Canada Gazette, Part I, Volume 157, Number 8: Federal Prompt Payment for Construction Work Regulations (Dispute Resolution)

February 25, 2023

Statutory authority
Federal Prompt Payment for Construction Work Act

Sponsoring department
Department of Public Works and Government Services


(This statement is not part of the Regulations.)


The Federal Prompt Payment for Construction Work Act (the Act) received royal assent on June 21, 2019, as part of the Budget Implementation Act, 2019, No. 1. Regulations are required to define the adjudication process should a dispute arise over a payment at any tier of the construction supply chain for construction contracts issued by any federal government department, agency, or Crown corporation located in Canada and issuing contracts as His Majesty in Right of Canada.


The construction industry in Canada is a significant employer and driver of the Canadian economy. Approximately 7.5% of Canada’s Gross Domestic Product is related to construction, and the industry employs an estimated 1.5 million people.

In 2016, at the 50th annual joint meeting of the Canadian Construction Association and the federal government, industry stakeholders raised the long-standing issue of payment delays along the contracting chain of contractors to subcontractors for federal construction contracts. A 2015 survey available from the Canadian Construction Association indicated that approximately $46 billion in payments remained unpaid after the conventional 30-day period, which represented about 16% of the estimated $285 billion in construction contracts in Canada that year.

The federal government was asked to take a leadership role and engage in dialogue with construction industry stakeholders to identify, assess, and implement possible measures to address timeliness of payment, which was of particular concern to small and medium enterprises (SMEs) in the construction industry. To date, the avenue available to SMEs affected by delayed or non-payments has been to seek redress through the courts, which is not a viable option for most SMEs. It usually involves long timelines to reach a judicial decision and legal costs are high, often exceeding the amounts being sought. With the exception of the province of Ontario (the Construction Lien Amendment Act), no jurisdiction in Canada had a broad legislated prompt payment regime in force with a relatively fast and low-cost dispute resolution and enforcement mechanism in place.

While the federal government itself maintains a good payment record and pays on time for completed construction work and services as per Treasury Board policy, there remain inconsistent payment contract terms and payment delays further down the chain. This inconsistency drives the cost of federal construction up and ultimately does not support growth, innovation, and employment. For workers, delayed payment means fewer opportunities for apprenticeships or working for firms unable to invest in technology or future work. For Government, delayed payment throughout the payment chain on federal construction projects erodes its buying power, increases financial risks, and escalates costs for construction.

In 2017, the Prime Minister mandated the Minister of Public Services and Procurement Canada (PSPC) to modernize practices to ensure the prompt payment of contractors and subcontractors that do business with the Government. To consider this issue, a government-industry working group was established, composed of PSPC, Defence Construction Canada and the Canadian Construction Association. The working group was established to consider ways to improve the speed of payment on federal construction jobs. In 2018, a 14-point action plan was developed. The action plan included a recommendation to develop legislation as a key action item. The legislation was deemed essential to ensure appropriate promptness of payment through all levels of the construction supply chain. The Act responds to that recommendation.

The core of the Act addresses the timelines of payment down the construction supply chain. It 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.

To ensure greater consistency and ease to construction firms in the province where a reasonably similar prompt payment regime exists, the Act allows the Governor in Council to designate that provincial prompt payment legislation as applicable instead of the federal legislation, and the designation also requires that the provincial legislation includes an adjudication regime that is similar to the one set out in the Act to handle cases of non-payment of contractors or subcontractors in the designated province.

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. Adjudication is a pragmatic, swift, and flexible dispute resolution mechanism. An adjudicator reviews evidence and arguments presented by opposing parties and arrives at a timely decision to determine the rights and obligations between the parties involved. Ultimately, adjudication allows a swift determination of a dispute, enabling a project to proceed and payments to flow through to lower tiers within the payment chain. The adjudicator’s determination is binding on the parties to the dispute unless they come to a written agreement or the determination is set aside by a court order or arbitral award.

