Abstract

This article takes a position on the nature and legal effects of advance payments made in the public procurement regime and examines other permissible payment systems. It also attempts to find possible solutions to some of the basic practical problems related to the conditions for advance payments to the contractor, if necessary, using the acquis developed on the grounds of other areas of law.

The provisions of the new act regulating the award of public contracts concerning advance payments and partial payment systems are essentially a repetition of the previous regulations. To a large extent, therefore, the existing interpretation practice developed under the previous act remains valid. Given that advances of a fiduciary nature with the obligation of settlement are in common circulation, along with “simple” advances on remuneration, prepayments, deposits, diversified systems of partial payments, as well as mixed mechanisms with varying degrees of complexity, only the advance and partial 124payment mechanisms should be considered acceptable in public procurement. Both the interpretation of the rules and the need to protect the public interest lead to this conclusion.

In practice, the fact that advance payments in public procurement matters are still not very popular is discouraging. Despite the fact that decision-makers, market participants, and the doctrine recognise the numerous advantages of allowing contractors to finance the execution of a contract from the contracting authority’s funds, it seems that contracting authorities are still not familiar with the use of the available instruments and are afraid of the consequences of the improper use and settlement of advance payments by contractors. However, properly drafted contractual provisions and the use of statutory security and control mechanisms make it possible to significantly reduce this risk.