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 Government of Canada-CCA 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. The working group has also prepared a brief Interim Status Report as well as an Action Plan that describes the various activities and subject areas the working group is addressing.
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 and DCC websites
Reporting payments to prime contractors
PSPC and DCC announced June 8, 2017 that they will both begin publicly disclosing payments to prime contractors on their construction contracts valued at over $100,000.
PSPC news release
See payments on PSPC’s website
See payments on DCC’s website
On January 30, 2018, PSPC announced that it has commissioned Singleton Urquhart Reynolds Vogel LLP to lead an industry engagement initiative on a potential federal legislation aimed at improving the timeliness of payments for federal construction contracts throughout all tiers of the construction industry and to build off of the recently completed Bill 142 (the Construction Lien Amendment Act) in Ontario as the basis for discussion. The results of this engagement will be presented in a recommendations report for the federal government’s consideration related to the development of an effective legislative solution.
CCA submission on federal payment legislation (March 2018)
CCA has advocated for a consultative process prior to finalizing legislation on federal payment. The government agreed to run this process through the services of the Singleton Urquhart Reynolds Vogel law firm, albeit under very short timelines. The four sectors councils that represent CCA’s membership – trade contractors, general contractors, civil infrastructure and manufacturers, suppliers & services – together with the chair of the federal payment taskforce, discussed the submission with their committees in Banff and prepared a submission.
Report: Building a Federal Framework for Prompt Payment and Adjudication (June 2018)
Following the Singleton Reynolds Report in June 2018, which addressed concerns and recommendations raised by the Canadian Construction Association (CCA), prompt payment legislation was announced as part of the federal government’s fall economic statement on November 21, 2018 and officially introduced on April 8, 2019 as the Federal Prompt Payment for Construction Work Act, a sub-section of Bill C-97, the Budget Implementation Act of 2019. The act applies to any federal real property or federal immovable. As expected, the act largely reflects the recommendations of the government-industry working group and the Ontario Building Lien Act, introduced in 2015. The Federal Prompt Payment for Construction Work Act received royal assent on June 21, 2019. The date of its official enactment remains undetermined, but, according to many pieces of legislation, is designated to come into force “on a day to be fixed by order of the governor-in-council”.
It is important to note that the legislation, once it comes into force, will not apply for one year in two categories:
(a) a contract entered into by a contractor, before the day on which this act comes into force, with Her Majesty or a service provider; and
(b) a contract entered into by a subcontractor, before the day on which this act comes into force or within one year after that day, with a contractor referred to in paragraph (a) or with any other subcontractor.