A change in federal policy should help subcontractors get paid on government projects. On June 8, Public Services and Procurement Canada announced that it will publicly disclose payments to prime contractors on its website.
The increase in transparency is designed to allow companies and individuals working for prime contractors to know when they can expect payment and to take action under their respective contracts when payments are late.
Effective immediately, it covers all construction contracts of over $100,000.
“If payment delays were not such a systemic problem we wouldn’t need this measure,” remarked Richard McKeagan, CEO of the Mechanical Contractors Association of Canada (MCAC).
“We are committed to legislation that not only encourages transparency, but that guarantees timely payment for work that has been done and that is not in dispute.”
“Our government understands that too many workers and small businesses in the construction industry face financial hardship because of payment delays. We are helping eliminate this unfair situation by providing those who work on federal construction projects with the information they need to get paid by their contractors on time and help bolster a healthy industry and a vibrant economy,” said Steven MacKinnon, parliamentary secretary to the minister of Public Services and Procurement.
Publishing the payments will complement federal measures already in place. For example, PSPC-managed construction contracts of over $100,000 require prime contractors to submit statutory declarations with every request for payment acknowledging that they have met all legal payment requirements.
They are also required to provide contract security (such as bonds) to protect subcontractors against non-payment.
This initiative is the product of a joint government-industry working group, composed of PSPC, Defence Construction Canada and the Canadian Construction Association.
The working group is also considering other measures to support timely payment in the construction industry, such as potential improvements to payment terms and contractual holdbacks.