Legal Definitions - Miller Act

The Miller Act is a United States federal law designed to protect subcontractors and suppliers who work on construction, alteration, or repair projects for the U.S. government. It requires prime contractors (the main companies awarded federal contracts) to provide two types of financial guarantees, known as bonds, before they can begin work on a federal public building or public work.

These two types of bonds are:

• Performance Bond: This bond guarantees that the prime contractor will complete the project according to the terms and specifications of the contract. If the contractor fails to perform their duties, the government can use this bond to cover the costs of finding another contractor to finish the job.
• Payment Bond: This bond guarantees that subcontractors, laborers, and material suppliers who contribute to the federal project will be paid for their work and materials. If the prime contractor fails to pay these parties, they can make a claim against the payment bond to recover the money they are owed.

Here are some examples illustrating how the Miller Act applies:

• Example 1: Construction of a New Federal Research Facility

  The U.S. Department of Energy awards a multi-million dollar contract to "Apex Builders Inc." to construct a new, state-of-the-art research laboratory on federal land. Before Apex Builders Inc. can break ground, the Miller Act requires them to secure both a performance bond and a payment bond. The performance bond ensures that the complex facility will be built to the exact specifications required by the government. The payment bond protects all the specialized subcontractors—such as those installing advanced HVAC systems, laboratory equipment, or complex electrical wiring—and material suppliers, guaranteeing they will receive payment for their contributions even if Apex Builders Inc. faces financial difficulties.

• Example 2: Renovation of a Historic Federal Courthouse

  The U.S. General Services Administration (GSA) contracts with "Heritage Restoration Group" to undertake extensive renovations, including structural repairs and interior modernizations, on a historic federal courthouse. Since this project involves the alteration and repair of a federal public building, the Miller Act mandates that Heritage Restoration Group provide the necessary bonds. The payment bond is crucial here, as it protects the specialized artisans, architects, and material providers who supply unique historical components or perform intricate restoration work, ensuring they are compensated for their highly skilled services and materials.

• Example 3: Repair of a Federal Bridge on an Interstate Highway

  The U.S. Department of Transportation awards a contract to "BridgeWorks LLC" for critical repairs and structural reinforcement of a federally owned bridge that is part of the interstate highway system. This project is considered the repair of a "public work" belonging to the U.S. government. Consequently, the Miller Act requires BridgeWorks LLC to post both a performance bond and a payment bond. The performance bond assures the government that the bridge repairs will be completed safely and to engineering standards, while the payment bond safeguards the steel fabricators, concrete suppliers, and construction crews who provide labor and materials for this vital infrastructure project.