Federal Payment Bond Claim

The purpose of the Miller Act is to protect persons supplying labor and materials to federal projects, given that a mechanic’s (construction) lien, ordinarily available on private projects, cannot attach to government property.

When payment bond required

  • Before any contract of more than $100,000 is awarded for the construction, alteration, or repair of any public building or public work of the federal government, the prime contractor must furnish a payment bond for the protection of all persons supplying labor and material in carrying out the work provided for in the contract.
  • Before relying on the existence of a payment bond, you should confirm that a payment bond is available.
    • There is no claim against the federal government for failing to obtain a payment bond.

Would you like help obtaining a copy of the payment bond?

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Persons entitled to make claim

  • If you are a prime contractor, you cannot bring a payment bond claim under the Miller Act–because it would be your bond.
  • The Miller Act covers
    • first and second-tier subcontractors,
    • first-tier suppliers, and
    • and second-tier suppliers under contract with a first-tier subcontractor.
  • The Miller Act does not cover (because they are too “remote”)
    • second-tier suppliers under contract with another supplier (i.e., suppliers-to-suppliers), and
    • third-tier, and below, suppliers and subcontractors.
      • If you are not covered by the Miller Act, consider
        • contracting up the chain,
        • attacking the “strawman” (i.e., “telescoping”) to get higher up the chain, and
        • a joint check agreement.

Would you like help to determine whether you are entitled to make a claim?

Payment Bond Claim Notice

  • If your contract is directly with the prime contractor, no notice is required.
    • But there may be benefit in sending a notice anyway.
  • If your contract is with a subcontractor, you must give notice within 90 days from the date on which you last performed labor or furnished or supplied the material for which your claim is made.
  • The notice must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed.

Would you like help with your notice?

Enforcement

  • A suit to enforce a Miller Act payment bond claim must be filed more than 90 days after the day on you did or performed the last of the labor or furnished or supplied the material for which your claim is made, but before one year after the day on which the last of your labor was performed or material was supplied.

Would you like help with your Miller Act payment bond claim?

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Other considerations and topics for discussion

Payment bonds are a great tool for collecting money. But they are complex. I have provided you with the basic steps necessary to preserve your rights so that we can use a payment bond as a tool to collect your money. But there is much more you will want to take into account that is beyond the scope of our current discussion. For example:

  • How do you determine if there is a payment bond? 
  • What if there is no payment bond?
  • What if you determine that the payment bond?
  • What options do you have if you are too remote?
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