Feds move forward on prompt payment

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prompt payment

The federal government will adopt prompt payment rules, likely within the next year. The plan to implement modernized procurement practices, an adjudication period, and prompt payment legislation was announced in the Fall Economic Statement in November.

“Once it’s mentioned in the Economic Statement, the bureaucracy puts together legislation that makes it a law and that should be in the budget implementation bill released sometime in February,” reported Judy Sgro, MP for the Humber River – Black Creek, Ont. riding, who has been spearheading the legislation for the Liberals.

She is expecting “a piece of legislation that will require the general contractors that have federal contracts to pay their sub-trades within a designated time frame – let’s use a 30-day framework. Once the general contractor has been paid, they will be responsible for paying sub-trades within 30 days.”

In terms of modernizing the procurement process, the plan is to use the internet to ensure that everyone knows about federal project opportunities, she added.

While Ontario has adopted prompt payment and it is in the works in other provinces, Sgro would like to see it at all levels of government. “Municipalities should be required to install something that ensures that city contracts have the same kind of clauses. Therefore, once a general contractor has received payment, they have a certain amount of time to pay their sub-trades.”

Pierre Boucher, CEO of the Mechanical Contractors Association of Canada (MCAC), is pleased that prompt payment was included in the Economic Statement. “When I found out, I was very, very happy with it because next year will be an election year and there was concern that it may have been difficult for government perhaps to go through the whole legislation process.”

Prompt payment at the federal level is expected to be similar to Ontario legislation introduced in December 2017 as Bill 142. Ontario has moved to prompt payment in steps, with the process scheduled to be completed and the adjudication process in full-effect by October.

As of now, industry officials will just have to wait until the budget comes out next month for a better idea of exactly what prompt payment legislation at the federal level will look like. “This is a good step forward for Canada, but more importantly it’s a good step forward for our sub-contractors,” said Sgro.

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