Order Fixing the Day After the Day on Which this Order is Made as the Day on Which Division 26 of Part 4 of the Budget Implementation Act, 2019, No. 1 Comes into Force: SI/2023-77
Canada Gazette, Part II, Volume 157, Number 26
Registration
SI/2023-77 December 20, 2023
BUDGET IMPLEMENTATION ACT, 2019, NO. 1
Order Fixing the Day After the Day on Which this Order is Made as the Day on Which Division 26 of Part 4 of the Budget Implementation Act, 2019, No. 1 Comes into Force
P.C. 2023-1216 December 8, 2023
Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Works and Government Services, under section 388 of the Budget Implementation Act, 2019, No. 1, chapter 29 of the Statutes of Canada, 2019, fixes the day after the day on which this Order is made as the day on which Division 26 of Part 4 of that Act comes into force.
EXPLANATORY NOTE
(This note is not part of the Order.)
Proposal
This Order in Council will fix the day after the day on which this Order is made as the day on which Division 26 of Part 4 of the Budget Implementation Act, 2019, No. 1 comes into force in order to bring into force the Federal Prompt Payment for Construction Work Act (the Act).
Objective
The Act will facilitate the orderly and timely building of federal construction projects on federal property by ensuring that payments flow down the construction supply chain promptly and provide for an effective adjudicative mechanism when they do not.
This initiative is directly linked to the Minister of Public Services and Procurement mandate letter of October 2017, within which the Prime Minister mandated the Minister to ensure that, in collaboration with the private sector, terms of payment, adjudication processes and the right legislation be developed to support prompt payment for all federal construction contracts.
Background
The Act was developed and received royal assent on June 21, 2019, through section 387 of the Budget Implementation Act, 2019. The Act stipulates that payment will be due from the federal government 28 days after receipt of a proper invoice from the contractor. The contractor will then have 7 days to pay its subcontractors, and those subcontractors will then have 7 days to pay their subcontractors, and so on down the chain. If there is a dispute between parties working on the construction project related to payment anywhere down the chain of payment, the Act introduces an adjudication process.
The implementation of the entire federal prompt payment regime required four key elements to be in place: the Act to be in force; the Regulations to define the adjudication process, the criteria to designate provinces as having a reasonably similar prompt payment regime as well as time limits, interest and circumstances to enable the Act to function; the Adjudicator Authority to be created; and the standard Government of Canada construction contract to be revised.
Implications
The Regulations under this Act come into force on the day after the day on which the Governor in Council makes the Coming Into Force Order, on the recommendation of the Minister of Public Services and Procurement, pursuant to section 387 of the Budget Implementation Act, 2019, No. 1, chapter 29 of the Statutes of Canada, 2019.
The Federal Adjudicator Authority is in place through a contract issued by Public Services and Procurement Canada (PSPC) after a competitive solicitation. Adjudicators have been identified, trained and certified.
The standard Government of Canada construction contract has been amended to bring the basis of payment timelines in line with the Act and to add adjudication as a method of dispute resolution.
Pursuant to the Act, any contracts for federal construction work on federal property that were underway at the time the Act and proposed Regulations came into force, and which will end more than one year after, will have one year to adjust to the payment periods and adjudication process, and ultimately follow all the requirements under the Act and Regulations.
Provinces that have enacted a reasonably similar prompt payment and adjudication regime will be designated, so that any federal construction work in those provinces will, by default, be under the prompt payment regime of the province. At this time, Ontario, Saskatchewan and Alberta are the only designated provinces.
The coming into force of the Act facilitates the orderly and timely delivery of federal real property projects on federal lands by reducing risks related to lengthy payment disputes or work stoppages. It also ensures small and medium enterprises (SMEs), including indigenous firms, are paid in a predictable and timely manner, which leads to more opportunities for apprenticeships or working for firms better able to invest in technology.
Consultation
In 2018, the Department engaged expert consultants to conduct a series of stakeholder engagement sessions and develop a recommendation package for the federal government regarding promptness of payment and adjudication in relation to federal construction projects. They conducted 55 engagement sessions and met with more than 500 stakeholders from all provinces and territories.
The Department also engaged with the provinces and territories to discuss payment practices and opportunities for improvement to ensure proper alignment across the country. Industry organizations expressed interest in achieving national consistency where possible, acknowledging that legislation related to property and civil rights typically falls within provincial and territorial jurisdiction. Since 2018, the sharing of best practices with the Provinces and Territories has taken place through participation in the Regulatory Reconciliation and Cooperation Table — Prompt Payment Working Group.
Contact
Communications, Issues, and Strategic Relations
Real Property Services Branch
Public Services and Procurement Canada
Place du Portage, Phase III, 9A1
11 Laurier Street
Gatineau, Quebec
K1A 0S5
Email: Biensimmobiliers.RealProperty@tpsgc-pwgsc.gc.ca