A Brief Overview of the Miller Act

The Miller Act is a payment bond statute that regulates all federal construction projects and the payments made on them. It requires general contractors to provide a payment bond on public works project or improvement contracts valued at over $100,000. This bond guarantees payment for services and materials provided by subcontractors and suppliers.

If the construction project is valued at an amount between $25,000 and $100,000, the general contractor must agree to one of the following types of payment protection:

  • A payment bond
  • An irrevocable letter of credit
  • A tripartite escrow agreement
  • A certificate of deposit

Sovereign immunity prohibits the filing of a mechanic’s lien against a federal project, so if you are a subcontractor or supplier, you would make a claim against the surety on the payment bond or other surety.

A History of the Miller Act

In the 19th century, many public construction projects were left unfinished due to the high insolvency rate among private contractors. This trend put a huge burden on American taxpayers, who had to cover the completion costs. Congress passed the Heard Act of 1894 to enable the use of corporate surety bonds to secure federal projects, but it was riddled with problems and finally replaced by the Miller Act in 1935.

Who is Covered?

The Miller Act covers all parties who provide labor and/or materials to the general contractor or first-tier subcontractor. It does not cover those furnishing:

  • Materials to a material supplier
  • Labor or materials to a second-tier subcontractor

It also does not protect general contractors, who must file a lawsuit against the government for breach of contract to collect their money.

What is the Miller Act Claim Process?

General contractors must obtain a payment bond before being awarded a federal construction project valued at over $100,000. Subcontractors and suppliers can and should request a copy of this bond before beginning work, to ensure that they will be paid for the labor and materials that they furnish.

Unlike private projects, there are no preliminary notice requirements. All you need to do is file a claim and deliver notice to the general contractor within 90 days of last furnishing labor or materials to a project. The general contractor is obligated to forward your notice to the bonding company, which will investigate. Although you are not required to send a copy to the contractor’s surety, many claimants do so to expedite the investigation process.

If the claim is deemed valid, it will be paid by the company. They will ask you to return a lien release and waiver after being paid, and may also request that you submit a form canceling your now-settled claim against the bond.

On the other hand, if your claim is rejected, you will need to file a lawsuit in the federal district court where the project is located. The deadline for filing is one year from the date you last furnished labor or materials to the project, and you should definitely retain a construction law attorney to assist you with the process.

Work With a New York Mechanic’s Lien Provider

A Miller Act claim is an effective way of collecting your fees for work contributed to a public project or improvement. Filing a mechanic’s lien has the same effect with private contracts. If you have questions about how to protect your right to payment on a New York construction project, reach out to the experienced lien providers at NYLiens LLC. For more information, please contact us or call 718-444-LIEN.

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For over a decade, NYLiens LLC has prepared and filed Notice of Mechanic’s Lien documents for all types of contractors and suppliers throughout New York State.

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