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The Miller Act
The Federal Law That Requires Bonding on Government Construction Projects
If you're a contractor who wants to bid on federal construction work, the Miller Act is the law you need to understand. It's the reason performance and payment bonds are required on virtually every federal construction contract — and it's been shaping how the government manages construction risk since 1935.
The Miller Act isn't complicated, but the details matter. Knowing what it requires, who it protects, and how it affects your ability to bid and win federal work is fundamental to competing in public construction. This page covers the law in plain English — what it says, how it's applied, and what it means for contractors at every level.
What Is the Miller Act?
The Miller Act is a federal statute, codified at 40 U.S.C. §§ 3131–3134 , that requires contractors on federal construction projects to furnish both a performance bond and a payment bond before the contract is awarded. Originally enacted in 1935 to replace the earlier Heard Act of 1894, it was recodified in 2002 but its core requirements have remained consistent for nearly a century.
The statute itself sets the bonding threshold at contracts exceeding $100,000. However, the Federal Acquisition Regulation (FAR), which implements the Miller Act's requirements in practice, sets the bonding threshold at $150,000 for construction contracts. For contracts between $35,000 and $150,000, the FAR provides alternative forms of payment protection instead of a full payment bond. For contracts over $150,000, both a performance bond and a payment bond are mandatory.
In practical terms: if you want to bid on any federal construction contract worth more than $150,000, you must be able to provide performance and payment bonds. No bond, no bid.
Why Does the Miller Act Exist?
The Miller Act addresses two problems that are unique to government construction.
First, the government needs assurance that contractors will complete the work. When a contractor abandons a federal project or fails to perform, it doesn't just create a financial loss — it delays critical public infrastructure, disrupts services, and wastes taxpayer dollars. The performance bond guarantees that if the contractor defaults, the surety will step in to ensure the project gets finished.
Second, subcontractors and material suppliers need a way to get paid. On private construction projects, unpaid subs and suppliers can file mechanics' liens against the project property to secure their payment. But on federal projects, you can't file a lien against government property — sovereign immunity prevents it. Without the Miller Act, subcontractors working on federal jobs would have no practical recourse if the general contractor failed to pay them. The payment bond fills that gap by giving them a direct claim against the surety.
The U.S. Small Business Administration recognizes the importance of this framework and operates a Surety Bond Guarantee Program specifically to help small contractors who might otherwise struggle to obtain the bonds required under the Miller Act.
.What Bonds Does the Miller Act Require?
The Miller Act requires two bonds on qualifying federal construction contracts: a performance bond and a payment bond.
The performance bond protects the federal government. It guarantees that the contractor will complete the project in accordance with the terms of the contract. If the contractor defaults, the surety is obligated to resolve the situation — typically by financing a replacement contractor, providing financial assistance to the original contractor, or compensating the government for its losses. The performance bond amount is set by the contracting officer at a level they consider adequate to protect the government's interest, which in practice usually means 100% of the contract value.
The payment bond protects subcontractors, laborers, and material suppliers. It guarantees that the contractor will pay all downstream parties who provide labor and materials on the project. The payment bond amount must equal the total contract value unless the contracting officer determines that a bond in that amount is impractical, in which case they can set a different amount — but it can never be less than the performance bond amount.
Both bonds must be furnished before the contract is awarded and become binding when the contract is signed. They must be issued by a surety satisfactory to the contracting officer, which in practice means a surety company listed on the U.S. Department of the Treasury's Circular 570 — the official list of approved sureties for federal bonds.
Who Does the Miller Act Apply To?
The Miller Act applies to prime contractors — the contractors who enter into a direct contract with the federal government. If you're awarded a federal construction contract over $150,000, you're the one who must furnish the bonds.
Subcontractors are not required to provide Miller Act bonds to the government. However, many general contractors require their subcontractors to carry bonds as a condition of the subcontract, particularly on larger or more complex projects. This is a contractual requirement, not a Miller Act requirement — but it operates on the same principle. The GC wants the same assurance from their subs that the government wants from the GC.
