Constructing a federal prompt payment regime

  • June 12, 2019

The CBA’s Construction and Infrastructure Law Section has in the past asked the federal government to introduce prompt payment legislation, so it was happy to see it when it came – but unhappy with the way it was introduced, as part of an omnibus budget implementation bill, C-97.

“The introduction of the Federal Prompt Payment for Construction Work Act through an omnibus budget bill hinders opportunities for public or parliamentary scrutiny and decreases effective democratic process and debate,” the Section said in a submission to the Finance Committee.

That said, a number of its comments on the proposed Act itself had to do with definitions, as it recommended revising the definitions of construction work, subcontractor and service provider to provide more clarity.

The Act allows the Governor in Council to designate a province with a “reasonably similar” prompt payment regime, but it is not clear on what provisions of the Act would no longer apply in the event of a designation. It is also not clear whether a provincial holdback regime would apply – the Section recommends the Act set a default holdback, or adopt the provincial holdback.

The Section also questions when, given the importance of the legislation for the construction industry, any exemption would be warranted. It suggests exemptions only be granted in “extraordinary circumstances” – and that the Act set out those circumstances.

Other recommendations include:

  • Adopting a forms regime, with forms appended to the regulations for ease of use
  • Enumerating the grounds for adjudication
  • Creating a stand-alone certificate of completion section that should require the contractor to post a certificate of completion
  • Adding a requirement for bonding
  • Revising the Act to address both the contract signing and lead-in procurement phase.
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