Miller Act
The federal statute requiring performance and payment bonds on most federal construction contracts above $150,000.
What It Is
The Miller Act is a federal law, codified at 40 U.S.C. sections 3131 through 3134, that requires prime contractors on federal construction contracts exceeding $150,000 to furnish a performance bond and a payment bond before work begins. The performance bond protects the federal government against contractor default, while the payment bond protects subcontractors and suppliers who furnish labor or materials.
Performance bond penal sums typically equal 100 percent of the contract price. Payment bond amounts are set by the contracting officer, usually 100 percent of the contract value as well. Subcontractors and suppliers with no direct contract with the prime must give notice to the prime within 90 days of last furnishing labor or materials to preserve their payment bond claim.
Most states have enacted Little Miller Acts that impose similar bond requirements on state and local public construction projects.
Why It Matters for Brokers
For brokers serving construction clients, Miller Act compliance is a gating issue: contractors that cannot secure required bonds cannot bid federal work. Surety capacity, financial statements, work-on-hand schedules, and indemnity arrangements all flow from the bond requirement. On the claimant side, subcontractors that fail to send the 90-day notice or file suit within the one-year statute of limitations lose payment bond rights even when they have a valid claim. Brokers who understand Miller Act mechanics can position clients for federal opportunities and protect downstream parties from procedural forfeitures.
Real-World Example
A mid-size mechanical contractor pursues a $4.2M federal courthouse HVAC retrofit. The broker works with a Treasury-listed surety to issue 100 percent performance and payment bonds at a 1.0 percent rate, conditioned on personal indemnity from the two owners and quarterly work-in-progress reporting. The contractor wins the bid, and a tier-two ductwork supplier later preserves a $86,000 payment bond claim by sending timely 90-day notice when the prime's mechanical sub falls behind on payments.
Common Mistakes
- 1Treating the $150,000 threshold as discretionary, when in fact federal contracting officers must require bonds above that limit and brokers should plan capacity accordingly.
- 2Allowing tier-two and tier-three suppliers to miss the 90-day notice or one-year suit deadline, which extinguishes payment bond rights regardless of merit.
- 3Confusing the federal Miller Act with state Little Miller Acts, which have different thresholds, notice rules, and limitations periods.
- 4Failing to coordinate Miller Act bonds with the contractor's existing surety program, leading to capacity strain or unintended cross-default triggers.
How brokerageaudit.com Handles This
Submission Intake routes federal construction submissions to surety markets with verified Treasury Listing capacity. Document Pipeline tracks bond forms, notice dates, and limitations deadlines so brokers can advise both prime contractors and downstream claimants on Miller Act compliance.