What Are the Bonding Requirements for Federal Contracts?
According to the U.S. General Services Administration Public Building Service, contractors who intend to work on federally-funded construction projects costing more than $100,000 must post bonds before work can begin. This requirement stems from the Miller Act of 1935.
This page outlines the types of bonds required for federal construction projects under the Miller Act. View our Contract Surety Bond Guide for more information on all types of construction bonds.
How to Get a Surety Bond for a Federal Construction Project
SuretyBonds.com has a history of helping contractors get bonded quickly and accurately. If you’re a contractor involved in a government-funded construction project and need a contract bond, apply online now!
What Is the Miller Act Bond Used For?
The Miller Act and its bond requirement are in place to protect the federal government and taxpayers from losses if a general contractor defaults on a public construction project or participates in fraudulent acts.
Types of Bonds Required on Federal Construction Contracts
The Miller Act specifically requires performance surety bonds and payment surety bonds for public construction projects. These two types of bonds work together to protect federal contract jobs from incompletion due to labor and materials issues.
Federal Performance Bonds
A contractor’s lack of performance can cause severe delays and unexpected expenses in the building process which disrupt the governmental procurement process. Performance bonds guarantee that a contractor will complete a project according to the contract terms.
If a contractor fails to do so, the federal agency can file a claim on the bond. When this happens, the surety can use the bond amount to pay a new contractor to complete the project. To avoid such claims, surety underwriters often base bond approval on a contractor’s past performance.
Federal Payment Bonds
If contributors to a federal construction project are not paid, they have the right to sue the contractor. Payment bonds guarantee that contractors will pay those who provide labor, materials, equipment or supplies throughout a project.
When a valid claim is brought against a payment bond, the surety must pay the money owed up to the bond’s full amount. The surety provider will then seek reimbursement from the bonded contractor.
Little Miller Act Bonds for State Contracts
Over the years, individual states have created versions of the federal Miller Act called “Little Miller Acts.” The Little Miller Acts are the same, except the bonding requirements are enforced for smaller, state-level projects. For these bonds, the project threshold is much lower than $100,000.
If you need a state-level contract bond, verify your requirements with the state agency managing the project before contacting us to get bonded.
