Gov’t Urged To Pay Its Bills
July 14, 2018
A Commons committee is demanding legislation guaranteeing prompt payment to small suppliers and contractors on public works. Cabinet has shelved a bill passed by the Senate in 2017 that would give contractors a right to demand payment for work without fear of being struck from the bidders’ lists.
“As a business you have to pay your employees every Thursday, you have to pay your suppliers – you have no give in these areas,” said Louis-Martin Parent, director of the President’s Office at the Canadian Federation of Independent Business. “You have to get paid, so they can get paid. Maybe larger businesses can absorb these expenses, but as a small business, not being paid on time is huge.”
The Commons government operations committee in a report Modernizing Federal Procurement For Small And Medium Enterprises, Women-Owned And Indigenous Businesses said Parliament must pass a prompt payment bill. Witnesses earlier told the committee that foreign regulations require payments to small business within 15 days of invoicing in the U.S., and 30 days in the U.K.
“The federal procurement process is such a massive thing that it’s never going to be perfect,” said Parent. “At the same time, you can improve people’s experiences.”
The committee noted payments, especially to subcontractors on public works, can be so haphazard many small businesses cannot afford to bid on government jobs. “The committee recognizes the federal procurement process is very complex and can be difficult to navigate for most Canadian business owners, especially small and medium-sized enterprises and Indigenous businesses,” wrote MPs. “It is concerned the majority of small and medium-sized enterprises in Canada do not consider the federal government as a potential client, and those that do are often discouraged with the process.”
The Senate in 2017 passed Bill S-224 that would mandate payment of invoices within 30 days; allow adjudication of disputes without penalty; require written notice of contract termination; allow trades and subcontractors to demand a payment schedule on public works; and allow unpaid contractors to claim default without being struck from bidders’ lists.
Witnesses told the Senate banking, trade and commerce committee that subcontractors typically wait from 180 to 220 days or more to get paid for work already done. “We had men in tears here,” said Senator Donald Plett (Conservative-Man.), sponsor of the bill. “We know there is a big problem.”
“It is time we give the contractors what they need to survive,” said Plett. “All they want is to be paid for work they have completed. They have waited long enough.”
Bill S-224 has never been called up for debate in the Commons though it passed the Senate May 4, 2017.
By Jason Unrau