Prompt Payment Dispute Resolution Rules

Summary#

This is a proposal for the Federal Prompt Payment for Construction Work Regulations (Dispute Resolution). It would spell out how quick, low‑cost adjudication works when there is a payment dispute on a federal construction contract. The public comment period was 30 days from February 25, 2023.

What it does#

• Defines what counts as a “proper invoice” (for example: invoice date, contractor contact details, contract number, description of work, amount and payment contact).
• Sets up an independent Adjudicator Authority to train and certify adjudicators, keep a public roster, set fees, enforce a code of conduct, handle complaints, and publish annual stats.
• Sets minimum qualifications for adjudicators, including 10 years of relevant construction experience, no indictable convictions, not being an undischarged bankrupt, and holding an appropriate security clearance.
• Lays out the basic adjudication steps and timing:
  • The claimant contacts the Adjudicator Authority and serves a Notice of Adjudication.
  • Parties must agree on an adjudicator within 4 working days or ask the Adjudicator Authority to appoint one.
  • The adjudicator must receive the parties’ documents and then make a written decision within 20 working days of receiving all material. The time may be extended by 5 working days (or longer if all parties agree).
  • A certified copy of the decision must be delivered within 5 working days of the decision.
  • The RIS states amounts found owing must be paid within 10 days of receipt of the certified decision.
• Other process rules:
  • Adjudication generally deals with one issue at a time, but related disputes can be consolidated.
  • Documents must be provided electronically.
  • Some calendar days are excluded when counting time limits (holidays, Saturdays, Dec 24–Jan 1, and recognized construction holidays).
• Reminds that the Act sets payment timelines down the chain: the federal government pays a contractor 28 days after a proper invoice, and contractors then have 7 days to pay their subcontractors, who in turn have 7 days to pay lower tiers.

Who's affected#

• Contractors and subcontractors working on federal construction contracts on federal property.
• Small and medium construction firms are likely to notice the change most, since the regime aims to reduce the time and legal cost of chasing unpaid invoices.
• The organization that becomes the Adjudicator Authority, and the adjudicators it certifies.
• Public Services and Procurement Canada (PSPC), which will run the procurement to create the Adjudicator Authority and update standard federal construction contracts.
• Provinces with similar prompt‑payment laws could be designated under the Act; this proposal, however, targets federal contracts.

If any detail about when the rules will start is unclear, that’s because the regs come into force only when the government sets a start date to align the whole system (Act, Adjudicator Authority, and contract changes).

Why it matters#

• It aims to make payments move faster down the construction supply chain. Faster payment helps small subcontractors survive and invest in labour and equipment.
• Adjudication is intended to be quicker and cheaper than court action. That could cut legal costs and reduce project delays caused by payment disputes.
• For the federal government, more consistent payment practices may lower project financial risk and long‑term costs.
• The actual effect for a particular project depends on when the government establishes the Adjudicator Authority and brings the rules into force.