Glossary
Miller Act
The Miller Act is a federal law requiring prime contractors on most federal construction contracts above a set dollar amount to post payment and performance bonds protecting subcontractors and suppliers.
Because private parties generally cannot place liens on federal property, the Miller Act, codified at 40 U.S.C. sections 3131 to 3134, provides an alternative. For federal construction contracts above a dollar threshold, which the statute sets at $100,000 and federal procurement regulations have since adjusted upward for inflation, the prime contractor must furnish a performance bond protecting the government and a payment bond protecting those who supply labor and materials. Agencies may use alternative payment protections for smaller contracts.
Not everyone on the job is covered. Parties with a direct contract with the prime contractor, such as first-tier subcontractors and suppliers, can claim on the bond. So can parties with a direct contract with a first-tier subcontractor. Those more remote, such as a supplier to a supplier or a sub-subcontractor's supplier, are generally not covered. Second-tier claimants must also give written notice to the prime contractor within 90 days after the last date they furnished labor or materials, stating the amount claimed and the party they worked for. Any suit must be filed within one year after the claimant's last labor or materials were furnished, in federal district court where the contract was performed, brought in the name of the United States for the claimant's use.
Here is a fictional example. An electrical supply company, Patriot Wire & Conduit, sells $54,000 of materials to an electrical subcontractor on a federal courthouse renovation. The subcontractor stops paying. Because Patriot contracted with a first-tier sub, it sends written notice to the prime contractor 60 days after its last delivery. When the claim is not paid, Patriot files a Miller Act suit in federal court about eight months after its last delivery, within the one-year limit.
The Miller Act matters to creditors because federal projects are often large, and the bond may be the only real source of payment if a subcontractor fails. The 90-day notice and one-year suit deadlines are strictly applied, and the rules on who is covered can be decisive. Tracking last delivery dates on federal jobs is essential.
Example
Patriot Wire & Conduit, a second-tier supplier, gives the prime contractor written notice 60 days after its last delivery and sues on the bond within one year.