Enacted in 1935, the Miller Act applies to all federally owned construction projects and regulates all payments made on the project.
The Act requires all general or prime contractors to post surety bonds before any contract of $100,000 or more is awarded for the construction, alteration, or repair of federal projects.
Not only does the Miller Act set forth the bonding requirements for contractors, but it also serves to protect subcontractors and their suppliers if payment from the prime contractor is delayed and the government if the contractor fails to complete the project.
It is essential to understand all of the Miller Act’s bonding requirements and laws to work on federal construction projects successfully.
Below we will detail the Miller Act requirements and their importance.
Required Miller Act Construction Bond Types
The Miller Act requires general contractors to post a payment bond and a performance bond. Although they are separate bonds, they can often be grouped into a single product called a payment & performance bond or P&P Bond.
The payment bond is a surety bond set in place to ensure that subcontractors and their suppliers are paid for their services.
The performance bond is there to protect and benefit the government by guaranteeing the completion of the project by the general contractor.
The Miller Act offers protection for the government, first-tier contractors, second-tier subcontractors, and first-tier suppliers. However, it does not protect general contractors or subcontractors and suppliers lower than second tier.
At CNS, we can guide you through the Miller Act bond claim process in any state: See our states’ services⇢
Protection for the Federal Government
The performance bond required by the Miller Act is set in place to protect the federal government. It must be in the amount that the contracting officer finds acceptable for the protection of the government.
It acts as a deterrent to nonperformance or abandonment by the general contractor, which could cause delays and added expenses for the government.
Protection for Subcontractors & Suppliers
The payment bond guarantees payment to subcontractors and their suppliers and must generally be equal to the total amount of the contract.
Since subcontractors and suppliers cannot send liens against federal property, the payment bond acts as an alternative for securing payment. If the general contractor fails to pay the subcontractors and suppliers, they can bring civil action against the contractor for the unpaid amount.
Filing Bond Claims Under The Miller Act
Subcontractors and material suppliers that have not been paid within 90 days of the last day they furnished materials or labor are eligible to file a Miller Act claim to receive payment.
The first step to filing the claim is to provide the prime contractor with a payment claim notice. Next, certain backup information – such as copies of the contract, invoices, purchase orders, etc. – must be sent to the surety. The surety will then review the claim and decide whether to pay it or reject it.
In order to avoid the rejection of payment, all information provided must be correct, and every step of the process must be adhered to.
File a Miller Act Claim for Federal Construction Contracts
To successfully file a payment bond claim under the Miller Act, it is crucial that detailed recordings of contracts, invoices, labor, materials supplied, and more be kept.
At CNS, we specialize in helping contractors, subcontractors, and suppliers get paid.
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Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.