PSPC is responsible for procuring the services of an Adjudicator Authority and will engage it through the issuing of a contract for services. The Adjudicator Authority will then be responsible for establishing a training and certification program for adjudicators, as well as to establish a code of conduct for adjudicators and methods to ensure adherence to that code. The Adjudicator Authority will also be responsible for maintaining a national list of adjudicators that it has certified, and will make this list available to industry, so that a certified adjudicator can be identified to resolve a dispute among parties.

Finally, the Adjudicator Authority will be responsible for tracking information about the various adjudications and will publish statistics on an annual basis to enable industry to see the status of prompt payment adjudications related to federal construction projects. PSPC will approve format and content of the annual statistics prior to posting and address any performance issues raised by industry.

The Act has set out the adjudication process as a dispute resolution process. It identifies how the adjudication is to be started (with a Notice of Adjudication), that the adjudicator is to be chosen from a list of adjudicators established by an Adjudicator Authority, and that the determination of the adjudicator is binding, unless the disputing parties come to a written agreement, or the determination is set aside by a court order or arbitral award. The Act also stipulates that the two disputing parties must pay their own costs, and an equal portion of the adjudicator’s fees, unless the adjudicator rules differently.



The proposed Federal Prompt Payment for Construction Work Regulations (Dispute Resolution) [the proposed Regulations] would define the key elements and timing related to the adjudication process.

As the proper invoice is the start to the entire prompt payment regime, the proposed Regulations would detail the minimum requirements for a proper invoice, e.g. that it includes the name and contact information of the contractor, the date of the proper invoice, the period that the invoice covers, the contract number, among other information.

The proposed Regulations would establish that a qualified adjudicator is one that has no conflict of interest, significant relevant working experience in the construction industry, not have been convicted of an indictable offence, and be a member of good standing with the Adjudicator Authority. They would also provide that the adjudicator must be impartial and establish that the powers that an adjudicator may exercise during an adjudication process include, but not be limited to, deciding the matters in dispute, taking the initiative in ascertaining the relevant facts, and giving directions related to the conduct and timetable of the adjudication.

The proposed Regulations would define the responsibilities of an Adjudicator Authority, i.e. that the Adjudicator Authority would

The proposed Regulations would define the adjudication process as follows:

Regulatory development


Upon royal assent of the Act, PSPC continued to engage an advisory group composed of key representatives from real property construction associations (i.e. the Canadian Construction Association, the National Trade Contractors Coalition of Canada, and the General Contractors Alliance of Canada), construction law experts, and interested individuals to ensure continued support and to clarify items to be included in the proposed Regulations. This advisory group was established during the build-up to the development of the Act, with expert industry representatives selected by a third-party construction-focused legal firm. The advisory group provided its feedback on multiple occasions during 2020. All feedback that was received from the advisory group informed, and was integrated into, the regulatory policy position.

Modern treaty obligations and Indigenous engagement and consultation

PSPC conducted an assessment to determine the implications of the legislation and resulting regulations on modern treaties. As the Act and proposed Regulations deal with prompt payment for the delivery of federal construction projects on federal lands only when the contracting authority is a federal department or agency, the proposed Regulations have no implications on modern treaties.

Instrument choice

The Act establishes that the details of the adjudication process are to be included in the proposed Regulations and they would become a fundamental element in the overall prompt payment regime. The Act assigns the details of the adjudication process to regulations because adjudications related to construction payments are new to the federal construction payment regime, and minor adjustments may be required to the process in the years following implementation. Adjustments can be more readily made to regulations compared to legislation.

