Miller
Act
40 U.S.C. Section 270a to 270f
270a
Bonds of Contractors
270b Rights of Persons Furnishing Labor or Material
270c Right to Copy of Bond
270d "Person"
270d-1
Contract Amount
270e
Army, Navy, Air Force, and Coast Guard Contracts
270f
Transportation Contracts
In the United States, the law requiring contract surety bonds on
federal construction projects is known as the Miller Act.
This law requires a contractor on a federal project to post two bonds:
a performance bond and a labor and material payment bond. The surety
company issuing these bonds must be listed as a qualified surety on the
Treasury List, which the U.S. Department of the Treasury issues each year.
The Miller Act provides that, before a contract that exceeds $100,000
in amount for the construction, alteration, or repair of any building or
public work of the United States is awarded to any person, that person
shall furnish the United States with the following:
- A performance bond in an amount that the contracting officer regards
as adequate for the protection of the United States. The bond amount
is normally 100 percent of the contract price.
- A separate payment bond for the protection of suppliers of labor and
materials. The amount of the payment bond shall be equal to the total
amount payable by the terms of the contract unless the contracting
officer awarding the contract makes a written determination supported
by specific findings that a payment bond in that amount is
impractical, in which case the amount of the payment bond shall be set
by the contracting officer. In no case shall the amount of the payment
bond be less than the amount of the performance bond.
The Miller Act payment bond covers subcontractors and suppliers of
material who have direct contracts with the prime contractor. These are
called first-tier claimants. Subcontractors and material suppliers who
have contracts with a subcontractor, but not those who have contracts with
a supplier, are also covered and are called second-tier claimants.
Anyone further down the contract chain is considered too remote and
cannot assert a claim against a Miller Act payment bond posted by the
contractor.
A subcontractor or supplier who has a direct contract with the prime
contractor has no duty to provide any notice to the prime contractor
before filing a suit on the bond. When the claimant is a second-tier
subcontractor or material supplier, however, formal notice must be given
to the prime contractor within 90 days of the last date the claimant
furnished labor or materials for the project.
The final step in perfecting a claim on a payment bond is filling a
lawsuit. For both first and second-tier claimants, suit must be filed no
sooner than 90 days after the last labor and material were furnished and
no later than one year after that date.
Many states in the U.S. have adapted the Miller Act for use at the
state level. These state statutes are known as Little Miller Acts.
Other Web Sites
http://www.tonry.com/articles/miller.htm
http://pdca.org/legislative/millerpasses.htm
http://www.johnburnham.com/pdf/News_Letters/9605Miller_Act.pdf
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