Title 200 | Chapter 005 | Regulation 021E
200 KAR 5:021REG
A proposed version of this document exists.
PREVIOUS VERSION
The previous document that this document is based upon is available.
STATEMENT OF EMERGENCY
200 KAR 5:021E
This emergency amendment is necessary to implement 2026 RS HB 480 (enacted as 2026 Ky. Acts ch. 147. Section 2 of that Act, codified as KRS 45A.137(7)), which requires the Finance and Administration Cabinet to promulgate regulations concerning contract payments no later than October 1, 2026. KRS 45A.137(8) separately requires publication of the payment resolution process and instructions on the Cabinet’s website by that date. This amendment is therefore promulgated pursuant to KRS 13A.190(1)(a)3. to meet an imminent statutory deadline.
This amendment updates the Finance and Administration Cabinet Manual of Policies and Procedures, incorporated by reference in 200 KAR 5:021. In particular, FAP 111-45-00 and FAP 111-46-00 establish procedures for invoice review and correction, partial payments, late-payment penalties, and administrative resolution of payment disputes. These procedures give agencies and contractors a common process for implementing the new payment requirements and obtaining timely resolution of unpaid amounts.
An ordinary amendment filed at this time would not take effect by October 1, 2026. Immediate effectiveness is necessary to have the required regulatory procedures in place by the statutory deadline and to align the published instructions with enforceable procedures. Delayed implementation would prolong uncertainty over invoice corrections and payment claims and increase the risk of avoidable interest penalties and recoverable financing costs. Prompt resolution also supports contractors’ continued performance and protects funds available for the goods and services the Commonwealth has contracted to receive.
The revised Manual also clarifies contract insurance requirements, electronic submission for review, procurement card training, contract assignments, and bid withdrawal, and corrects technical errors. These changes support consistent contract administration, financial oversight, and continuity of performance. Notwithstanding the foregoing, the statutory payment deadline is the principal basis for this emergency amendment.
This administrative regulation will be replaced through an emergency amendment by an ordinary administrative regulation.
The ordinary administrative regulation is identical to this emergency administrative regulation.
ANDY BESHEAR, Governor
HOLLY M. JOHNSON, Secretary
FINANCE AND ADMINISTRATION CABINET
(Emergency Amendment)
200 KAR 5:021E.Manual of policies and procedures.
Section 1.
A state agency shall follow the procurement requirements in the Finance and Administration Cabinet Manual of Policies and Procedures.Section 2.
Incorporation by Reference.(1)
"Finance and Administration Cabinet Manual of Policies and Procedures", Revised October 2026, is incorporated by reference.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Finance and Administration Cabinet, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622, Monday through Friday, 8 a.m. to 4:00 p.m. This material may also be obtained at the Finance and Administration Cabinet's website, https://finance.ky.gov/office-of-the-secretary/office-of-policy-and-audit/Pages/Finance-Policies.aspx.HOLLY M. JOHNSON, Secretary
APPROVED BY AGENCY: September 30, 2026
FILED WITH LRC: September 30, 2026 at 2:40 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on November 23rd, 2026, at 10:00 a.m. at the Kentucky Finance and Administration Cabinet, 200 Mero Street, Frankfort, Kentucky 40622. Individuals interested in being heard at this hearing shall notify this agency in writing five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until 11:59 p.m. on November 30, 2026. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Cary Bishop, Assistant General Counsel, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622. Phone: (502)564-6660, Fax: (502)564-9875. Email: cary.bishop@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Cary Bishop, Assistant General Counsel, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622. Phone: (502)564-6660 Email: cary.bishop@ky.gov
Subject Headings:
(1) Capital Construction, (2) Finance and Administration, (3) Infrastructure, (4) Purchasing and Procurement
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation publishes a manual of procedures that clarify and explain detailed processes necessary for daily administration of purchase-related activities.
