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Federal Miller Act, State Little Miller Acts, GSA Schedule & Municipal Procurement

Government Contract Performance Bonds

Every federal construction contract above $150,000 demands a performance bond at 100% of the contract price — and the surety has to be on the U.S. Treasury Department's Circular 570 list. Miss either rule and your bid is non-responsive. We write Miller Act bonds, state Little Miller Act bonds, GSA Schedule task-order bonds, and municipal performance bonds through Treasury-listed sureties, including SBA-guaranteed bonds up to $14 million.

100%
Of Contract Price (FAR 28.102-2)
$14M
SBA Guarantee Limit

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Official Federal Requirements

"The penal amount of performance bonds at the time of contract award shall be 100 percent of the original contract price. If the contract price increases, the penal amount of the performance bond shall be increased correspondingly."
Federal Acquisition Regulation • FAR 28.102-2(b)(1)

Federal Construction Contract Bond Thresholds

What FAR 28.102-1 requires at each contract value tier

The 100% Rule: Why Federal Bonds Are So Large

Unlike commercial construction where bond amounts are often 50% of contract value, every Miller Act performance bond — and almost every state Little Miller Act bond — is sized at the full contract price. The math is unforgiving: a $5M federal contract requires a $5M performance bond plus a $5M payment bond, for $10M of total surety capacity tied up before you can mobilize.

This is the single biggest reason small contractors fail to qualify for federal work — and the single biggest reason the SBA Bond Guarantee Program exists.

Bidder beware: The bid bond (Bid Guaranty) is typically only 20% of the bid price. The performance bond that follows is 100% of the awarded price. Plan your surety capacity around the 100% number, not the bid bond.

Federal, State, and Municipal — Three Separate Systems

A federal Miller Act bond does not satisfy a state Little Miller Act, and vice versa

Federal (Miller Act)

40 U.S.C. §§ 3131-3134 / FAR Part 28

  • Threshold: $150,000 (FAR), $100,000 (statute)
  • Penal sum: 100% of contract price
  • Surety must be Treasury Circular 570 listed
  • Forms: SF 25 (performance), SF 25A (payment)
  • SAM.gov registration required for prime

State (Little Miller Acts)

All 50 states have a version

  • California: 100% above $25K (PCC § 7103)
  • Texas: 100% above $100K (Gov Code 2253)
  • Florida: 100% above $200K (FS 255.05)
  • New York: 100% above $100K (SFL § 137)
  • State-licensed surety usually sufficient

Municipal & Special District

Local procurement code

  • Usually cross-references state Little Miller Act
  • Some cities set lower thresholds than state
  • School districts, water districts often custom rules
  • County contracts may require local-licensed surety
  • Always read the specific solicitation

State citations verified against state legislature websites. Always confirm current dollar thresholds with the issuing agency before bid.

What a Government Contract Performance Bond Costs

Premium is a percentage of the bond's penal sum, billed annually. Because federal bonds run at 100% of contract value, the dollar premium on government work is typically 2-5x what a contractor pays for a comparable private commercial bond.

The premium percentage itself depends on the principal's personal credit, the firm's working capital, contract backlog, and past performance on government work. Treasury-listed sureties price aggressively for contractors with three years of CPA-reviewed financials and a clean federal performance record.

For a side-by-side comparison with payment bond costs on the same contract, use our performance bond calculator or our combined payment bond calculator.

Treasury Circular 570 — The Surety Gatekeeper

Under 31 U.S.C. §§ 9304-9308 and FAR 28.202, every corporate surety on a federal bond must appear on the Treasury Department's annually-published Circular 570 list. The list also assigns each surety an underwriting limitation — the maximum single bond it can issue without coinsurance or reinsurance from another T-listed company. The 2025 Revision became effective August 1, 2025.

View current Treasury list of certified companies

SBA Bond Guarantee — Up to $14M

The SBA Surety Bond Guarantee Program (13 CFR Part 115) backs 80%-90% of the surety's losses, allowing participating sureties to bond small contractors who would otherwise be declined. Following the 2024 statutory increase, the SBA can now guarantee bonds on contracts up to $9 million for any project, and up to $14 million on federal contracts when the contracting officer certifies the higher limit is necessary. The program is the single most effective tool for a sub-$10M small contractor pursuing Miller Act work.

Read the SBA Surety Bond Guarantee Program rules

Underwriting Submission for Government Work

Financial Package

CPA-prepared business financials (3 years), interim statement <90 days old, personal financial statements for each owner with 10%+ stake.

Work-in-Progress Schedule

All open contracts with original value, billed-to-date, costs-to-date, estimated costs to complete, and projected completion date.

Past Performance

CPARS reports for any prior federal work, references from contracting officers, and a list of completed projects of similar scope and size.

SAM.gov Registration

Active SAM.gov entity registration with current UEI, NAICS codes covering the contract scope, and any small-business or 8(a) certifications.

Solicitation Package

Full RFP/IFB including FAR 52.228 clauses, bond forms (SF 25 / SF 25A), and any agency-specific bond riders or escrow requirements.

Bank Reference

Letter from your bank confirming line of credit, available capacity, and any restrictive covenants. Surety wants to see liquidity behind the contract.

