Government-Industry Working Group on
Prompt Payment: Interim Status report
Special to the Canadian Design and Construction Report
The Canadian Construction Association (CCA) and the fed-
eral government have co-ordinated a government-industry
working group focusing on prompt payment issues. The
CCA has posted this “interim status report” on its website.

Following the annual meeting of the CCA and the Gov-
ernment of Canada at Meech Lake in April 2016, and at the
request of CCA, Public Services and Procurement Canada
(PSPC), Defence Construction Canada (DCC) and a CCA
task force on federal prompt payment formed a Govern-
ment-Industry Working Group. The objectives and focus of
the working group are described in the working group’s En-
gagement Strategy, a document that was finalized in late
2016, translated and approved for circulation by all working
group members in February 2017.

The CCA task force includes trade contractors, specialty
contractors, general contractors and services providers,
and was appointed by the CCA executive committee acting
on a resolution of the CCA board of directors at the fall 2015
board meeting.

The working group is looking to influence federal govern-
ment contract terms, practices and culture towards achiev-
ing the principles expressed in CCA’s policy statement on
payment (Policy 4.15 Payment cca-acc.com/cca/policy-state-
ments). The working group is of the view that no single ini-
tiative or “tool” is likely to solve the prompt payment
problem, and is considering a number of initiatives which
together will improve the promptness of payment through-
out the construction industry on federal construction proj-
ects. 8 – June 2017 — The Canadian Design and Construction Report
In defining the “problem,” the working group describes
its vision of the minimum characteristics of a well-function-
ing market that enjoys timely payment on federal construc-
tion projects:
• Contractual payment terms throughout the federal con-
struction contracting tiers should be fair. The group’s
working reference point for what constitutes “fair”
terms are the industry standard contract/subcontract
documents endorsed by the CCA;
• Undisputed amounts, including holdback amounts,
throughout the contract tiers are paid in accordance
with fair contract/subcontract payment terms;
• There is sufficient transparency around the dates on
which payments are made to enable stakeholders
throughout the contracting tiers to exercise remedies
in a timely manner;
• PSPC and DCC continue to manage fair and efficient
payment processes within its contractual control, and
where it does not have control, leads by example to in-
fluence good payment practices throughout the pay-
ment chain;
• The construction industry at all levels is knowledgeable
about available contractual and legal mechanisms, and
acts with confidence to ensure timely cash flow
throughout the industry.

The working group is working to implement initiatives by
both government (PSPC and DCC) and industry that the
group believes will help improve timely payment on PSPC/
DCC construction contracts. The initiatives being consid-
ered by the working group include some that are contractual
and some that are not contractual (i.e. policy statements and
administrative process improvements).




1. Transparency - PSPC and DCC are developing a tool
to post on a public website the dates on which they
issue payments to their prime contractors on construc-
tion contracts above $100,000.

2. Statement of Principles – following adoption by
the CCA board in spring 2016 of the policy statement
on payment (Policy 4.15 Payment cca-acc.com/cca/pol-
icy-statements), PSPC and DCC have adopted princi-
ples advocating for a prompt payment culture in
government and within industry participants. These
principles will be included in future construction ten-
ders. 3. Fair Pay ment Terms – PSPC and DCC have re-
viewed their standard contracts for consistency and
alignment with CCDC standard documents.

4. Government Servic e Standards – PSPC is review-
ing internal processes to identify any opportunities for
improvement affecting the timing of payment.

5. Education – The working group will be developing
education content around contract terms, service stan-
dards, frequent bottlenecks, remedies for delayed pay-
ment, and payment best practices on federal
construction contracts. Training could be structured
with local construction associations for joint delivery
with government on how to do business with PSPC
and DCC.

The Government of Canada currently invests in construc-
tion both directly through construction contracts, and
through Real Property Services Management contracts,
often referred to as “RP-n” contracts (e.g. RP-1 and RP-2).

Initiatives by the working group will not apply to the existing
RP-1 or RP-2 contracts. The working group will initially focus
on initiatives to improve timely payment throughout the
contract tiers on government’s direct construction con-
tracts (contracts administered through PSPC and DCC with
values over $100,000). The working group scope includes
consideration of applying identified initiatives on future RP-
n procurements.

In addition to the priorities above, the working group is
considering several other initiatives including, for example,
a review of holdback requirements, a review of the dispute
resolution process, and a simple method for benchmarking
industry experience over time on promptness of payment
and evaluating the impact of the various measures put in
place by the working group.

www.threadsoflife.ca The Canadian Design and Construction Report — June 2017 – 9