How should pay-when-paid terms be handled in public procurement?

• A. They delay payment until the supplier's payor pays; ensure compliance with statutory payment timing and contract terms.
• B. They accelerate payment upon submission of an invoice.
• C. They require payment only after acceptance testing.
• D. They waive payment until project completion.

Answer: (A)

Pay-when-paid terms place the payment risk on the supplier by making payment contingent on the payor’s own receipt of funds. In public procurement, payment timelines are set by law and by the contract, with explicit, prompt-payment requirements. The correct approach is to ensure that payments to suppliers are made in accordance with those statutory timelines and contract terms, regardless of when the upstream payer is paid. This protects vendor cash flow and aligns with public-sector payment duties. Other approaches that promise faster payment upon invoicing or tie payment to testing or project completion do not fit the public procurement framework and can undermine mandated payment timelines.