Action is under way on multiple fronts to ensure that construction contractors and subcontractors who do business with the federal government are paid promptly. The federal government said that it pays 96% of their main contractors on time. However, some subcontractors who work for these main contractors are not paid on time, or within the required timelines.
Two independent experts have been appointed to seek input from the construction industry to identify the elements required to develop a robust federal prompt-payment regime. The federal government will use the proposed recommendations to inform the development of legislation to direct terms of payment and provide for an adjudication process for federal construction contracts.
The latest 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 8 June 2017, the government of Canada has publicly posted all payments related to construction contracts of over CA$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 & Procurement Canada to collaborate through a working group;
- agreeing on prompt payment principles;
- reviewing payment terms in federal construction contracts, including an assessment against industry standards; and
- the Treasury Board's 30-day mandated payment period to determine if there is flexibility to reduce this period.
"Today, our government is taking the next step in ensuring that subcontractors who work on federal construction contracts get paid on time,” said Steven MacKinnon, parliamentary secretary to the minister of public services and procurement. “The construction sector is an important employer and economic engine in Canada. Our government is committed to ensuring that construction investments flow efficiently to all contractors involved in federal projects."
"Canada's trade contractors and tradespeople will benefit immensely from prompt payment legislation,” said John Galt, chair of the National Trade Contractors Coalition of Canada. “This legislation will fix the most significant bottleneck in federal construction and introduce new efficiencies to keep costs low and projects running smoothly.”
"On behalf of the Canadian Construction Association, I would like to congratulate the Government of Canada on its announcement today,” said Raymond Bassett, director and member of Canadian Construction Association Executive Committee. “The timely flow of payment within all tiers on construction projects is necessary to allow material and equipment suppliers, subcontractors and trades, labour, and general contractors to succeed in their businesses. It will also continue providing the construction capacity to build Canada's infrastructure and to create jobs and economic opportunities in an industry that represents a very significant part of the economic activity in Canada.”