The Miller Act covers contracts for the construction, alteration, or repair of any public building or public work of the federal government. This includes new construction, renovation, infrastructure work, facility maintenance, and any other project that involves physical work on government property or public works. It does not apply to supply contracts, service contracts, or contracts that don't involve construction.
Payment Bond Claim Rights Under the Miller Act
One of the most important practical aspects of the Miller Act for the construction industry is the payment bond claim process. If you're a subcontractor or supplier working on a bonded federal project and you haven't been paid, the Miller Act gives you a specific legal path to recover your money.
First-tier claimants — subcontractors and suppliers who have a direct contract with the prime contractor — can file a claim against the payment bond without providing prior notice. If you haven't been paid in full within 90 days after you performed your last work or delivered your last materials, you have the right to bring a civil action against the surety.
Second-tier claimants — sub-subcontractors and suppliers who contract with a first-tier subcontractor rather than directly with the prime contractor — must provide written notice to the prime contractor within 90 days of their last day of work or material delivery. The notice must state the amount of the claim and identify the party they contracted with. After providing proper notice and waiting the 90-day payment window, second-tier claimants can file suit.
All Miller Act payment bond claims must be filed in federal court within one year after the date on which the claimant last performed work or furnished materials. Missing this deadline forfeits your claim — the statute is strict on timing.
For subcontractors working on federal projects, understanding these timelines is critical. Keep detailed records of every delivery and every day of work, and if payment doesn't come within 90 days of your last contribution to the project, don't wait to take action.
Little Miller Acts — State and Local Bonding Requirements
The Miller Act applies only to federal construction projects. But its framework was so effective that virtually every state has enacted its own version — commonly called a "Little Miller Act" — that imposes similar bonding requirements on state and local government construction projects.
Little Miller Acts vary significantly from state to state. The contract threshold that triggers bonding requirements, the types of bonds required, the claim notice procedures, and the deadlines for filing suit all differ depending on the jurisdiction. Some states set their bonding threshold as low as $25,000. Others follow the federal model more closely.
For contractors working on state and municipal projects, knowing your state's specific bonding requirements is essential. The bonding threshold, the claim process, and the notice requirements in Utah are different from those in Idaho, which are different from those in California or Texas. If you're bidding across multiple states — which many contractors do — you need to understand the requirements in each jurisdiction where you work.
This is an area where working with a knowledgeable bond agent makes a real difference. At Grit, we're licensed in 25+ states and help contractors navigate the bonding requirements for both federal and state projects.
How the Miller Act Affects Your Bonding Strategy
If you're a contractor who wants to compete for federal work — or state and local government work under a Little Miller Act — bonding isn't optional. It's a prerequisite. And the contractors who treat bonding as a strategic asset rather than an administrative hurdle are the ones who grow their federal project portfolios most successfully.
Building a bond program before you need it is the single most important step. Contractors who wait until they find a federal project to bid and then scramble to get bonded often miss deadlines, pay higher premiums, or get declined because their financials aren't organized. Contractors who have an established surety relationship, pre-approved bonding capacity, and current financial documentation on file can move on opportunities quickly — often getting a bid bond issued the same day.
Strengthening your financial profile directly increases your ability to compete for federal work. Every dollar of working capital, every point on your credit score, and every successfully completed bonded project builds the capacity that allows your surety to back larger bonds. The Miller Act requirement isn't just a hurdle — it's a market filter that keeps unqualified contractors from competing for the work. If you're bonded, you're in a smaller, more qualified competitive pool.
How Contractors Qualify for Bonds
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If you're looking to compete for federal construction projects and need to get bonded — or you already have a bond program and want to ensure it supports your federal project goals — our team can help.
Questions about Miller Act bonding requirements? Call us at (801) 505-5500