Regulatory analysis

Benefits and costs

The costs to businesses as a result of the proposed Regulations are seen to be neutral or potentially resulting in cost savings. Adjudication is likely to be a significant benefit as it allows for a quick and cost-effective way of obtaining a determination on amounts owing. Industry has stipulated that a real cost is incurred when payment is not completed promptly. In order to recover these amounts owing, firms must engage lawyers and seek determinations through the courts. This litigious process is expensive and often more costly than the amounts that are being sought, resulting in firms not collecting the amounts that are owed. Countries such as Australia and the United Kingdom have found that with the introduction of adjudication, payment practices significantly improve and, when adjudication does become necessary, it is faster and less expensive than proceeding with a court action.

The proposed Regulations would not create additional costs to industry as they simply define the adjudication process to be followed as per the Act. Ultimately, adjudication costs are seen as regular dispute costs associated to the construction project itself as opposed to a government-wide cost. As costs related to mediation and arbitration are only accounted for at the individual project level, so would any adjudication costs associated with Government of Canada payment disputes with the contractor. As adjudication is seen as a quick and efficient method for settling disputes related to payment, it is likely that overall dispute costs will drop with the introduction of adjudication. Therefore, no additional costs or funding have been identified for this element.

Small business lens

The Act and the proposed Regulations are designed to support the construction industry which is made up of predominantly small businesses. The Canadian construction industry employs an estimated 1.5 million people. Over 99% of the firms are micro (1–4 employees), small (5–99 employees) and medium (100–499 employees) enterprises. Large businesses with more than 500 people on the payroll account for 0.1% of establishments. Of the 369 979 construction businesses, 61% have 4 employees or less.

The Act, supported by the proposed Regulations, articulates a payment regime that is to be followed throughout the construction supply chain on construction work on federal property, including that payment disputes should be addressed through adjudication, which is a quick, efficient and a relatively inexpensive way to resolve the dispute. Without the regime established by the Act and proposed Regulations, businesses would be required to engage legal counsel and await a decision by the courts — ultimately resulting in a long and expensive process. The proposed Regulations would produce a greater benefit to small businesses by speeding up payments and providing an effective method of resolving payment disputes quickly and efficiently, since going to court is even more cost prohibitive for them than it is for larger businesses.

Regulatory cooperation and alignment

Engagement continues through PSPC’s provincial and territorial meetings focused on the administration of real property. Direct engagement with provincial and territorial officials is ongoing to ensure information sharing (both related to legislative measures, but also for other contractual/administrative measures that may support the promptness of payment). PSPC will continue to monitor provincial and territorial prompt payment initiatives, and will keep provinces and territories informed of the status of the federal regime to ensure alignment where possible.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan was conducted to identify environmental impacts. Although construction can have an impact on the environment, the proposed Regulations deal only with prompt payment and enforcement through adjudication. As such, there would be no environmental impacts.

Gender-based analysis plus

The proposed Regulations deal with the adjudication of disputes related to prompt payment down the construction supply chain, therefore assuring the orderly and timely building of federal construction projects on federal property. The Act and proposed Regulations do not address the determination of who will do the work and where the work will be done. All firms will be paid on time, regardless of their ownership and irrespective of sex, ethnicity or culture.

Recognizing that the direct impacts of the proposed Regulations are neutral from a gender-based analysis plus perspective, there is an expectation that there will be some indirect socio-economic benefits created from the proposed Regulations. For example, by paying promptly, industry has indicated that firms would be able to take on more business and potentially hire more workers. Due to the current demographic of workers within the industry, this is expected to benefit more men than women. In addition, some federal land (and thus some federal construction contracts) will be in remote locations, which would provide for economic benefits to those remote areas. This would benefit both women and men in remote locations but, once again, because of industry worker demographics, there would be greater benefit to men than women.

The construction industry includes a range of occupations such as administrative, welders, bricklayers, sales and accountants, and electricians. Although the majority of the construction workforce is male and will likely benefit the most from the indirect benefits of the proposed Regulations, the 13% female segment is actively being targeted through a number of outreach initiatives led by major construction companies and key industry associations, e.g. the “Talent Fits Here” program of the Canadian Construction Association.

