The Miller Act is a law that requires contract surety bonds on all federal construction projects and that every contractor that bids on a federal project must post a performance bond and payment bond that cover all labor and supplies. In this article, our construction lawyers in Orlando will discuss requirements and recoverable costs associated with the Miller Act.
Miller Act Requirements
The Miller Act instructs contractors to supply the government with the following requirements.
1. Performance bonds are needed by the contracting officer to provide protection for the government.
2. Payment bonds are required to protect subcontractors, suppliers, and materials. These payment bonds need to equal the total contract amount by defined terms. The payment bonds cannot be less than the amount that is required under the performance bond. The payment bond will protect the subcontractors, suppliers, and materials that are related directly to the prime contractor, as well as sub-subcontractors and suppliers that are hired by the subcontractors. These are known as second-tier claimants.
3. The Federal Acquisition Regulation can ask for additional protection or bonds to contractors that are being contracted between $25,000 and $100,000.
4. The Miller Act bans contractors from requiring their subcontractors to waive their payment bonds prior to beginning work.
Miller Act Recoverable Costs
As construction attorneys in Orlando, we are aware that some expenses under the Miller Act can be reclaimed depending on a few claim supporting facts.
Below is a list of some eligible and non-eligible recoverable costs.
Eligible for Cost Recovery
- Labor done on the job site.
- Any rental fees associated with the contract.
- Attorney’s fees may be recovered, however it depends on the contract’s terms and conditions.
- Any material that is entirely used during the duration of the project.
Not Eligible for Cost Recovery
- Professional services unless they were involved in the scope of work under the bonded contract.
- Office staff that does not have any on-site related work.
- Material that is bought for the project but can be used afterwards.
- Materials that were not used in the project.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.