Federal Bond FAQ — Miller Act, Treasury, SBA

When does the Miller Act actually kick in on a federal contract?
The Miller Act statute (40 U.S.C. § 3131) applies to federal construction contracts exceeding $100,000, but the Federal Acquisition Regulation raises the practical threshold to $150,000 under FAR 28.102-1. Below $35,000, the contracting officer has full discretion to require no payment protection at all. Between $35,000 and $150,000, FAR 28.102-1(b) authorizes alternative payment protections (irrevocable letters of credit, tripartite escrow, or an individual surety bond) instead of a full Miller Act payment bond. At or above $150,000, both a performance bond and a payment bond — each at 100% of the contract price — are mandatory before a notice to proceed is issued.
Why is the federal performance bond always 100% of the contract price?
FAR 28.102-2(b)(1) sets the penal sum of the performance bond at 100% of the original contract price, and increases it dollar-for-dollar with any contract modification. The rationale is simple: if the prime contractor walks off the job, the government may have to pay a replacement contractor an entirely new contract price plus mobilization costs. Anything less than 100% would leave the agency exposed. State Little Miller Acts in California, Texas, Florida, New York, and most other states copy this 100% rule for state-funded public works above their own thresholds.
Do GSA Schedule contracts and IDIQ task orders require performance bonds?
The GSA Schedule master contract itself does not require a performance bond — only individual task orders or BPAs that meet the FAR 28 thresholds. Construction-related Schedule task orders above $150,000 trigger Miller Act bonding the same as any other federal construction contract. Most Schedule task orders are services or supplies (not construction), so FAR 28.103-2 governs: bonds are only required when the ordering activity provides advance payments, government property, or determines a bond is needed to protect the government's interest. Always read the individual task order, not just the Schedule contract.
How does the SBA Bond Guarantee Program help small businesses win government contracts?
The SBA's Surety Bond Guarantee Program backs 80%-90% of a participating surety's losses if a small contractor defaults, which lets sureties say yes to firms they would otherwise decline. As of the 2024 statutory increase, the SBA can guarantee bonds on contracts up to $9 million for any project, and up to $14 million on federal contracts when the contracting officer certifies the higher limit is necessary. For a small contractor without three years of audited financials, the SBA program is often the only path to a Miller Act bond on a contract over $1 million.
Why does my surety have to be on the Treasury Department's Circular 570 list?
FAR 28.202(a)(1) and 31 U.S.C. §§ 9304-9308 require that any corporate surety on a federal bond be listed in Treasury Department Circular 570 (the 'Approved Listing of Sureties' published annually by the Bureau of the Fiscal Service). Each listed surety carries an underwriting limitation — the maximum single bond it can write without coinsurance or reinsurance. If your bond exceeds the surety's Treasury limit, the bond must be co-surety or reinsured by another T-listed company. State and local agencies often adopt the Circular 570 list by reference even though it is a federal document.
Are state and municipal performance bond requirements different from federal Miller Act bonds?
Yes — every state has its own 'Little Miller Act' covering state-funded public works, and the thresholds and percentages vary. California (Public Contract Code §§ 7103, 20129) requires performance bonds at 100% of the contract on state public works above $25,000. Texas (Government Code Chapter 2253) uses a $100,000 threshold. Florida Statute 255.05 sets $200,000. Municipal contracts are typically governed by the local procurement code, which usually cross-references the state Little Miller Act. A federal Miller Act bond does not satisfy a state requirement, and vice versa — they are separate obligations on separate contracts.

Related Federal & State Bond Resources

View All Performance Bonds
Payment Bonds
Miller Act 100% rule
P&P Bonds Combined
Both bonds together
Bid Bonds
Pre-award guarantee
Miller Act Guide
40 U.S.C. 3131-3134
Performance Bond Guide
Full requirements walkthrough
Performance Calculator
Estimate your premium
Payment Calculator
100% rule on payment
Surety Bond Cost
Premium fundamentals

Official .gov Resources

40 U.S.C. §§ 3131-3134 — The Miller Act (full text)

U.S. House of Representatives, Office of the Law Revision Counsel — the underlying federal statute requiring performance and payment bonds on public works.

FAR 28.102 — Performance and Payment Bonds for Construction

Federal Acquisition Regulation establishing the $150,000 bond threshold and 100% penal sum rule for federal construction contracts.

Treasury Department Circular 570 — Approved Listing of Sureties

Bureau of the Fiscal Service — annually published list of sureties acceptable on federal bonds, with each company's underwriting limitation.

SBA Surety Bond Guarantee Program

U.S. Small Business Administration — bond guarantees for small contractors on contracts up to $9M (or $14M on certified federal contracts).

SAM.gov — System for Award Management

General Services Administration — required entity registration for any contractor receiving a federal award; surety underwriting reviews active SAM status.

Nick Thoroughman, Editorial Director
Reviewed by Nick Thoroughman, Editorial Director
Eric Drummond, Surety Specialist
Surety review by Eric Drummond, Surety Specialist
Nevada DOI license pending issuance

All content is researched from official state and federal sources (.gov) and verified before publication. BuySuretyBonds.com works with Treasury-certified, A- minimum rated surety carriers serving all 50 states.

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Bid Opens Soon. Your Bond Should Already Be Approved.

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