While the Government of Canada has no influence over the gender representation within construction companies, it is important to note that Canadian construction firms must abide by the human rights legislation of their respective province, and larger firms may have signed an Agreement to Implement Employment Equity under the Federal Contractors Program to ensure employment equity.

Implementation, compliance and enforcement, and service standards


Implementation of the entire federal construction prompt payment regime requires four key elements to be in place: implementation of the Act, implementation of the proposed Regulations, creation and ongoing operations of an Adjudicator Authority and, finally, revisions to the standard Government of Canada construction contract.

The Act received royal assent on June 21, 2019. It will only enter into force on a date set by the Governor in Council. This will be done to coincide with the completion of the other elements of the federal construction prompt payment regime, including the making of these proposed Regulations.

The Adjudicator Authority will be created through a contract issued by PSPC after a competitive solicitation. This solicitation is being issued in tandem with the publication of the proposed Regulations in the Canada Gazette, Part I. It is the intent that the Adjudicator Authority would be established and that adjudicators are identified, trained and certified prior to the coming into force of the proposed Regulations.

The standard Government of Canada construction contract will be adjusted to bring the basis of payment timelines in line with the Act and to add adjudication as a method of dispute resolution. This revised contract would be used for new solicitations that would be issued after the Act comes into force.

Pursuant to the Act, any contracts for federal construction work on federal property that are underway at the time the Act and proposed Regulations come into force, and which will end more than one year after, would have one year to adjust to the payment periods and adjudication process, and ultimately follow all the requirements under the Act and proposed Regulations.

Compliance and enforcement

Adjudication would be identified in the standard government construction contract as a means of payment dispute resolution. Compliance and enforcement with the adjudication process would be monitored by the Adjudicator Authority, once established. If a party does not adhere to the terms of the contract regarding payment dispute resolution, it could still be resolved through litigation.


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


Notice is given that the Minister of Public Works and Government Services, under section 22 of the Federal Prompt Payment for Construction Work Actfootnote a, proposes to make the annexed Federal Prompt Payment for Construction Work Regulations (Dispute Resolution).

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email the representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Real Property Services Branch, Public Services and Procurement Canada (email:

Gatineau, February 2, 2023

Helena Jaczek
Minister of Public Works and Government Services

Federal Prompt Payment for Construction Work Regulations (Dispute Resolution)



1 The following definitions apply in these Regulations.

means the Federal Prompt Payment for Construction Work Act. (Loi)
means a party to a dispute. (partie)
working day
means any day that is not a holiday as defined in subsection 35(1) of the Interpretation Act and includes a Saturday. (jour ouvrable)

Proper Invoice and Notice of Non-Payment

Proper invoice

2 In addition to meeting any requirements under the Act or set in the contract, a proper invoice must include the following information:

Notice of non-payment

3 A notice of non-payment must indicate, in addition to the information set out in section 13 of the Act, the amount to be paid that is not in dispute.


Adjudicator Authority — powers, duties and functions

4 The Adjudicator Authority has the following powers, duties and functions:

Adjudicator — eligibility and qualifications

5 An individual must meet the following eligibility criteria in order to be designated as an adjudicator:

Adjudicator — powers, duties and functions

6 (1) An adjudicator has the following powers, duties and functions:

Other powers

(2) If a party does not comply with any request or direction issued by the adjudicator, the adjudicator may continue the adjudication in the absence of that party and make a decision on the basis of any available information or evidence.

Single adjudicator

7 A single adjudicator is to be appointed to determine each dispute.

Adjudication Process


Computation of time

8 The following periods are excluded from the computation of time in these Regulations:

Electronic provision of documents

9 Any document required by these Regulations must be provided by electronic means.

One matter per adjudication

10 Subject to section 11, each adjudication must address only one matter.

Consolidated adjudication

11 (1) If related disputes are the subject of separate adjudications, the parties may agree to have those adjudications consolidated and determined by a single adjudicator in which case they must inform the adjudicators concerned.

