Page 1 of 2 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 Contract; 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. 3. 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. Progress Payments Page 2 of 2 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 Contractor. 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.