Not getting paid on time is often an unfortunate reality of the construction business. For subcontractors working on private projects, the remedy for this is typically a mechanics lien, giving them an enforceable interest against the property itself. However, when the project involves public property, a mechanics lien is not an option. Instead, laws provide subcontractors with alternative means of collecting unpaid moneys.
The Miller Act
The Miller Act, 40 U.S. Code Section 3131, controls situations where a subcontractor is involved in a construction project for federal property. It requires general contractors of such projects to supply a payment bond for the construction, alteration or repair of any federal building or property, where the contract exceeds $100,000.
Typically, the amount of the bond must equal the amount of the contract, though this is not always the case. The federal officer awarding the contract has some discretion here and, if they determine that amount would be impractical, they can set a different amount for the bond. The Miller Act gives subcontractors the right to sue general contractors for nonpayment, with the bond acting as the remedy from which payment can be taken.
Procedural requirements
The notice and filing requirements are slightly different for first and second-tier subcontractors. First-tier subcontractors may bring a bond claim once 90 days have passed since labor or materials were last provided. And such a claim must be made within one year of the last date on which materials or labor were provided; otherwise, the right to bring the claim is lost.
The primary distinction between first and second-tier subcontractors is that of notice. Second-tier subcontractors have the same 90 day and one year time limitations as first-tier subcontractors. But first-tier subcontractors may bring the claim without providing notice of any kind. Second-tier subcontractors, conversely, must give written notice at the time they file the claim.
