When it comes to construction law, one of the most common provisions that always tends to get mentioned is the Miller Act.
Generally defined, the Miller Act is a law that was originally passed back in 1935 here in the United States. The United States General Services Administration states the following:
“The Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000. Other payment protections may be provided for contracts between $30,000 and $100,000. The payment bond is required as security for the protection of those supplying labor and/or materials in the construction of public buildings. Failure by a contractor to pay suppliers and subcontractors gives such suppliers and subcontractors the right to sue the contractor in U.S. District Court in the name of the United States.”
Under provisions stated in the Miller Act, payment bonds are legally able to take the place of mechanics lien filings that are commonly used to help with resolving payment issues on any and all public works construction projects. This is due to the fact that mechanics liens are not legally able to be filed against a public property. Furthermore, the law allows for construction payment bonds to be utilized as a form of insurance in the event that a contractor ends up not paying other involved parties when it comes to a construction project.
In terms of how the Miller Act itself applies to projects, the following three factors are protected:
-Federal construction projects
-Subcontractors and material suppliers
It’s important to note that the Miller Act is designed to only apply to federal construction projects as opposed to commercial projects, private projects, county projects, and state projects. Additionally, in the event that you are considered to be the prime contractor for a specific federal project, it’s worth noting that you will not be permitted to bring any kind of a payment claim under this act. Instead, you will be required to file a contract claim against the government itself before then filing a lawsuit in order to address it. Furthermore, it’s also important to note that the act itself is also designed to deal with certain material suppliers and subcontractors. More specifically, the Miller Act covers the following:
-First-tier and second-tier subcontractors
-Second-tier suppliers who are under a contract with a first-tier subcontractor
Alternatively, the Miller Act does not cover the following:
-Second-tier suppliers who are under contract with a separate supplier
In terms of how you can make a payment claim under the Miller Act for a federal construction project, the following steps must be taken:
-The payment claim notice must be delivered to the prime contractor.
-The prime contractor must be notified of the claim in order to allow them to forward the notice of the claim itself to the bonding company.
-A claim form must be submitted to the surety. You must also submit any and all backup information that is requested and a “sworn” claim form.
-Your claim will be reviewed by the surety before they will respond to you that they will make a payment on the claim. You must also submit a waiver and a lien release to the surety in exchange for the payment.