(b) The necessity of this administrative regulation:
This regulation fulfills the requirement of KRS 45A.045(2) for the Secretary to publish a manual of procedures which shall be incorporated by reference as an administrative regulation pursuant to KRS Chapter 13A.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This regulation incorporates by reference the policies and procedures manual required by KRS 45A.045(2).
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
It provides guidance to vendors, prospective bidders, Finance and Administration Cabinet (“FAC”) staff and other state employees in the administration of Kentucky’s Model Procurement Code (KRS Chapter 45A).
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendment contains updates and clarifications to the existing Finance and Administration Cabinet procedures manual, as detailed in the attached summary of changes. In addition to technical, grammatical, and formatting updates, the updated manual brings the manual into alignment with the requirements of 26RS HB 480, in regard to vendor payment documents and disputes; updates small purchase amounts; and clarifies application of administrative oversight requirements.
(b) The necessity of the amendment to this administrative regulation:
Aside from the recent changes required by 26RS HB 480, after a 2025 major update, the first since a prior comprehensive review and update in 2016, Finance has become aware of the need for clarification and update of portions of the manual, both in language revised in 2025 as well as older language.
(c) How the amendment conforms to the content of the authorizing statutes:
The manual is required by KRS 45A.045(2).
(d) How the amendment will assist in the effective administration of the statutes:
Updates will simplify and clarify the Finance and Administration Cabinet’s Manual of Policies and Procedures for all users and eliminate confusion as to procedures to be followed in KRS 45A procurement matters.
(3) Does this administrative regulation or amendment implement legislation from the previous five years?
Yes. The update’s primary purpose is to align with the requirements of 26RS HB 480.
(4) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
Affected state units, parts, or divisions consist of all state agencies subject to the KRS 45A.045 procurement authority of the Finance and Administration Cabinet. Excluded from this scope would be any postsecondary educational institution that has opted-out pursuant to KRS 164A.560, or any state government entity exempted by act of the legislature from the KRS 45A.045 central procurement authority of the Finance and Administration Cabinet. No local entity will be affected, except to the extent they independently elect to adopt regulations, pursuant to KRS 45A.360, modeled on the Manual of Policies and Procedures.
(5) Provide an analysis of how the entities identified in question (4) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (4) will have to take to comply with this administrative regulation or amendment:
The primary action required of regulated entities is that their procurement staff will be required to review and be aware of the updates in the amended manual. The most notable action required will be for agencies to be aware of the increased need for timely processing and payment of contractor invoices and to exercise due diligence to avoid application of late payment penalties.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (4):
No additional cost.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (4):
Agencies will have more detailed and clear guidance regarding the steps to be taken to procure goods and services for their agency in a manner that complies with Commonwealth law.
(6) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
No additional cost.
(b) On a continuing basis:
No additional cost.
(7) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation or this amendment:
No additional funding is necessary for implementation of this regulation.
(8) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
No additional funding is necessary for implementation of this regulation.
(9) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
No fees are established or increased.
(10) TIERING: Is tiering applied?
Yes, the Manual of Policies and Procedures contains tiering primarily regarding tiered levels of general and small purchase procurement authority for different executive branch entities. That said, the focus of changes in this amendment are generally updates to policies and procedures that affect all state agencies subject to Finance’s KRS 45A.045 authority in a similar manner.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation:
No federal statute or regulation at issue. While the Commonwealth’s Model Procurement Code is modeled on the federal model, the statute authorizing this regulation is a state statute, KRS 45A.045.
(2) State whether this administrative regulation is expressly authorized by an act of the General Assembly, and if so, identify the act:
Yes, KRS 45A.045(2) expressly requires the Finance and Administration to publish, and periodically revise, a manual of procedures incorporated by reference within an administrative regulation.
(3)(a) Identify the promulgating agency and any other affected state units, parts, or divisions:
The promulgating agency is the Finance and Administration Cabinet. Affected state units, parts, or divisions consist of all state agencies subject to the KRS 45A.045 procurement authority of the Finance and Administration Cabinet. Excluded from this scope would be any postsecondary educational institution that has opted-out pursuant to KRS 164A.560, or any state government entity exempted by act of the legislature from the KRS 45A.045 central procurement authority of the Finance and Administration Cabinet.
(b) Estimate the following for each affected state unit, part, or division identified in (3)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(4)(a) Identify affected local entities (for example: cities, counties, fire departments, school districts):
No local entity will be affected, except to the extent they independently elect to adopt regulations, pursuant to KRS 45A.360, modeled on the Manual of Policies and Procedures.
(b) Estimate the following for each affected local entity identified in (4)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(5)(a) Identify any affected regulated entities not listed in (3)(a) or (4)(a):
None.
(b) Estimate the following for each regulated entity identified in (5)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(6) Provide a narrative to explain the following for each entity identified in (3)(a), (4)(a), and (5)(a)
(a) Fiscal impact of this administrative regulation:
No fiscal impact is expected from this amendment. The nature of the changes in the amendment are primarily intended to clarify application of existing procurement statutes and regulations and eliminate potential confusion.
(b) Methodology and resources used to reach this conclusion:
Review by the Office of Procurement Services and Office of General Counsel, within the Finance and Administration Cabinet, to confirm that anticipated changes are limited to procedural clarifications not expected to have a significant fiscal impact.
(7) Explain, as it relates to the entities identified in (3)(a), (4)(a), and (5)(a):
(a) Whether this administrative regulation will have a "major economic impact", as defined by KRS 13A.010(14):
No, the revisions to the incorporated manual of procedures are intended to primarily update and clarify existing procedures without imposing any new significant costs on affected enti-ties.
(b) The methodology and resources used to reach this conclusion:
Review by the Office of Procurement Services and Office of General Counsel, within the Finance and Administration Cabinet, to confirm that anticipated changes are limited to procedural clarifications not expected to have a major economic impact.
STATEMENT OF EMERGENCY
200 KAR 5:021E
This emergency amendment is necessary to implement 2026 RS HB 480 (enacted as 2026 Ky. Acts ch. 147. Section 2 of that Act, codified as KRS 45A.137(7)), which requires the Finance and Administration Cabinet to promulgate regulations concerning contract payments no later than October 1, 2026. KRS 45A.137(8) separately requires publication of the payment resolution process and instructions on the Cabinet’s website by that date. This amendment is therefore promulgated pursuant to KRS 13A.190(1)(a)3. to meet an imminent statutory deadline.
This amendment updates the Finance and Administration Cabinet Manual of Policies and Procedures, incorporated by reference in 200 KAR 5:021. In particular, FAP 111-45-00 and FAP 111-46-00 establish procedures for invoice review and correction, partial payments, late-payment penalties, and administrative resolution of payment disputes. These procedures give agencies and contractors a common process for implementing the new payment requirements and obtaining timely resolution of unpaid amounts.
An ordinary amendment filed at this time would not take effect by October 1, 2026. Immediate effectiveness is necessary to have the required regulatory procedures in place by the statutory deadline and to align the published instructions with enforceable procedures. Delayed implementation would prolong uncertainty over invoice corrections and payment claims and increase the risk of avoidable interest penalties and recoverable financing costs. Prompt resolution also supports contractors’ continued performance and protects funds available for the goods and services the Commonwealth has contracted to receive.
The revised Manual also clarifies contract insurance requirements, electronic submission for review, procurement card training, contract assignments, and bid withdrawal, and corrects technical errors. These changes support consistent contract administration, financial oversight, and continuity of performance. Notwithstanding the foregoing, the statutory payment deadline is the principal basis for this emergency amendment.
This administrative regulation will be replaced through an emergency amendment by an ordinary administrative regulation.
The ordinary administrative regulation is identical to this emergency administrative regulation.
ANDY BESHEAR, Governor
HOLLY M. JOHNSON, Secretary
FINANCE AND ADMINISTRATION CABINET
(Emergency Amendment)
200 KAR 5:021E.Manual of policies and procedures.
Section 1.
A state agency shall follow the procurement requirements in the Finance and Administration Cabinet Manual of Policies and Procedures.Section 2.
Incorporation by Reference.(1)
"Finance and Administration Cabinet Manual of Policies and Procedures", Revised October 2026,(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Finance and Administration Cabinet, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622, Monday through Friday, 8 a.m. to 4:00 p.m. This material may also be obtained at the Finance and Administration Cabinet's website, https://finance.ky.gov/office-of-the-secretary/office-of-policy-and-audit/Pages/Finance-Policies.aspx.HOLLY M. JOHNSON, Secretary
APPROVED BY AGENCY: September 30, 2026
FILED WITH LRC: September 30, 2026 at 2:40 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on November 23rd, 2026, at 10:00 a.m. at the Kentucky Finance and Administration Cabinet, 200 Mero Street, Frankfort, Kentucky 40622. Individuals interested in being heard at this hearing shall notify this agency in writing five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until 11:59 p.m. on November 30, 2026. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Cary Bishop, Assistant General Counsel, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622. Phone: (502)564-6660, Fax: (502)564-9875. Email: cary.bishop@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Cary Bishop, Assistant General Counsel, Office of General Counsel, 200 Mero Street, 5th Floor, Frankfort, Kentucky 40622. Phone: (502)564-6660 Email: cary.bishop@ky.gov
Subject Headings:
(1) Capital Construction, (2) Finance and Administration, (3) Infrastructure, (4) Purchasing and Procurement
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation publishes a manual of procedures that clarify and explain detailed processes necessary for daily administration of purchase-related activities.
(b) The necessity of this administrative regulation:
This regulation fulfills the requirement of KRS 45A.045(2) for the Secretary to publish a manual of procedures which shall be incorporated by reference as an administrative regulation pursuant to KRS Chapter 13A.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This regulation incorporates by reference the policies and procedures manual required by KRS 45A.045(2).
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
It provides guidance to vendors, prospective bidders, Finance and Administration Cabinet (“FAC”) staff and other state employees in the administration of Kentucky’s Model Procurement Code (KRS Chapter 45A).
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendment contains updates and clarifications to the existing Finance and Administration Cabinet procedures manual, as detailed in the attached summary of changes. In addition to technical, grammatical, and formatting updates, the updated manual brings the manual into alignment with the requirements of 26RS HB 480, in regard to vendor payment documents and disputes; updates small purchase amounts; and clarifies application of administrative oversight requirements.
(b) The necessity of the amendment to this administrative regulation:
Aside from the recent changes required by 26RS HB 480, after a 2025 major update, the first since a prior comprehensive review and update in 2016, Finance has become aware of the need for clarification and update of portions of the manual, both in language revised in 2025 as well as older language.
(c) How the amendment conforms to the content of the authorizing statutes:
The manual is required by KRS 45A.045(2).
(d) How the amendment will assist in the effective administration of the statutes:
Updates will simplify and clarify the Finance and Administration Cabinet’s Manual of Policies and Procedures for all users and eliminate confusion as to procedures to be followed in KRS 45A procurement matters.
(3) Does this administrative regulation or amendment implement legislation from the previous five years?
Yes. The update’s primary purpose is to align with the requirements of 26RS HB 480.
(4) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
Affected state units, parts, or divisions consist of all state agencies subject to the KRS 45A.045 procurement authority of the Finance and Administration Cabinet. Excluded from this scope would be any postsecondary educational institution that has opted-out pursuant to KRS 164A.560, or any state government entity exempted by act of the legislature from the KRS 45A.045 central procurement authority of the Finance and Administration Cabinet. No local entity will be affected, except to the extent they independently elect to adopt regulations, pursuant to KRS 45A.360, modeled on the Manual of Policies and Procedures.
(5) Provide an analysis of how the entities identified in question (4) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (4) will have to take to comply with this administrative regulation or amendment:
The primary action required of regulated entities is that their procurement staff will be required to review and be aware of the updates in the amended manual. The most notable action required will be for agencies to be aware of the increased need for timely processing and payment of contractor invoices and to exercise due diligence to avoid application of late payment penalties.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (4):
No additional cost.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (4):
Agencies will have more detailed and clear guidance regarding the steps to be taken to procure goods and services for their agency in a manner that complies with Commonwealth law.
(6) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
No additional cost.
(b) On a continuing basis:
No additional cost.
(7) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation or this amendment:
No additional funding is necessary for implementation of this regulation.
(8) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
No additional funding is necessary for implementation of this regulation.
(9) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
No fees are established or increased.
(10) TIERING: Is tiering applied?
Yes, the Manual of Policies and Procedures contains tiering primarily regarding tiered levels of general and small purchase procurement authority for different executive branch entities. That said, the focus of changes in this amendment are generally updates to policies and procedures that affect all state agencies subject to Finance’s KRS 45A.045 authority in a similar manner.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation:
No federal statute or regulation at issue. While the Commonwealth’s Model Procurement Code is modeled on the federal model, the statute authorizing this regulation is a state statute, KRS 45A.045.
(2) State whether this administrative regulation is expressly authorized by an act of the General Assembly, and if so, identify the act:
Yes, KRS 45A.045(2) expressly requires the Finance and Administration to publish, and periodically revise, a manual of procedures incorporated by reference within an administrative regulation.
(3)(a) Identify the promulgating agency and any other affected state units, parts, or divisions:
The promulgating agency is the Finance and Administration Cabinet. Affected state units, parts, or divisions consist of all state agencies subject to the KRS 45A.045 procurement authority of the Finance and Administration Cabinet. Excluded from this scope would be any postsecondary educational institution that has opted-out pursuant to KRS 164A.560, or any state government entity exempted by act of the legislature from the KRS 45A.045 central procurement authority of the Finance and Administration Cabinet.
(b) Estimate the following for each affected state unit, part, or division identified in (3)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(4)(a) Identify affected local entities (for example: cities, counties, fire departments, school districts):
No local entity will be affected, except to the extent they independently elect to adopt regulations, pursuant to KRS 45A.360, modeled on the Manual of Policies and Procedures.
(b) Estimate the following for each affected local entity identified in (4)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(5)(a) Identify any affected regulated entities not listed in (3)(a) or (4)(a):
None.
(b) Estimate the following for each regulated entity identified in (5)(a):
1. Expenditures:
For the first year:
$0
For subsequent years:
$0
2. Revenues:
For the first year:
$0
For subsequent years:
$0
3. Cost Savings:
For the first year:
$0
For subsequent years:
$0
(6) Provide a narrative to explain the following for each entity identified in (3)(a), (4)(a), and (5)(a)
(a) Fiscal impact of this administrative regulation:
No fiscal impact is expected from this amendment. The nature of the changes in the amendment are primarily intended to clarify application of existing procurement statutes and regulations and eliminate potential confusion.
(b) Methodology and resources used to reach this conclusion:
Review by the Office of Procurement Services and Office of General Counsel, within the Finance and Administration Cabinet, to confirm that anticipated changes are limited to procedural clarifications not expected to have a significant fiscal impact.
(7) Explain, as it relates to the entities identified in (3)(a), (4)(a), and (5)(a):
(a) Whether this administrative regulation will have a "major economic impact", as defined by KRS 13A.010(14):
No, the revisions to the incorporated manual of procedures are intended to primarily update and clarify existing procedures without imposing any new significant costs on affected enti-ties.
(b) The methodology and resources used to reach this conclusion:
Review by the Office of Procurement Services and Office of General Counsel, within the Finance and Administration Cabinet, to confirm that anticipated changes are limited to procedural clarifications not expected to have a major economic impact.