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Construction Law

Miller Act in Brief: Bond Claims on Federal Projects

The Miller Act applies to contracts awarded for the construction, alteration, or repair of any public building or public work of the federal government.

 

This article appeared in the June 2014 issue of "The Construction Advisor" published by Lang & Klain, P.C.


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On federal government construction projects exceeding $100,000, the Miller Act requires general contractors to post bonds guaranteeing (a) the performance of their contractual duties and (b) payment of their subcontractors and material suppliers. The Miller Act applies to contracts awarded for the construction, alteration or repair of any public building or public work of the federal government.

Parties that may assert a claim under a Miller Act payment bond are limited to:

  • "first tier" subcontractors and material suppliers (i.e., parties that contract directly with the general contractor) and

  • "second tier" subcontractors and suppliers (i.e., parties that contract with a first-tier subcontractor).

Architects, engineers, surveyors, etc., who provide professional services on a federal project may also make claims under a payment bond required by the Miller Act.

Waiting Period

If a first-tier subcontractor or material supplier has not been paid in full within 90 days after the date in which it completed its work or ceased performing work on the federal project, it may sue the general contractor in federal court in the district in which the contract was performed.

If a second-tier subcontractor or supplier has not been paid within 90 days, it may also file suit as above, if it gives notice to the general contractor within 90 days after the date in which it completed or ceased its work on the project. The notice 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, and include a demand that the prime contractor pay the outstanding balance.”  The notice may be served by certified mail, overnight mail, or by personal delivery.

While neither scenario carries a requirement to notify the general contractor’s surety company before taking legal action, such a notification is considered prudent.

Please note that most Arizona public works projects are covered by Arizona’s "Little Miller Act." The procedure to make a claim against a Little Miller Act payment bond is identical to the federal Miller Act, except that second-tier subcontractors and suppliers must send a preliminary 20-day lien notice in addition to the 90-notice required by the federal act.