On Thursday November 15th, Finance Minister Vic Fedeli rose in the Legislature to deliver the Ontario PC government’s first Fall Economic Statement (FES). This highly anticipated event is second only to the provincial budget in terms of the attention paid to the Minister and the Ministry of Finance every year. The budget and the FES are the two pivotal points to providing a window into the province’s finances and how funding decisions are often made.
Issue: Consulting Engineers of Ontario (CEO) is advising members to use caution and consult their insurance and legal counsel before submitting project proposals to the City of Hamilton, specifically with regards to their standard indemnification clause. CEO has discussed the issue of indemnification in the past through a number of meetings with procurement, risk management and legal staff at the City with some acknowledgement on their side that they would entertain some modifications to the clause.
Recently through our Rapid Response Service, we enquired about the indemnification clause for RFP No. C3-10-17 – Consultant Required for Twenty Road East and Upper Red Hill Valley Parkway Extensions Municipal Class Environmental Assessment Phases 3 and 4 – Section 37. Indemnification. We were informed by the City that they will not be amending the referenced clause. City staff indicated that “Future considerations may (City emphasis) be made at a later date to amend this clause in some way …”. CEO is notifying member firms considering submitting proposals to the City of Hamilton to ensure that they carefully review the RFP documents for this clause and to beadvised that Section 37. Indemnification is very problematic for our industry insurance providers to fully insure.
CEO Position: CEO is of the strong opinion that fair and insurable agreements attract greater and more positive interest from the consulting engineering industry and result in better project results for clients. The clause in this RFP creates four substantial problems for consultants.
1. Imposes an obligation for the consultant to defend the client.
Professional liability insurance carriers will not defend an entity other than the insured engineering firm.
2. Creates an expectation that the consultant will assume “fines”, “penalties” and other sanctions.
Consultant professional liability insurance policies serve to cover compensatory damages arising from the consultant’s negligence; this does not include fines, penalties and fees etc.
3. Demands that “damages (including indirect, special, remote, and/or consequential damages)” be assumed by the consultant.
This is not reasonable as such damages cannot be accurately quantified and are often disproportionate to the liability of the consultant, if they are at all attributable. Due to these factors professional liability insurance coverage may not apply.
4. Requires coverage for questionable parties, namely “affiliates”, a term more appropriately applied to commercial entities, and “representatives”, an undefined term.
It is CEO’s position that for a consultant to be held accountable under any agreement, sound negligence-based criteria must exist. Our members’ professional liability policies exclude claims arising out of liability assumed under contract unless the liability would have existed in the absence of the contract, e.g. negligence. Acceptance of liability beyond that required by law is the acceptance of liability beyond that for which members are insured.
We remind members that our recommended industry standard indemnification clause, as developed with MEA, can be found in the current version of the MEA/CEO/Client/Engineer Agreement for Professional Consulting Services, 2017 that is located on our website here.
ISSUE: Consulting Engineers of Ontario (CEO) is advising members to use caution and consult their insurance and legal counsel before submitting project proposals to Norfolk County. Despite making efforts to engage county officials to amend the indemnity clause in the above referenced RFP, staff have issued CEO a blunt refusal. Member firms considering submitting responses to the County’s call for proposals for RFP No. PW-E-17-78 are advised that Section 4.3 - Indemnity is uninsurable through our industry’s insurance providers.
CEO POSITION: CEO strongly believes that having fair, insurable agreements attracts more positive interest from the consulting engineering industry and leads to better project outcomes for clients. The clause in this RFP creates three significant problems for our members.
The clause: 1. Imposes an obligation for the consultant to provide coverage for questionable parties, namely “…agents and other representatives…”. As these are undefined terms, such individuals are not subject to any sort of indemnification by the engineering firm’s insurance.
2. Creates an obligation for the consultant to assume costs including “expenses (including legal, expert and consultants fees…” and other sanctions. Members’ professional liability insurance policies serve only to cover compensatory damages arising from the consultant’s negligence; this does not include fines, penalties and fees etc.
3. Requires that the consultant assume “demands … in any way based upon, occasioned by or attributable to anything done or omitted to be done by the Proponent, … or otherwise in connection with, the Contract. The Proponent further agrees to indemnify and hold harmless the Indemnified Parties for any incidental, indirect, special or consequential damages, or any loss of use, revenue or profit, by any person, entity or organization, including, without limitation, Norfolk County, claimed or resulting from such Claims. The obligations contained in this paragraph shall survive the termination or expiry of the Contract”. Such obligations are not reasonable as they are overly broad, not limited to negligence and expressly include consequential damages. Such damages cannot be accurately quantified and are often disproportionate to the liability of the consultant, if they are at all attributable. Due to these factors, our members’ professional liability insurance coverage would not apply.
