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Construction stakeholders applaud federal prompt payment review

Angela Gismondi
Construction stakeholders applaud federal prompt payment review

Leaders from national construction organizations are praising the authors of the federal prompt payment review for conducting a thorough consultation process and including issues that are important to their members among the recommendations.

Building a Federal Framework for Prompt Payment and Adjudication was conducted by Bruce Reynolds and Sharon Vogel of Singleton Urquhart Reynolds Vogel LLP and was released by Public Services and Procurement Canada (PSPC) Aug 2. The review provides the Government of Canada with a set of recommendations for the implementation of prompt payment and adjudication legislation on federal construction projects.

“NTCCC (National Trade Contractors Coalition of Canada) has been involved with this for over a dozen years and we have advocated to all levels of government as to how important this is,” explained Sandra Skivsky, chair of the NTCCC.

“It’s a matter of knowing when you’re going to get paid. We’re trade contractors with no direct contractual relationship with the owner for the most part. The uncertainty of knowing when you are going to get your payment affects all of us. Once the proper invoice goes in, having that process outlined of how many days and what happens if you don’t get paid, what are your remedies, all of that makes it a more transparent and accountable system.”

The 258-page report outlines 55 recommendations, including mechanisms to ensure that cash flows down the construction pyramid quickly on federal construction projects. The report recommends the time period for payment between the federal owner to the general contractor be 28 days, and payment at levels below the general contractor be seven days from receipt of payment from the owner.

“CCA (the Canadian Construction Association) believes that these recommendations are consistent with what we had submitted on behalf of the general contractors, trades, civil, manufacturers and suppliers,” said association president Mary Van Buren.

“CCA championed the consultation process, which was similar to what was done in Ontario, because we believe that this would ultimately result in consensus legislation. We think the release of this report is an important milestone and we really appreciate PSPC for their collaborative approach and the Government of Canada supporting this member priority.”
Although many of the recommendations in the review are in line with the views of the CCA, as a stakeholder, the association will be providing feedback in a few areas, with a key item being trusts.

“It’s a very important issue for our members and we are continuing to look for opportunities to address it,” said Van Buren.

Matt Ainley, chair of the General Contractors Association of Canada (GCAC), also stated trust provisions are an important area in the report.

“There are no trust provisions federally, so they’ve asked the question in the report about should there be trusts or should there be bonding. I believe that is a very good question for the government to consider,” he said.

Reynolds and Vogel were retained by PSPC Jan. 30 and began by sending out a survey to key stakeholders. During the consultation process, Reynolds, Vogel and staff from their Toronto and Vancouver offices visited 10 provinces and two territories, meeting with over 500 people in 55 meetings and conference calls. They also received a number of written submissions.

“They were able to spend a lot of time consulting the industry and I think that was probably the key,” stated Ainley, adding he was pleased the federal government decided against a Private Member’s Bill, opting instead for a consultative process. “They decided to go to the experts and produce this report…so you get the best value for the taxpayer. When you read the report, it really does have a broad-based approach and they have listened to everybody.”

The review also addresses the issue of alignment which is important especially with many provinces considering prompt payment legislation.

Following the release of the review, Reynolds and Vogel have been retained to assist PSPC as they instruct the Department of Justice in relation to drafting the legislation.

Ainley added the GCAC will suggest the federal government put together a committee of industry stakeholders and experts to provide input as the legislation is drafted.

“One of the lessons learned at the provincial level in Ontario is this legislation is very complicated,” explained Ainley.

“We like the fact that Bruce and Sharon got an addition to their assignment to help over the next several months of this process so that is a great first step. The next step would be could a special committee be put together similar to Ontario to assist the drafters in making sure that they get the nuances, the specifics of the recommendations that the government is going to go forward with.”

Skivsky echoed those comments.

“This is very important because sometimes transcribing the recommendations into legislation and to get the intent right is a complicated task, so it’s good to see Bruce and Sharon will be part of that process,” she said. 

The CCA, NTCCC and GCAC are planning to submit responses to the review in the near future.

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