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Prompt payment progress highlighted during CCA spring board meeting

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by Russell Hixson

The Canadian Construction Association's (CCA) task force on prompt payment updated its members on the issue of prompt payment recently during its spring board meeting in St. John's, N.L.
Prompt payment progress highlighted during CCA spring board meeting

Task force chair Ray Bassett reported positive signs from the federal government following several productive discussions.

Since the last CCA board meeting in March, both Public Services and Procurement Canada (PSPC) and Defence Construction Canada (DCC) have launched their own prompt payment websites.

The sites explain their "Prompt Payment Principles" and confirm their commitment to certain outcomes. PSPC and DCC are also developing a tool to post on a public website the dates on which they issue payments to their prime contractors on construction contracts above $100,000.

PSPC and DCC have adopted principles advocating for a prompt payment culture in government and within industry participants. These principles will be included in future construction tenders.

"They seem to be taking a leadership role in this issue. That's kind of a soft item but I think it is a big win culturally," said Bassett.

The government agencies have also reviewed their standard contracts for consistency and alignment with CCDC standard documents. PSPC is reviewing internal processes to identify any opportunities for improvement affecting the timing of payment.

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

"If you are working on federal construction projects, there are lots of levers, avenues and buttons to move things along and I don't think everyone is aware of those," said Bassett.

He also explained they are working on establishing some data on prompt payment by using questionnaires that would ask contractors about their payment experiences. Once a baseline measurement is taken and a few years of data is collected, the industry could begin to see if things are improving.

Bassett said the changes were partially due to pressure from the task force to follow Alberta's lead. Last year, Alberta Infrastructure (AI) made four changes to its contracts.

This included publicizing the date of payment so that subcontractors and suppliers will be aware of when the prime contractor was paid. AI has also modified the statutory declaration so that the general contractor must confirm they paid their subcontractors within 10 days of receiving payment from the government.

The CCA is also considering taking a position on Bill S-224, the Canada Prompt Payment Act. The bill requires that federal government project owners make progress payments to a contractor on a monthly basis, or at shorter intervals provided for in a contract, and that the payment requirement is consistent down the contractual chain.

The bill also accounts for milestone payments, when applicable, and permits contractors the right to suspend work, terminate a contract and collect interest on late payment.

The CCA was asked to take a position by Del Pawliuk, president of the Mechanical Contractors Association of Canada, who wrote a letter to the association.

"We are asking that CCA either support this bill or not. By remaining neutral, CCA, with all due respect, is 'muddying the waters' particularly in the eyes of the federal government," wrote Pawliuk.

He added the task force's joint government-industry working group agreed on an action plan that "talks about 'principles' and 'guides' but, quite frankly, does nothing to fix the problem."

He concluded by urging the CCA to "do the right thing" and support the bill.

Bassett said it essentially comes down to three questions: Is there an imbalance or situation where the economic or commercial environment is not working for the whole industry? Is effective legislation necessary? Is a specific bill likely to be effective?

He said the task force agrees the issue meets the first two questions but they are still discussing if this specific bill is likely to be effective.

"There was not unanimity in the group but the consensus was simply there is clearly a problem and legislation is probably necessary," he said. "We need to look at it carefully over the next few months and we will keep going on it."

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