Click here to read more.
Bill 148, the Fair Workplaces, Better Jobs Act, 2017, passed Third Reading in the Ontario Legislature on Wednesday, November 22, 2017. The legislation introduces significant amendments to Ontario’s Employment Standards Acts and Labour Relations Act, and limited amendments to the Occupational Health and Safety Act. Most of the amendments come into force on January 1, 2018.
When Bill 148 was first introduced in June 2017, Sherrard Kuzz LLP prepared a comprehensive Executive Summary including an analysis of the practical implications for Ontario workplaces, used as a resource by industry associations and employer advocacy groups such as CEO and its member firms.
Sherrard Kuzz LLP is now in the process of updating the Executive Summary. In the interim, this briefing note summarizes all of the key amendments to the Employment Standards Act, Labour Relations Act and Occupational Health and Safety Act. You can download the briefing note, here.
If you have any questions or concerns, please contact David Zurawel, CEO’s Director of Government and Stakeholder Relations at 416-620-1400 ext 222 or dzurawel@ceo.on.ca.
CEO is informing members that on the advice of our insurance and contract specialist partners some language in the current 2017 version of the MEA/CEO Client/Engineer Agreement for Professional Consulting Services needs to be changed.
Please make sure that in your project agreements that the language in the introductory paragraph of Section 1.11 Insurance (Page 6 of 19) reads as follows:
“The Client will accept the insurance coverage amount specified in this clause section (a) OR (b), or whichever is applicable to the claim or as specified in the RFP as the aggregate limit of liability of the Engineer for Clients damages.”
To ensure appropriate insurance coverage, be sure to attach supplementary conditions to your agreement reflecting this modified language.
CEO is working with MEA to update the standard agreement to reflect this necessary change as soon as possible.
Should you have any questions about this please do not hesitate to contact David Zurawel at dzurawel@ceo.on.ca or 416-620-1400 ext. 222.
CEO’s Business Risk Committee has established a Rapid Response Subcommittee to provide a rapid response service for Members encountering problematic client contracts and procurement practices. The subcommittee and its mandate of challenging and correcting problematic client terms and conditions are a key pillar of the association’s strategic plan.
To achieve the objectives laid out in CEO’s strategic plan, the Rapid Response Subcommittee provides analysis and advice on procurement issues through a new quick response service model.
The service model is driven by subcommittee volunteers and sets out to achieve solutions that are mutually beneficial to our Members and their Clients in efficient and timely manner.
CEO is completing its analysis of this new service model, which evaluates all associated tasks and activities. During the beta test period, CEO focused on the management and provision of services required to achieve their quick response times.
CEO has achieved success having reached mutually beneficial RFP amendments; our initial evaluation finds that CEO will be working to continue to improve our system of gathering information for analytical, administrative and informing Members of industry contractual issues.
By conducting a thorough assessment of the issues or risks identified during beta testing, CEO is convinced that we have a viable process. We will work collaboratively with Members to ensure the Rapid Response Subcommittee and its processes serve to address the most important issues confronting Member’s businesses today.
For inquiries about the Rapid Response Service Model, please contact David Zurawel at (416) 620-1400 Ext.222 | dzurawel@ceo.on.ca.
Issue:
Ontario Attorney General, Yasir Naqvi, has introduced Bill 142, An Act to amend the Construction Lien Act, better known as the Construction Act. The bill, if passed in to law, will modernize the Construction Lien Act, address the need for promptness of payment, and introduce an adjudication-based dispute resolution system for Ontario’s construction sector.
Background:
The product of a 2-year, comprehensive independent public consultation process, the draft Act is informed by the report “Striking the Balance” authored by Bruce Reynolds and Sharon Vogel. Making 101 recommendations to the province, the report was the product of advice from more than 60 stakeholder groups, presenting more than 90 specific issues over the course of 30 consultation meetings. Ministry of the Attorney General officials have adopted the vast majority of the recommendations as a package for change, omitting just three.
Consulting Engineers of Ontario has played an active role in the independent review and development of this draft bill and is pleased all of its issues have been represented in the draft legislation, namely:
Conclusion:
This legislation proposes to make extensive changes to Ontario’s construction sector, impacting both public and private projects. The federal government and other provinces are closely watching Ontario. What gets passed into law here will most certainly influence these other jurisdictions.
In the near future, CEO will be providing an analysis of the draft bill and how it will impact members. The Ministry of the Attorney General is preparing a consolidated version of the draft legislation that will highlight all of the changes made to the existing Construction Lien Act. In the meantime, Bill 142 is important reading for anyone practicing in the construction sector. A pdf copy of the bill is available here.
The provincial legislature has risen the summer recess therefore, action on the bill will not begin until MPPs return for the fall legislative session on September 11, 2017.
Should you have any questions about the draft bill or the proposed changes you can contact David Zurawel at 416-620-1400 ext. 222 or dzurawel@ceo.on.ca
Ontario has introduced legislation that will fundamentally reform the province’s existing Employment Standards Act, 2000 (ESA) and Labour Relations Act, 1995 (LRA).
The proposed legislation, Bill 148, Fair Workplaces, Better Jobs Act, 2017, contains broad ranging recommendations from the 419-page Changing Workplaces Review Final Report published in May 2017.
The Changing Workplaces Review, initiated by Labour Minister Kevin Flynn in 2015, is the most significant review of the ESA and LRA the Government of Ontario has undertaken in decades. During the review process, two phases of consultation took place to provide the general public and stakeholders with the opportunity to comment on how the LRA and ESA could be amended to better address today’s workplace issues.
The final Report contains 173 recommendations including raising the minimum wage, ensuring part-time workers are paid the same hourly wage as full-time workers, introducing paid sick days for every worker and including members of the architectural and land surveying profession in the LRA.
Fair Workplaces, Better Jobs Act, 2017 was introduced and referred to the Standing Committee on Finance Economic Affairs on June 1.
Sherrard Kuzz LLP, one of Canada’s leading employment and labour law firms, is reviewing the legislation and its recommendations and will be developing an analysis.
Meanwhile, if you have any questions or concerns, please contact David Zurawel, CEO’s Director of Government and Stakeholder Relations at 416-620-1400 ext 222 or dzurawel@ceo.on.ca.
The full Changing Workplaces Review Report is available here. The pdf copy of the bill is available here.
For more information on the amendments proposed in Fair Workplaces, Better Jobs Act, 2017, click here to download the backgrounder.
Issue:
The Regional Municipality of York issued RFP P-17-69 on May 18, 2017 for Consulting Services for the inspection and appraisal of Bridges, large Culverts, Structural retaining walls, and large Overhead sign supports owned by the Regional Municipality of York.
Under the provision of the Region of York’s agreement, the Consultant is responsible to the owner for delay and/or under-performance of the Project.
The Liquidated Damages clause (Schedule B, VII), presents problems for member firms obtaining professional liability insurance coverage members’ firms.When liquidated damages clause is not related to negligence in the performance of professional services (not meeting the standard of care), this becomes non-insurable because professional liability insurance policies only provide coverage for damages caused by the negligence of the insured Consultant. Most professional liability policies specifically exclude coverage for liquidated damages.
If the clause is not modified to address negligence-based performance (not meeting the standard of care), this clause is non-insurable. Professional liability insurance policies only provide coverage for damages caused by the negligence of the insured Consultant. Most professional liability policies specifically exclude coverage for liquidated damages.
CEO’s position:
1. The Courts have consistently held that a liquidated damages provision cannot be used to impose a penalty; therefore, if the amount set for liquidated damages is a penalty imposed for breach of contract, or a coercive measure for deterring a potential breach, liquidated damages may not be enforceable. For the liquidated damages provision to be enforceable, it must provide some clear or readily ascertainable amount accruing because of a breach of contract.
2. Also, damages must be exclusive. If the contract provides the Owner with an alternate way to measure or seek damages, the liquidated damages may not be enforceable.
Schedule F Contract Terms and Conditions, 9.1 Damages and Section 12 – Right to Set-Off and Holdbacks, both include provisions for the Region to remedy delayed services; therefore, Schedule B VII. Liquidated Damages would be nonexclusive.
The Regional Municipality of York’s Addendum:
On May 30th, CEO issued a formal letter to The Regional Municipality of York on behalf of our Members, regarding RFP P-17-69 Consulting Services for the inspection and appraisal, in particular, the Liquidated Damages clause.
On June 1st, 2017, the Region of York responded to CEO’s communication detailing the fact the addendum had been issued, removing the LD clause as requested.
This RFP is set to close on June 8th, 2017.
Should you have any questions or concerns regarding this communique or this particular RFP please contact Chaslene Pilgrim, (416) 620.1400 Ext. 226 or via email cpilgrim@ceo.on.ca
Click here to download in the PDF format.
Infrastructure Ontario’s (IO) Real Estate Division has issued a renewal of its Vendor of Record (VOR) for engineering and technical services.
The system will create a new pre-qualified list of firms that will be eligible to provide services to the agency and its project management service providers (PMSPs). Firms interested in qualifying for the VOR have the opportunity to submit a request for proposal via Biddingo until June 8, 2017. Those firms selected to be on the VOR list will be eligible to be invited to submit responses to agency bid call documents for specific assignments. All firms currently on the agency’s VOR must apply to be included on the VOR list.
The agency will be extending its current VOR Master Agreement terms and conditions beyond the July 1, 2017 expiration date. This is being done to provide an opportunity to evaluate terms and conditions of the new Master Agreement. Consulting Engineers of Ontario (CEO) has been assured by agency staff that the terms and conditions of the Master Agreement will be made available for its review and feedback. The agency has also assured CEO that earlier concerns over language contained in the current Master Agreement empowering it to summarily terminate contracts with vendors on the suspicion of fraudulent practices have been properly addressed.
Click here to read the details of the Renewed VOR.
Finance Minister Charles Sousa delivered Ontario’s first balanced budget since 2008. The fiscal plan entitled, “A Stronger, Healthier Ontario” details an ambitious strategy for social investment going forward. Proclaiming that “together we have built up Ontario to compete and succeed in the global economy …” the Finance Minister stated that “now we believe it is time to consider what comes next”. The key pillars of the budget are health care, education, supporting families and creating opporitunities and infrastructure.
“Balancing this year’s budget is a much anticipated and significant achievement for Ontario”, said Barry Steinberg, Chief Executive Officer of Consulting Engineers of Ontario. “Planning core investments without the burden of a deficit should substantially improve the government’s ability to deliver on its commitments”. This budget builds on the government’s commitments to the people of Ontario,” Steinberg remarked.
The proposed budget pledges to expand Ontario’s investments in infrastructure by $30 billion to $190 billion over 13 years, starting in 2014-15 and represents a $5.966 billion increase over last year. Emphasis focuses on four key prioirities: public transit ($56 billion); highways and transportation ($26 billion); grants to hospitals (approx. $20 billion); and, education (approx. $16 billion). Also central to infrastructure are continued commitments to municipalities through increased gas tax funding, the Ontario Community Infrastructure Fund, Connecting Links program and the Trillium Trust. “CEO has consistently been a strong supporter of separate, dedicated funds for infrastructure investment. They are the most effective tools for providing value to taxpayers”, said Steinberg. “The province’s continued commitment to ensure the full funding of the Trillium Trust is important. It is an imperative tool for eliminating Ontario's core infrastructure deficit. However, the government needs to provide more detail on how the Trust works. I don’t think anyone in our industry really knows how it factors in to proper project planning, prioritization and execution”, remarked Steinberg.
Today’s budget does not include any new taxes. The total government spend for the coming year is projected to be $141.1billion, including 11.6 billion in interest charges on the provincial net debt which now totals almost $302 billion, representing 37.8% of GDP.
Consulting Engineers of Ontario is pleased to report that all member issues it submitted to the expert review of the Act will be included in the reform legislation, expected to be tabled with the legislature late this spring.
The expert report of the review included 100 recommendations to modernize the lien and holdback process, introduce a prompt payment system and create an adjudicative dispute resolution process. In reviewing this feedback, the Attorney General has stated that the government’s reform legislation will address all of the review reports recommendations except for those proposing: a pilot project for trust accounts in the public sector; providing for a single property identifier number for common elements of condominiums; and, removing the provision that permits liens to expire on a lot-by-lot basis.
CEO is continuing to communicate with the Attorney General and his staff. Work continues to develop the finer details of the prompt payment system, including the definition of what constitutes a “proper invoice”, the trigger to start the payment clock. Also important is the ongoing discussion of freedom of contract, given that this is something consultants to not currently have.
CEO is preparing for a busy summer dealing with this issue as extensive public consultations are expected on the bill. We will keep you up-to-date with details as they become available.
CEO is expecting the government to soon finalize the update to its asset management regulation. To qualify for provincial funding for public infrastructure projects municipalities must have submitted an asset management plan with the Ministries of Infrastructure and Municipal Affairs.
CEO, as part of a small group of sector stakeholders, has been working with the province for more than a year to help guide the update of the regulation. Having already held one round of public consultations, advice has been gathered on how to improve the plans by requiring a standard format and more uniform data collection and reporting.
More information on this issue will be provided as it becomes available.
Consulting Engineers of Ontario (CEO) and Municipal Engineers Association (MEA) announced the finalization of a Standard Client/Engineer Agreement for Professional Consulting Services. The standard agreement aims at helping Ontario’s 444 municipalities practice a fair procurement process by outlining equitable, consistent terms and conditions for both clients and consulting engineers.
“The standard agreement is built on the principles of partnership and fairness. It symbolizes a collaborative approach to creating a favourable business environment for both clients and consulting engineers,” said Barry Steinberg, P.Eng, Chief Executive Officer of Consulting Engineers of Ontario.
The consulting engineering sector is one of few professional service providers that allow clients to prescribe the terms and conditions under which they offer their services. In response, the two associations have been working closely together to review and update the 2006 version of the MEA/CEO Agreement for Engineering Services so that municipalities can use a contract that is up-to-date with the present business landscape.
“This standard agreement will enable municipalities to be more efficient in doing business with consulting engineers. The template will allow smaller municipalities particularly to save on the significant time and cost spent on creating a contract,” said Reg Russwurm P.Eng, President of the Municipal Engineers Association.
“It has been a lengthy, complex process but also a very rewarding one,” said Geoff Pound, P.Eng, Chair of CEO’s Municipal Engineers Association Liaison Committee. “The revised standard agreement is now in line with current municipal engineering business practices. This will be a benefit to both municipalities and the consulting engineering industry.”
Download: 2016 MEA-CEO Standard Client/Engineer Agreement for Professional Consulting Services
Consulting Engineers of Ontario applauds this afternoon’s passage of Bill 6, the Infrastructure for Jobs and Prosperity Act.
“We have been working with government on this legislation for quite some time and we are pleased to see it pass the legislature,” said Barry Steinberg, Chief Executive Officer of Consulting Engineers of Ontario.
Today’s passage of the legislation sees Ontario join Québec as the only other provincial jurisdiction requiring its government to have a long-term infrastructure plan. The province will have three years to table its first plan from the date the legislation receives royal assent, and then must renew the plan at least once every five years.
The government intends to use its new strategic plan to align its infrastructure investments with its economic development and job creation priorities, while emphasizing design and planning. “Professional Engineers play an integral role in bringing the government’s infrastructure plans to life, we are very pleased this legislation recognizes our public duty,” Steinberg remarked. “The draft Bill was of great concern to us; it made no mention of the role of engineers while prescribing a specific role for architects,” said Steinberg. “Given the stipulations of the Professional Engineers Act, this had to change; the legislation had to maintain balance. We are happy with the solution we developed with Minister Duguid’s staff and officials.”
Also heavily emphasized in the Bill is the role of asset management plans. “CEO has consistently supported infrastructure investment as a result of sound planning. By requiring these plans and mandating they be consistent in their form, content and timing, government will be able to make sound, and accurate decisions to prioritize projects and manage their full lifecycle cost. This is what is necessary to provide innovation, value and public safety for Ontarians,” said Steinberg.
Click here to download Bill 6, the Infrastructure for Jobs and Prosperity Act.
Finance Minister Charles Sousa this afternoon delivered the Wynne government’s economic blueprint for Ontario. With a 10-year, $130 billion infrastructure commitment, the “Building Ontario Up” budget makes transit and transportation infrastructure a key element determining Ontario’s future economic success. Also playing an important role in the government’s four part plan are: investing in people’s talents and skills; creating a dynamic and innovative environment for business; and, building a secure retirement system.
“Where last year’s budget focused on investment commitments today’s plan is all about implementing of those commitments,” said Barry Steinberg, Chief Executive Officer of Consulting Engineers of Ontario. “Our communities are being stifled by the lack of quality core infrastructure,” Steinberg said. “We have gridlock on our roads and highways, our transit systems don’t have the capacity to serve as an alternative to promote mobility, and our water and wastewater systems are suffering the neglect of deferred maintenance. There is an urgent need for today’s announced commitments, especially the Moving Ontario Forward investment of $31.5 billion over the next 10 years,” said Steinberg.
Recommendations from the Premier's Advisory Council on Government Assets are providing an additional $2.6 billion to the Moving Ontario Fund over the next 10 years for a total of $31.5 billion. “What is most important about this investment is its allocation to the Trillium Trust,” said Steinberg. “Separate, dedicated funds for infrastructure investment are the most effective tools for providing value to taxpayers as they provide government a secure means to eliminate Ontario's core infrastructure deficit.”
Today’s budget details a total government spend for the coming year of $131.9 billion, leaving a deficit of $8.5 billion. The government is maintaining its pledge to bring its finances back to balance by 2018. Ontario’s total accumulated debt will reach $298.9 billion next year.
