Action plan on prompt payment in the construction industry

From: Public Services and Procurement Canada

Consult the action plan developed by the government-industry working group, made up of the Canadian Construction Association, Defence Construction Canada and Public Services and Procurement Canada, to learn more about some of the proposed solutions being explored to improve payment timeliness in the construction industry. In the first phase, the working group is focusing on construction contracts valued over $100,000 managed by Public Services and Procurement Canada and Defense Construction Canada.

Engagement strategy

A guiding document that describes the commitments made by Public Services and Procurement Canada, Defence Construction Canada and the Canadian Construction Association to collaborate through a government-industry working group to improve the timeliness of payment throughout the contract tiers on Public Services and Procurement Canada and Defence Construction Canada contracts above $100,000. This document identifies context and objectives.

Status: Completed

More information:

Prompt payment principles

Our principles advocate for a prompt payment culture and mirror the Canadian Construction Association’s policy statement 4.15 and Defence Construction Canada’s principles on prompt payment.

Status: Completed

More information:

Transparency and prompt payment disclosure

Disclose on a public website information on payments made to Public Services and Procurement Canada's and Defence Construction Canada's construction prime contractors and businesses (such as payment date, company name, and contract and project numbers).

Status: In progress

Fair terms throughout the construction supply chain

Consider inserting a statement in Public Services and Procurement Canada and Defence Construction Canada documents requiring prime contractors to pay subcontractors within a certain time period to highlight the importance of fair terms and encourage subcontractors to adopt the same practice. The industry will be reviewing standard construction documents to identify opportunities to outline such payment terms.

Status: In progress

Payment certification process

The department is reviewing the payment process from receipt of invoice to issuance of payment to assess any opportunity to reduce timeframe. Further validation is required to ensure reduced timeline would not compromise due diligence and accountability for ensuring value for money to Canadian taxpayers.

Status: In progress

Review of payment terms

Review payment terms in federal construction contracts and assess against industry standards.

Status: In progress

Next steps: The department is gathering information on what other organizations (such as municipalities and provinces) are doing.

Dispute resolution

The Canadian Construction Association will review existing process and consider establishing a set timeline for resolving disputes.

Status: In progress

Metrics

Develop metrics and method to measure prompt payment improvements and successes, particularly on the measures taken by the working group.

Status: In progress

Next steps: Canada Construction Association is developing a type of industry survey that could be jointly run with local construction associations to get specific feedback from the industry on the current situation, and to establish a baseline. The ultimate goal is to be able to assess the effectiveness of the measures identified in the working group’s action plan.

Contractual holdback

Review the need and purpose of holdbacks on Public Services and Procurement Canada and Defence Construction Canada construction contracts (such as where lien legislation does not apply). Consider progressive release of holdbacks for completed portions of the work.

Status: In progress

Next steps: The department will consult internally to obtain further information on the purpose of holdbacks and advise on the potential improvements to current practices.

Education

Need to ensure contractors and sub-contractors throughout the contracting chain are aware of their responsibilities and remedies, especially on federal construction projects.

Status: The working group is working to create educational content around contract terms, service standards, frequent bottlenecks, remedies for delayed payment, 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 Public Services and Procurement Canada and Defence Construction Canada.

Treasury Board 30-day payment period

Review the Treasury Board 30-day mandated payment period to determine if there is flexibility to reduce this payment period.

Status: In progress

Next steps: Treasury Board Secretariat is reviewing its policies, including the 30-day timeline requirements for the payment of invoices.

Prompt payment codes and protocols for the industry

Similar to the “better business bureau” idea, this action would look at a protocol and opportunities for companies to self-identify as adhering to prompt payment principles.

Next steps: This practice is being done in the United Kingdom. Initial reaction is that this would be difficult to monitor and ensure validity. The Canadian Construction Association will further investigate.

Project close-out

Consider opportunities to improve project close-outs on federal construction contracts and release of final payments. Opportunity to build on work already underway by an Alberta taskforce working on this issue.

Next steps: The Canadian Construction Association will consult with the province of Alberta and share results with the working group, and then evaluate next steps.

Legislation

Bill S-224 was introduced to Senate in April 2016, Senate Committee hearings occurred in February 2017.

Status: Given active Senate Committee process, the working group is not in a position to discuss the content of Bill S-224. However, the overall merit of legislation (federal or provincial) remains as an activity under review by the working group.

Additional initiatives led by Public Services and Procurement Canada

National Trade Contractors Coalition of Canada

Public Services and Procurement Canada continues to engage with the National Trade Contractors Coalition of Canada in order to consider their concerns and point of view on the various action plan initiatives.

Next steps: The department will continue to meet with the National Trade Contractors Coalition of Canada to ensure that potential prompt payment actions have an impact at all levels of the construction supply chain.

Federal-provincial-territorial forum

Public Services and Procurement Canada continues to engage with provinces and territories. Both the procurement and portfolio federal-provincial-territorial sub-committees have discussed the issue of prompt payment at their meetings. Issues and potential solutions are very similar on a national level. The federal-provincial-territorial committee initiated discussions on the merit of assessing promptness of payment of prime contractors in pre-qualification and bid evaluation processes.

Status: Public Services and Procurement Canada has sent a survey to the federal-provincial-territorial committee to gather data on current practices and envisioned improvements. A follow up meeting with the committee will be scheduled to continue discussions. These discussions and the gathering of data will ensure proper alignment between federal and provincial/territorial initiatives.

Related links

More information

For more information on the government-industry working group:

Date modified: