Miller Act
Encyclopedia
The Miller Act requires prime contractors on some government construction contracts to post bonds guarantying both the performance of their contractual duties and the payment of their subcontractors and material suppliers.
Background and Purpose
The Miller Act addresses two concerns that would otherwise exist in the performance of federal government construction projects:- 1. Performance Bonds: The contractor's abandonment or other non-performance of a government job may cause critical delays and added expense in the government procurement process. The bonding process helps weed out irresponsible contractors while the bond itself defrays the government's cost of substitute performance. The subrogration right of the bond suretySuretyA surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
against the contractor (i.e., the right to sue for indemnification) is a deterrent to non-performance.
- 2. Payment Bonds: Subcontractors and material suppliers would otherwise be reluctant to work on such projects (knowing that sovereign immunitySovereign immunitySovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution....
prevents the establishment of a mechanic's lien) - decreasing competition and driving up construction costs.
Contracts to which the Act Applies
The Miller Act applies to contracts awarded for the construction, alteration, or repair of any public building or public work of the Federal Government. While the Act provides that these bonds must be posted on contracts exceeding $100,000.00, Federal Acquisition Regulation (FAR) Part 28 requires the bonds only on contracts that exceed $150,000.00.The Act requires the Federal Acquisition Regulations
Federal Acquisition Regulations
The Federal Acquisition Regulation is the principal set of rules in the Federal Acquisition Regulation System. This system consists of sets of regulations issued by agencies of the Federal government of the United States to govern what is called the "acquisition process"; this is the process...
to establish alternative payment protections for contracts in excess of $30,000.00 but not exceeding $150,000.00, with the contract-specific protection to be determined by the contracting officer
Contracting Officer
A Contracting Officer is a person who can bind the United States government to a contract that is greater than the Micro-Purchase threshold. This is limited to the scope of authority delegated to the Contracting Officer by the head of the agency.In the Department of Defense the acronym KO is...
. While the Miller Act applies only to federal contracts, state legislatures throughout the country have enacted "Little Miller Acts," which establish similar requirements for state contracts.
Posting of Performance Bonds
Prior to the award of the contract, the contractor must furnish the government a performance bondPerformance bond
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.A job requiring a payment & performance bond will usually require a bid bond, to bid the job...
issued by a surety satisfactory to the officer awarding the contract, and in an amount the contracting officer
Contracting Officer
A Contracting Officer is a person who can bind the United States government to a contract that is greater than the Micro-Purchase threshold. This is limited to the scope of authority delegated to the Contracting Officer by the head of the agency.In the Department of Defense the acronym KO is...
considers adequate, for the protection of the Government.
Posting of Payment Bonds
The contractor must also furnish a payment bond with a surety satisfactory to the contracting officerContracting Officer
A Contracting Officer is a person who can bind the United States government to a contract that is greater than the Micro-Purchase threshold. This is limited to the scope of authority delegated to the Contracting Officer by the head of the agency.In the Department of Defense the acronym KO is...
for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person. The amount of the payment bond generally must equal the total amount payable by the terms of the contract.
Enforcement on Payment Bonds
A subcontractorSubcontractor
A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
or material supplier who has not been paid within 90 days after the day on which he last furnished labor or materials for which the claim is made may bring a civil action on the payment bond for the amount unpaid at the time the suit is brought. The suit must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.
The agency issuing the contract is required to provide a copy of the payment bond (which identifies the surety - who would be the defendant in an enforcement action) upon the presentation of an affidavit indicating the person requesting the copy has not been paid for labor or materials furnished under the contract.
A person having a direct contractual relationship with a subcontractor
Subcontractor
A subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
but no contractual relationship, express or implied, with the contractor furnishing the payment bond may bring a civil action on the payment bond on giving written notice to the contractor within 90 days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made. The action must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed.