Amendment on Advance Payment in Procurement

R.A. No. 9184 was enacted to reform government procurement practices, signed into law on January 10, 2003.
The Government Procurement Policy Board (GPPB) formulated and approved the IRR-A in cooperation with the Joint Congressional Oversight Committee.
The Supreme Court declared the Congressional Oversight Committee's participation unconstitutional in Macalintal vs. Comelec (July 2003).
The amendment was proposed by the GPPB-Technical Support Office and endorsed by the GPPB to introduce provisions regarding advance payments for procurement.

Advance payment is regulated under Presidential Decree No. 1445 and the amendment sets the parameters for its application in procurement contracts.
Advance payment shall only be made after prior approval of the President and shall generally not exceed 15% of the contract amount.
Exceptions allowing higher or no prior approval include:
- Procuring entities entering into contracts for services where down payments are industry-standard practices (e.g., hotel and restaurant services, use of conference/seminar and exhibit areas, lease of office space), where a single advance payment not exceeding 50% of the contract amount is allowed without presidential approval.
- Procurement of goods addressing contingencies due to natural or man-made calamities declared under a State of Calamity, where advance payment up to 15% may be made without President's prior approval.

All progress payments must first be charged against the advance payment until it is fully utilized, unless otherwise approved by the President.

The existing provision No. 4 on advance payment is renumbered as No. 5.
The amendment takes effect immediately upon approval (May 19, 2005).
Other provisions of Annex "D" of the IRR-A that are not amended remain unchanged.

Advance Payment: Funds released upfront in government procurement subject to limitations and approval requirements to ensure efficient and transparent use of public funds.
Prior Approval Requirement: Ensures presidential oversight on advance payments exceeding prescribed limits, except in specified cases.
Progress Payment Charge: The mechanism to deduct subsequent progress payments from the initial advance payment until depletion to maintain fiscal discipline.
Exception to Restrictions: Specific industries and emergency procurement contexts where norms allow for more flexible application of advance payments to facilitate operational needs.