Construction Services for The Federal Government and State Level Public Projects
You likely know what the Miller Act is if you’ve ever performed construction services for the federal government. You’ve likely also run into what’s known as the Little Miller Act if you’ve worked on state level public projects. These laws require a prime contractor to post surety bonds to insure the prime contractor performs the work it contracted to perform and pays its subcontractors and suppliers for their services or materials. As you’ve likely guessed, the Little Miller Act varies from state to state, so it’s important you know the requirements of each state you work in and the rights such laws give you if you are a subcontractor or supplier on a state public project.
What Happens When the Prime Contractor Fails to Perform?
The types of surety bonds required for the Little Miller Act are usually performance bonds and payment bonds. Performance bonds protect those that are harmed if the prime contractor fails to perform. Generally, this is the owner of the project who receives compensation from the performance bond for damages they suffer because of the delay caused by the prime contractor’s failure to perform and the cost of hiring a new prime contractor to complete the job. Payment bonds protect the prime contractor’s subcontractors and suppliers in the event the prime contractor fails to properly pay for services performed and/or goods provided. Under a payment bond, you as a subcontractor or supplier can file a claim against the bond if the prime contractor fails to timely pay for amounts owed to you.
Depending on The State You Work In
Most states only require a payment bond if the contract value of the prime contractor’s work is in excess of a certain amount, which can vary greatly from state to state. For example, Texas only requires payment bonds on public projects over $25,000 whereas Nevada doesn’t require such protection unless the value is over $100,000. When taking on state public works projects, it’s helpful to know whether a payment bond will be there to protect you.
It’s also important to know what payment bond value is required by the state where you are providing services or materials. Not all states require a payment bond cover 100% of the subcontractor’s work and supplier’s goods. Some require as little as 50% of the value of the good and services. If you’re performing work in such a state, you will want to file your non-payment claim against the bond as soon as possible before the money runs out.
Timing Is Everything
You must also be careful of each state’s notice requirements to have the right to file a Little Miller Act bond claim. Some states require you file notice with the clerk’s office and/or send notice to the prime contractor within a certain amount of time of starting work or providing materials on a public works jobs. Others require you provide such notice within a certain time of not being paid. If you fail to timely give the notices required by that state’s Little Miller Act, you will not be allowed to file a claim against the bond.
The deadline to file a Little Miller Act bond claim is also of great importance. Even if your state requires 100% value payment bonds and doesn’t require notice, there will still be a final date you are allowed to file a claim against any bond. These final filing dates will vary based on when the services or materials were furnished that the claim is based on, when you completed the furnishing of services or materials, or when the prime contractor’s work or the project is complete. To protect your right to payment on any public works project, it is important to know you rights under the Little Miller Act in your state before you start work.