NPM 126-2012

Requesting Entity: Bases Conversion and Development Authority (BCDA)

Issues Concern: Advance Payment for Consulting Services



Whether advance payment can be made at any time during the implementation of the contract.

Advance payment, as a general rule, is not allowed. As an exception, however, advance payment may be extended to a consultant for purposes of mobilization.

Based on the foregoing, x x x claim for advance payment is not allowed when a consultant initially forgoes its right to claim advance payment and thereafter requests it together with the first progress billing or at any time during contract implementation where work has been partially accomplished as this defeats the very purpose for which an advance payment is allowed.

Whether advance payment is possible without the issuance of the corresponding irrevocable standby letter of credit (LC).

[T]he posting of an irrevocable standby LC is necessary whenever advance payment is made, but may be reduced vis-a-vis the amounts refunded or charged against progress billings