What Is the Miller Act?
All federal construction improvement projects are regulated by the Miller Act, a law that was passed in the United States in 1935. According to the US General Services Administration (GSA), “[t]he 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.” The Miller Act allows these bonds to take the place of mechanics lien filings usually used to resolve payment issues on public works construction projects, as mechanics liens cannot be filed against any public property. It allows construction payment bonds to function as “insurance” in case a contractor does not pay the other parties involved in a construction project.
How Does the Miller Act Apply to Projects?
Only three main aspects are protected by the Miller Act: federal construction projects, prime contractors, and subcontractors and material suppliers. First, you should know that the Miller Act only applies to federal construction projects, not others (like commercial or private projects, or state or county projects). Secondly, if you are the prime contractor for a federal project, you should be aware that you are disallowed from bringing a payment claim under the Miller Act; rather, you must bring a contract claim against the government and then file a lawsuit to address it. (Consulting with an experienced attorney to discuss such a claim is highly advisable.) Third, you should note that the Miller Act deals with specific subcontractors and material suppliers. It covers first and second-tier subcontractors, first-tier suppliers, and second-tier suppliers under contract with a first-tier subcontractor, but does not cover those second-tier suppliers under contract with another supplier nor third-tier suppliers and subcontractors.
How Do I Make a Miller Act Payment Claim?
The Miller Act sets forth a legal requirement for a payment bond to stand in place of the federal property. This is mandated so that anyone working on the project goes unpaid, they can make a claim directly against that bond to seek out the payment they are due from the bonding company, should their claim be successful. Once the bonding company completes an investigation of the claim and has backup, it will be paid. The process for making a claim against a federal construction project is as follows:
- You must first deliver your payment claim notice to the prime contractor.
- After that, you must notify the prime contractor of the claim, so the prime contractor can forward notice of the claim to the bonding company.
- The third step in the process is to submit a claim form to the surety, along with any requested backup information, as well as a required “sworn” claim form.
- Next, the surety should review your claim and then respond to you within a reasonable amount of time to inform you that they intend to make payment on the claim. The surety will require a lien release and waiver from you in exchange for that payment.
You cannot be positive that the surety will pay your claim after review. If it rejects your claim, you will have to file a lawsuit in the federal district court where the project is located to enforce the Miller Act claim, in hopes of receiving payment. Reeves Law can assist you with this action. Consult with a qualified construction attorney at Reeves Law for help with this complex construction dispute, by contacting them by phone at (512) 827-2246 or via their website.