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For Information About State "Little Miller Acts", click
here.
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In the United States, the law requiring contract surety bonds
on federal construction projects is known as The Miller Act (1935).
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:
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A performance bond in an amount that the contracting
officer regards as adequate for the protection of the United States. The
bond is normally 100 percent of the contracted price.
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A separate payment bond for the protection of the
suppliers of labor and materials. The sum of the payment bond is equal to 50
percent of the contract price when the contract is less than $1-million and
40 percent when the contract is from $1-million to $5-million. Contracts in
excess of $5-million require a payment bond in the amount of $2.5-million.
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 whoa 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 after the last date the claimant furnished labor or materials for the
project.
The final step in perfecting a claim on a payment bond is
filing 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 called "Little Miller
Acts."
Source:Surety Information Office
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Phone: 516-745-7520
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