The
general provisions relating to bonding requirements on federal
government construction projects are located in Title
40 of the United States Code, at sections 3131 through
3134 . This statute is commonly referred to as the "Miller
Act", and bonds required under this statute are referred
to as "Miller Act Bonds."
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WHAT
BONDS ARE REQUIRED?
A
bond is required before any contract in excess of $100,000
is awarded for the construction, alteration, or repair of
any public building, or public work, of the United States.
There are a few circumstances where the bond requirements
can be waived, but, these circumstances are narrowly defined
and limited.
A
contractor's performance bond, for the protection of the
U.S. Government, to secure the contractor's completion of
the project, in an amount satisfactory to the officer of
the U.S. Government who is in charge of the project, is
required by the Miller Act.
A
payment bond for the protection of all persons providing
labor and/or supplying material to the prime contractor,
or a subcontractor to the prime contractor, is also required.
The amount of this bond shall equal the total amount expressed
in the contract unless the contracting officer for the U.S.
Government awarding the contract determines that the amount
of the payment bond is impracticable, in which case the
amount will be determined at the discretion of the officer.
However, such determination must be in writing supported
by specific findings. At any determination, the payment
bond will not be less than the amount of the performance
bond.
Additionally,
the contracting officer for the U.S. Government, at their
discretion, may require additional bonds, or other security
in addition to those bonds. There are also alternatives
to payment bonds provided by Federal Acquisition Regulation.
The relevant section provides that the Federal Acquisition
Regulation shall provide alternatives to payment bonds as
payment protections for suppliers of labor and materials
under contracts that are more than $25,000, but do not exceed
the $100,000 threshold as listed above.
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WHO
IS PROTECTED BY THE PAYMENT BOND?
The
U.S. Government is protected by the contractor's performance
bond. Only those providers of labor and/or suppliers of
materials who have a contract with either the prime contractor
or a first tier subcontractor are covered by the payment
bond. Consequently, sub-subcontractors, and anyone below
them in the contractual hierarchy, including material suppliers
to sub-subcontractors, are not protected by or covered by
the payment bond. The coverage of a Miller Act Bond, therefore,
does not protect as broad a group of “lienors”
as are protected under Florida’s construction lien
laws. Further, Miller Act payment bond claimants are protected
only to the extent of the penal amount of the bond (the
bond amount), which is determined by statute, and is for
substantially less than the prime contract amount as discussed
above. Material suppliers to material suppliers are not
covered by the bond.
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HOW
DO I OBTAIN A COPY OF THE BOND?
A
person or entity who is owed money for labor provided or
materials furnished for the project, or one who is being
sued by another for such labor or materials, may obtain
a copy of the bond by submitting an affidavit as to these
facts to the department secretary or the agency head of
the contracting agency. A copy of the bond may also be requested
from the prime contractor.
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WHAT
ARE THE NOTICE REQUIREMENTS?
A
claimant who has a direct contract with the prime contractor
is not required to serve any written notice prior to filing
a lawsuit on the payment bond. A claimant with a contract
with a first tier subcontractor must provide the prime contractor
with written notice of nonpayment specifying the amount
owed and the name of the party to whom the labor was provided
and/or the materials were supplied. This notice must be
provided within 90 days from the date the claimant performed
the last of the labor or supplied the last of the material
for which the claim is made. The Miller Act now permits
a subcontractor to provide written notice of its payment
bond claim by any means of notification that can be verified
by a third party. Hence, whether a method of providing notice
is acceptable hinges upon whether a third party can verify
the delivery of notice.
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WHAT
IS THE DEADLINE FOR FILING A LAWSUIT?
A
lawsuit must be filed within one year from the date the
labor was last provided and/or the materials were last supplied.
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