procedure as defined below.

Contract assignment agreements must include the following elements:

• The original vendor must assign all rights and responsibilities to the new vendor and the new vendor must accept.
• Both vendors must sign and their signatures must be acknowledged.
• The contract assignment agreement must indicate an effective date of the transaction.
• If the contract payments are to be allocated among vendors, the payment terms should be explicitly stated in the contract assignment agreement.
• The contract assignment agreement must state that all other terms and conditions in the original agreement remain unchanged.
• The contract assignment must be signed by an agency-authorized signatory, approved by the Attorney General's office and sent to the Comptroller's Bureau of Contracts for approval.

Documents needed for a contract assignment:

The contract assignment agreement should be sent to the Comptroller's Bureau of Contracts (with form AC340). It should include the new vendor's name and Federal ID number and supporting documentation explaining the change and that there are no known liens against this contract or vendor and no reason to believe there may be any in the future unless the new vendor has agreed to be responsible for them.

(See contract assignment template attached.)

Agency managers are required to consent to the payment assignment before the Office of the State Comptroller takes any action. We ask that you respond to the Offset Unit by the date provided (20 days from the date of assignment). Our office will suspend any payments due on the contract until the agency manager responds on the appropriateness of the payment assignment.

The agency manager can respond, in writing, as follows:

• the agency accepts the payment assignment
• the agency rejects the payment assignment (include a statement of the reason for the agency rejecting the assignment), or
• the agency did not receive the payment assignment within 20 days of the assignment as required by law.

If the agency manager rejects the payment assignment or did not receive the payment assignment by the required date our office will release to the contractor any monies held and will notify the assignor that the payment assignment was not properly filed or accepted. As appropriate, the assignor will be directed to contact the contracting agency for further information.

1. It is simply a vendor name change. There is no change in payee ID number.

2. There are no known liens against this contract or vendor and no reason to believe there may be one in the future.

If you have any questions regarding this bulletin, please contact: