NPM No. 036-2015
Requesting Entity: Software Farm International, Inc.
Issues Concern: Payment Terms for Government Contracts
Ways by which a supplier can collect other than the 15%/85% payment terms within the purview of the procurement law
[T]he procurement law and its associated rules and procedures admit of procurement transactions allowing partial deliveries and progress payment for each delivery of the goods and services covered by the contract. The terms and conditions for which, i.e. 40%/30%/30 must be properly indicated in the SCC, particularly, Clauses 6 and 10 thereof. It bears stressing that the fifteen percent (15%) threshold applies only to advance payment, where services have not yet been rendered or when supplies and materials have not yet been delivered under the contract, as opposed to progress payments for partial deliveries allowed by the contract, i.e. payment upon installation of software.
A supplier would have occasions by which to collect on its government contracts, other than the proposed 15%/85%, as long as such payment is in the nature of progress payments for partial deliveries prescribed in the Bidding Documents through SCC Clauses 6 and 10, and not in the nature of an advance payment.