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Your Quick Guide to the Miller Act

Involved in a federal construction contract? You need to understand the Miller Act.

If you’re involved in any stage of a federal construction contract, you need to know what the Miller Act is and how it applies to your project. Here are seven key facts:

  1. It’s a federal law that requires contractors to post bonds. Officially known as 40 U.S.C. §§ 3131–3134, the Miller Act states that general (or prime) contractors must furnish surety bonds for contracts “for the construction, alteration, or repair of any building or public work of the Federal Government.” These bonds become binding when the contract is awarded.
  2. It was created to protect subcontractors, suppliers, and taxpayers. Originally passed in 1935, at the depth of the Great Depression, the Miller Act requires two different types of surety bonds for most projects. A payment bond ensures that first- and second-tier subcontractors, material suppliers, and professionals like architects and engineers will be compensated in full and on time. A performance bond guarantees that the project will be completed according to the terms of the contract, thus promoting public trust in government spending.
  3. The requirements depend on the amount of the contract. For contracts over $150,000 (recently raised from $100,000), payment and performance bonds are required. The amount of the payment bond must be enough to cover all payables, and performance bonds typically need to be equal to the contract price. The Miller Act also requires a qualified form of payment protection for contracts between $30,000 and $150,000 – and payment bonds are one of several options.
  4. There are a few exceptions. The Miller Act applies to nearly all federal construction contracts, but contracting officers may waive it for some projects performed in foreign countries or for certain military and maritime purposes.
  5. A legal loophole was recently closed. An amendment to the Infrastructure Investment and Jobs Act of 2021 (Pub. L. 117–58) extended Miller Act requirements to all projects funded by the Transportation Infrastructure Finance and Innovation Act (TIFIA). That means that public–private partnerships (P3s) will now need to secure surety bonds for qualified regional and national surface transportation projects.
  6. Most states have passed “Little Miller Acts.” The Miller Act only applies to federal contracts, but similar legislation exists at the state level. State statutes are often more stringent – for example, in Alabama, both payment and performance bonds are required for all public works projects over $50,000. Notice requirements and limitations also vary from state to state.
  7. Bonds must be provided by a Treasury-approved issuer. You can view Gray Surety’s listing (as GRAY CASUALTY & SURETY COMPANY [THE]) on the Treasury Department Circular 570, which is published annually “for the information of Federal bond-approving officers and persons required to give bonds to the United States.”

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Here at Gray Surety, we’re dedicated to supporting your success with responsive and reliable service. To learn more about our surety bond services or get help with an application or claim, reach out today.