Trade contractors support feds’ prompt payment proposal

federal prompt payment
Government seeking recommendations on federal prompt payment legislation (CNW Group/Public Services and Procurement Canada)

Members of the National Trade Contractors Coalition of Canada (NTCCC) are expressing support for the federal government’s plan to legislate prompt payment requirements on all federal construction projects.

The move comes after months of collaborative work between contractor groups, civil servants and Parliamentarian champions. Steven MacKinnon, Parliamentary Secretary to the Minister of Public Services and Procurement, hosted stakeholder groups to announce the initiative on Jan. 30 at the department headquarters in Gatineau, Quebec.

“Trade contractors have been encouraging the government to take action on this initiative for years,” said NTCCC chair John Galt. “The proposal put forward by the parliamentary secretary and MPs today will result in trade contractors taking on less risk on federal projects, being able to put forward more competitive bids, and tradespeople and apprentices will benefit as a result.”

The Government of Ontario passed Bill 142, which amended the Construction Lien Act, in December after thorough review and sector-wide consultation. That legislation will will ensure general contractors receive payment from owners in a timely fashion, and that sub-contractors and suppliers benefit from similar prompt payment terms.

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Government seeking recommendations on federal prompt payment legislation (CNW Group/Public Services and Procurement Canada)

The federal government said in a statement that Bruce Reynolds and Sharon Vogel have been contracted to seek input from the construction industry to identify the elements required to develop a robust federal prompt payment regime. Reynolds and Vogel drafted 100 recommendations that provided the basis for Ontario’s Bill 142, named the Construction Act.

The federal government will use the proposed recommendations to inform the development of an effective legislative solution that will direct terms of payment and provide for an adjudication process for federal construction contracts, the government statement says.

This initiative builds on ongoing prompt payment efforts, notably the creation of a 14-point action plan, developed jointly by the government and the Canadian Construction Association.

As of June 8, 2017, the Government of Canada has publicly posted all payments related to construction contracts of over $100,000. This allows businesses involved in federal construction contracts, such as subcontractors, to make informed inquiries about the status of their payment. To date, four other actions have been completed:

  • Completing an engagement strategy that describes the commitment of the Canadian Construction Association, Defence Construction Canada and Public Services and Procurement Canada to collaborate through the working group;
  • agreeing on prompt payment principles;
  • reviewing payment terms in federal construction contracts, including an assessment against industry standards; and
  • reviewing the Treasury Board’s 30-day mandated payment period to determine if there is flexibility to reduce this period.

These steps will support small and medium-sized enterprises at the heart of our economy, creating jobs and helping grow our middle class, the statement said.

“There is tremendous momentum across Canadian jurisdictions to advance prompt payment legislation,” NCTCCC’s Galt said in a statement. “Other highly industrialized countries and 49-of-50 U.S. states have some sort of prompt payment legislation on the books, so we’re very glad to be moving in that direction.”

Ontario’s Bill 142 was supported by groups representing all segments of the construction sector including general contractors, trade contractors, suppliers, and labour groups. The federal government intends to follow a similar framework to achieve consensus by consulting widely, and moving legislation forward efficiently.

“We have benefitted from the support of many champions to get to this point and want to thank Sen. Don Plett and MP Judy Sgro for their tireless efforts to encourage action on this file,” said Galt. “We know that prompt payment enjoys support from all parties and we look forward to helping the politicians and regulators in finding the best possible legislative solution.”


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