Contractor Mobilisation Payment

The design and execution for an Assessment Centre for the office of
Deputy Permanent Secretary (Group 3A) in the Public Service

Mobilisation Payment – Principle and Practice

 The Mobilisation Advance is a monetary payment made by a client to the
Contractor/Service Provider for initial expenditure in respect of site mobilisation, and
a fair proportion of job overheads or preliminaries (Murdoch & Hughes 2002)

 Though applicable, principally, in a construction environment. The principle has

found applicability in most procurement scenarios. This is so, as even in the provision
of services, the ability to move resources from a stationery point to the place of
activity usually involves cost that service providers are not willing to bear initially.
Consequently, Mobilisation payments over time have evolved into a ‘standard’
payment at the commencement of any contract.

 The basis for Mobilisation, as a standard payment, is that there is some significant
project start-up activity that has a positive relationship to project output and outcome
that is required and necessary.

The TGN Proposition

 The basis for the request is that Mobilisation is usual for this type of Project with this
particular contractor.

 The reasons given by TGN are as follows:

o GORTT’s history of project payment issues
o Contractor protection
o Client protection from embarrassment, due to work stoppage
o Angry feelings
o For practical reasons – though unidentified
o Eases ‘pressure’ when payment is delayed
o Not covered under the new Procurement legislation

 Prior experience with this Contractor and GORTT is evidenced by an Acceptance of

Offer from the Central Tenders Board to this particular contractor in which the CTB
accepted “Signing of Contract” as a deliverable and due 3% of the value of the
contract as payment (CTB:16/3/283 – May 2015)
The SCD Position
 Past experience with ACEs, namely (DPS/DDPA/Cop & DCoP), successful
contractors did not request Mobilisation payments upon Contract execution.

 First payments were due upon Contractor submission of an Inception Report – usually
submitted within 4 weeks of contract execution.

 Thus, the SCD practice is to make payment upon receipt of a deliverable and not upon
contract execution.

 MoF circular ………… expressly prohibits the Accounting Officer from making
payment for goods and/or services prior to receipt of same.

 This Circular has not been rescinded

 The reasons given by TGN for the Mobilisation do not meet the bar of what is
professionally acceptable.