The Miller Act protects persons who have furnished labor or materials to contractors engaged in the construction, alteration, or repair of any public building or public work of the United States.
Prior to 1894, the agreements or contracts that the U.S. Government awarded to direct contractors rarely had clauses that required the direct contractor to pay its debts to subcontractors and material suppliers. Additionally, these contracts seldom allowed the government to withhold payments to the direct contractor should that direct contractor not pay its subcontractors and material suppliers. The unfortunate subcontractors and material suppliers had very little recourse against the direct contractor, since the subcontractors and material suppliers could not claim a lien against property owned by the United States. Actually, one still can’t assert or claim a lien against property owned by the United States. The Heard Act was passed in 1894, in response to protests by subcontractors and suppliers about their inability to collect their receivables from contractors.
The Heard Act allowed subcontractors and material suppliers to file a lawsuit in the name of the United States against a direct contractor and its surety for labor and materials (used on the government project) that remained unpaid. However, Congress amended the Heard Act in 1905 adding the phrase “labor or materials used in the construction of any public building or public work.” With that added language, the subcontractors and material suppliers now had to prove that the labor and supplies that they provided for the government projects were absolutely necessary and were exclusively used in the scope of the contract work. 30 years later, Congress replaced the Heard act with the Miller Act of 1935.
In short, the Miller Act protects subcontractors and certain material suppliers on federal projects in excess of $100,000.00 by requiring the direct contractor to provide or post two surety bonds: a performance bond and a labor and material payment bond. The performance bond guarantees the U.S. Government that the construction will be performed to completion. The payment bond assures payment to subcontractors and material suppliers providing the labor and materials on the government project. Subcontractors and material suppliers who have not been paid in full within 90 days after the last labor was performed or material supplied, may bring suit on the payment bond for the unpaid balance.
(1) The Miller Act only applies to federal government projects
(2) Only those who contract directly with the general contractor (direct contractor) or one of its subcontractors may recover under a Miller Act payment bond. Those who provide labor or materials to a sub-subcontractor are not protected and may not assert a claim. You cannot bring a claim under the Miller Act if you are the direct contractor. The direct contractor has a contract claim against the government, and must bring a lawsuit against it. The Miller Act deadlines are not applicable.
(3) Second tier subcontractors or material suppliers must send a Miller Act Notice or Notice to Contractor to the direct contractor within 90 days from the day of last furnishing labor and/or materials. First tier subcontractors and material supplies are not required to send this notice.
(4) There is a one-year statute of limitations for the filing of Miller Act lawsuits.