Miller Act Bond Requirements

The Miller Act (40 U.S.C. 3131-3134) is a federal law that requires contractors on federal construction projects over $150,000 to provide performance and payment bonds. The performance bond protects the government by guaranteeing project completion. The payment bond protects subcontractors, suppliers, and laborers by guaranteeing they get paid. Both bonds must equal 100% of the contract price.

The current threshold is $150,000. Federal construction contracts exceeding $150,000 require both performance and payment bonds (FAR 28.102-1). Contracts between $35,000 and $150,000 require alternative payment protections. Contracts under $35,000 have no bonding requirements. These thresholds are exempt from automatic inflation adjustment.

If you are a first-tier subcontractor (direct contract with the prime), you do not need to give preliminary notice - just file suit within one year of your last work. If you are a second-tier sub (contract with a first-tier sub), you must give written notice to the prime contractor within 90 days of your last work, then file suit within one year. All Miller Act suits are filed in the U.S. District Court where the contract is performed.

The Miller Act applies only to federal construction projects. Little Miller Acts are state laws that impose similar bonding requirements on state and local public works projects. Every state has some version of a Little Miller Act, but thresholds vary widely - from $0 (Arizona, Ohio, Washington require bonds on all contracts) to $500,000 (Virginia). You must comply with both federal and state requirements depending on who is funding the project.

Performance and payment bonds under the Miller Act typically cost 1-3% of the contract value for well-qualified contractors. On a $1 million federal contract, expect to pay $10,000-$30,000 for both bonds combined. Credit score, financial strength, and project type all affect pricing. The SBA Surety Bond Guarantee Program can help contractors who cannot get bonding through traditional channels, with bid bonds issued at no SBA fee.

The Miller Act specifically applies to federal construction contracts. Service contracts, supply contracts, and non-construction work are generally not covered by the Miller Act bonding requirements. However, contracting officers have discretion to require bonds on any contract type, and many federal service contracts include bonding provisions in their solicitations.

A contractor who fails to provide the required performance and payment bonds cannot proceed with the contract. The contracting officer will not issue a notice to proceed without the bonds in place. If the winning bidder cannot provide bonds, the contract is typically awarded to the next lowest responsive bidder. The bid bond covers the government's additional cost of re-awarding the contract.

Yes. The SBA Surety Bond Guarantee Program guarantees 80% of the surety's loss (90% for disadvantaged and veteran-owned businesses). Contract limits are $9 million for general contracts and $14 million for federal contracts (increased March 2024). The SBA's QuickApp program handles contracts up to $500,000 with streamlined approval. Bid bonds have no SBA fee; performance and payment bonds carry a 0.6% guarantee fee.