Progress Payments

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Progress Payments                                                      DEFCON 35
                                                                      Edition 10/04

1. Subject as hereinafter provided progress payments will be made monthly,
amounting to a proportion of the total disbursements actually made to date by the
Contractor calculated as in Clause 2 hereof, less the aggregate amount of any
progress payments already made, provided that:

     a) if payment for any Articles has been made without the deduction
     referred to in Clause 7 hereof, an appropriate reduction shall be made in
     the progress payments;

     b) the total amount payable under this Condition shall not exceed an
     amount to be determined by the Authority and specified in the Schedule
     to the Contract.

2. For the purpose of Clause 1 hereof, the total proportion of the expenditure
shall be the aggregate of the amounts calculated by applying the appropriate
percentage specified in the Schedule to the following:

     a) the actual net invoiced cost of materials properly purchased and paid
     for by the Contractor for incorporation in the Articles;

     b) the actual net sums properly paid by the Contractor to his suppliers
     or subcontractors for goods supplied or work done in connection with the

     c) the actual wages properly incurred in the execution of the work under
     the Contract, with the addition of a percentage thereof, to be agreed, in
     respect of overhead charges.


     a) To each progress payment made in accordance with Clauses 1 and 2
     hereof shall be added a sum equal to the Value Added Tax (VAT)
     chargeable in respect of a supply or service equal in value to the
     progress payment, as appropriate to the VAT status of the Contract
     Articles or Services.

     b) For the purposes, pursuant to sub-Clause 1.b), of determining
     whether the total amount payable under this Condition exceeds the
     amount specified in the Schedule no account shall be taken of VAT.

     c) Expenditure claimed under Clause 2 shall be exclusive of deductible
     input VAT.
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4. Claims for progress payments under this Condition shall be accompanied by a
certificate by the Contractor that the amounts claimed are not more than those
payable in accordance with the above provisions, the rate of VAT being that
applicable at the date when the claim is issued. The claims will show clearly the
total expenditure to date under each of the headings a, b and c of Clause 2 hereof,
and also the aggregate amount (exclusive of VAT) of all payments already made
by the Authority under Clauses 1 and 2 in respect of the Contract. The Authority
reserves the right to verify the certification by examination of the Contractor's
books and to reduce the Contractor's claims in the event of his considering any of
the items of expenditure to be excessive.

5. Any progress payment under the Contract will be made at the sole discretion
of the Authority and, if the Authority considers that the Contractor has failed to
perform any of his obligations under the Contract he may, wholly or in part,
withhold progress payments or recover from the Contractor any progress payment
(including the addition in respect of VAT) already made, or both. The making of
any progress payment shall in no way reduce the liability of the Contractor to
carry out his obligations under the Contract.

6. If at any time by reason of progress payments made, overpayment to the
Contractor results from the rejection of Articles under the Contract or from any
other cause whatsoever, the amount of such overpayment shall be taken into
account in assessing any further payments or shall be recoverable from the

7. Progress payments under this Condition will be recovered by the deduction of
such percentage as may be determined by the Authority, from payments for
delivered Articles whether at fixed or provisional prices.

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Description: Progress Payments