Consolidation required by contractor

(2) Despite subsection (1), if the parties to each of the adjudications do not agree to consolidated adjudication, a contractor may require the consolidation of disputes by informing the parties and the adjudicators concerned.

Appointment of adjudicator

(3) When disputes are consolidated, the following rules apply to the appointment of an adjudicator:


12 A party may act in person or be represented by legal counsel or by another representative.

Dispute Resolution

Joint appointment of adjudicator

13 (1) The parties seeking to jointly appoint an adjudicator to determine a dispute must communicate, in writing, with that adjudicator within four working days after the day on which the notice of adjudication referred to in subsection 16(2) of the Act is received.

Consent or refusal

(2) The adjudicator must provide their consent or refusal to the parties, in writing, within four working days after the day on which the request for adjudication is received.

New adjudicator

14 (1) If an adjudicator refuses their joint appointment under subsection 13(2), the parties may agree to make a request, in writing, to another adjudicator that they determine the dispute.

Consent or refusal

(2) The new adjudicator referred to in subsection (1) must provide their consent or refusal to the parties, in writing, within four working days after the day on which the request for adjudication is received.

Appointment by Adjudicator Authority

15 (1) If the parties cannot jointly appoint an adjudicator, either party may request, in writing, that the Adjudicator Authority appoint one.

Appointment of adjudicator

(2) The Adjudicator Authority has five working days after the day on which the appointment request is received to appoint an adjudicator.

Informing parties

(3) The Adjudicator Authority must, within two working days after the day on which the adjudicator is appointed, inform the parties of the date of that adjudicator’s consent to their appointment, as well as their name, street and mailing address, telephone number and email address.

Documents sent to adjudicator

16 Within the five working days after the day on which consent referred to in subsections 13(2), 14(2) or 15(3) is received, the party that provided the notice of adjudication must send the following documents to the adjudicator and to the other parties:

Steps to follow

17 On receipt of the documents referred to in section 16, the adjudicator must inform each party, in writing, of the steps to be followed in the adjudication process.


18 The party to which the notice of adjudication was provided and that intends to respond has 20 working days after the day on which the documents referred to in section 16 are received to send to the adjudicator and every other party

Appointment of new adjudicator

19 If the adjudicator can no longer determine the dispute for any of the circumstances set out in section 5 of the Federal Prompt Payment for Construction Work Regulations (Criteria, Timelines, Interest and Circumstances), a new adjudicator must be appointed in accordance with the procedure established under section 13, 14 or 15 of these Regulations.

Termination of dispute

20 The parties may, upon agreement, at any time following the notice of adjudication but before the adjudicator makes a determination, terminate the dispute.


Information considered

21 The adjudicator must consider any relevant information submitted by the parties and must make available to them any other information that the adjudicator considers in making a determination.

Time limit for determination

22 (1) Subject to subsection (2), the adjudicator must make a determination no later than 20 working days after the day on which the response referred to in section 18 is received or, if there is no response, no later than 20 working days after the day on which it was to be provided under that section.


(2) The time limit referred to in subsection (1) may be extended for up to five working days by the adjudicator, or for a longer period with the consent of all parties and of the adjudicator.

Format and content

23 The adjudicator must render a written determination with reasons.

Provision of determination

24 The adjudicator must, without delay after a determination is made, provide a copy of it to all the parties.

Certified copy

25 The adjudicator must also, no later than five working days after the day on which a determination is made, provide a certified copy of it to all parties.

Minor corrections

26 (1) Within five working days after the day on which the determination is provided, an adjudicator may, on their own or on the written request of a party, make any changes to the determination as may be necessary to correct a typographical or similar error.

Provision of corrected determination

(2) An adjudicator who makes a change to a determination under subsection (1) must

Coming into Force

S.C. 2019, c. 29

27 These Regulations come into force on the day on which section 387 of the Budget Implementation Act, 2019, No. 1 comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

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