CCA makes headway on federal prompt payment initiatives

It’s been almost a year since the Canadian Construction Association (CCA) formed a joint government-industry working group to facilitate prompt payment discussions on federal construction projects.

Since then the group has embarked on several initiatives, which were highlighted recently in a CCA progress report.

"The interim status report is about what the working group is doing, where we are currently and what the government has more or less agreed to do with CCA. It’s an interim report only," stated CCA president Michael Atkinson. "We identified more than a dozen potential areas of solutions to look at prompt payment on federal construction projects, some of which are contractual and some of which are non-contractual. We’re just a little more than halfway through them so the interim status report summarizes where we are to date but we still have a number of other items on our agenda."

Following an annual meeting between the CCA and the Government of Canada at Meech Lake, Que. in April 2016, the two authorities on government construction contracts — Public Services and Procurement Canada (PSPC) and Defence Construction Canada (DCC) — as well as members of a CCA taskforce on federal prompt payment came together to form the joint working group. It includes task force chair Ray Bassett, trade contractors, specialty contractors, general contractors and services providers.

The current priorities outlined in the interim report include transparency, a statement of principles, fair payment terms, government services standards and education.

In terms of transparency, PSPC and DCC are developing a tool to post the dates on which they issue payments to their prime contractors on a public website for construction contracts above $100,000.

"Essentially the thinking behind this is once the supply chain knows that a payment has been made by the owner, in this case the federal government to the prime contractor, they at least know that the payment has been made and then can take the recourses within their own contract and their own bailiwick to ensure payment is made promptly," said Atkinson. "Anyone, not just suppliers and contractors on that project but pretty well anyone…if you have the project number or the contract number you would be able to go to a public website and see the dates on which payments have been made on these contracts."

Last year, CCA also passed policy statements endorsing a number of principles, many supporting prompt payment. PSPC and DCC have done the same, adopting principles advocating for a prompt payment culture in government and with industry participants.

"Both PSPC and DCC have agreed not only to adopt these principles advocating for a prompt payment culture on federal construction projects, but are going to insert them in all of their front end documents for their construction tenders," said Atkinson. "That doesn’t necessarily mean it has any force and effect but it’s something that they’ve committed to do."

In terms of fair payment terms, PSPC and DCC have reviewed their standard contracts for consistency and alignment with the Canadian Construction Documents Committee (CCDC) standard documents, explains the report. PSPC is also reviewing internal processes to identify any opportunities for improvement affecting the timing of payment.

"The government departments agreed to look at their own standard contracts and their payment provisions and to see to what extent they can be aligned closer to what the industry has established as the standard, the CCDC standard contracts and the CCA documents," said Atkinson.

According to the interim report, the working group will also be developing education content around contract terms, service standards, frequent bottlenecks, remedies for delayed payment and payment best practices on federal construction contracts.

"We both sort of made a commitment that we need to do a better job of educating contractors working on federal construction projects," said Atkinson.

He advised that the working group is still holding meetings and considering several other initiatives including a review of holdback requirements and a review of the dispute resolution process. Overall, Atkinson said he hopes the working group will raise awareness and support more promptness of payment throughout the chain.

"The fact that people will know the federal contracting authorities are shining a light on it through measures like transparency, like including their commitment to prompt payment principles being put right in the front end documents of all the construction contracts…that may well go a long way to improving practices on federal construction projects," Atkinson concluded.