Government-Industry Working Group on Prompt Payment
In October of 2015, the Canadian Construction Association (CCA) board of directors passed a resolution calling upon CCA to work to “educate the federal government on the importance of prompt payment and cash flow on federal construction projects, and work together to resolve any concerns, which may include the enactment of federal prompt payment legislation acceptable to the industry.”
A CCA taskforce was struck for this purpose and at the annual joint CCA-Government of Canada meeting in April of 2016, the major federal government construction contracting authorities, (i.e. Public Services and Procurement Canada – PSPC and Defence Construction Canada – DCC), agreed to establish a joint Government-Industry Working Group to achieve this purpose.
That working group held its first face-to-face meeting in August of 2016 and has been meeting since.
The working group has identified the participants, purpose, scope and objectives of its deliberations in a document entitled the Engagement Strategy.
CCA Policy Statement on Payment
The CCA board adopted in September of 2016 a new CCA policy statement (4.15) on payment that was crafted by the CCA taskforce. It reads as follows:
“CCA advocates contractual payment and related terms that are fair, reflecting the industry consensus expressed in CCDC and CCA standard documents. Further, CCA advocates that project owners, prime contractors, subcontractors, suppliers, payment certifiers and other stakeholders in the payment chain comply with all statutory/legal requirements and honour commitments and contractual obligations on time, and in the spirit of the following general principles:
- Contracting parties, both payers and payees, should be responsible for understanding all agreed contractual terms affecting obligations to make and entitlement to receive payment; and
- Project owners should share with others in a project payment chain the dates on which they make payments to prime contractors to enable parties to comply with and benefit from contract payment provisions with confidence.
While CCA supports free competitive enterprise and individual freedom (CCA Policy Statement 1.1), CCA does not object in principle to the use of effective regulation and legislation where there is broad industry consensus that this is necessary in specific circumstances in order to correct imbalances or preserve an efficient and productive economic and commercial environment for the benefit of the whole construction industry.”
PSPC Prompt Payment Principles
Public Services and Procurement Canada (PSPC) have endorsed the following prompt payment principles and will soon be including these in the front-end documents of all PSPC construction contracts. Defence Construction Canada (DCC) will also be taking a similar step in that it will include the principles in its construction procurement notices.
PSPC advocates that construction-related payments should follow these three principles:
- Promptness: The department will review and process invoices promptly. If disputes arise, PSPC will pay for items not in dispute, while working to resolve the disputed amount quickly and fairly.
- Transparency: The department will make construction payment information such as payment dates, vendor names, contract and project numbers, publicly available; likewise, contractors are expected to share this information with their lower tiers.
- Shared responsibility: Payers and payees are responsible for fulfilling their contract terms including the obligations to make and receive payment, and to adhere to industry best practices.
PSPC and DCC Websites
CCA has been working with PSPC and DCC to explore potential solutions aimed at improving prompt payment. We are pleased to announce that their websites are now online. Learn what Public Services and Procurement Canada and Defence Construction Canada are doing in cooperation with the CCA to improve payment practices throughout the construction industry.
The second phase of their websites will feature information regarding payments issued by PSPC and DCC to construction contractors such as the name of the company, the date of payment as well as the contract and project numbers.