The Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000. Other payment protections may be provided for contracts between $30,000 and $100,000. The payment bond is required as security for the protection of those supplying labor and/or materials in the construction of public buildings. Failure by a contractor to pay suppliers and subcontractors gives such suppliers and subcontractors the right to sue the contractor in U.S. District Court in the name of the United States.Although the suit enters the courts in the name of the United States, the United States is not liable for any of the costs of the suit.
Who is protected by the Miller Act?
First tier subcontractors and suppliers may bring a civil action in U.S. District Court for the amount unpaid at the time the action is brought on the payment bond provided by the prime contractor. The case may be filed 90 days after, but no later than one year after, the last labor was furnished or materials supplied. First tier subcontractors and suppliers do not need to provide any notice to the prime contractor prior to filing such a suit.
When a civil action is filed by first tier subcontractors in U.S. District Court for the amount owed them, their second tier subcontractors and the second tier subcontractor’s suppliers may also bring a civilaction for the amount owed them on the payment. However,prior to bringing an action in U. S. District Court, a second tier subcontractor or their supplier must provide written notice to the prime contractor of its claim within 90 days from the date when the last protection under the Miller Act labor was furnished or materials supplied. After providing notice, a second tier subcontractor or supplier may file a suit no later than one year after, the last labor was furnished or materials supplied.
Where to file suit?
You must sue in the U.S. District Court in which the contract was performed. (However, a venue provision in a contract may supersede the miller act’s statutory venue provision.)
Relevant sections of the Miller Act
§ 3133. Rights of persons furnishing labor or material
(a) Right of person furnishing labor or material to copy of bond.–The department secretary or agency head of the contracting agency shall furnish a certified copy of a payment bond and the contract for which it was given to any person applying for a copy who submits an affidavit that the person has supplied labor or material for work described in the contract and payment for the work has not been made or that the person is being sued on the bond. The copy is prima facie evidence of the contents, execution, and delivery of the original. Applicants shall pay any fees the department secretary or agency head of the contracting agency fixes to cover the cost of preparing the certified copy.
(b) Right to bring a civil action.–
(1) In general.–Every person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title and that has not been paid in full within 90 days after the day on which the person did or performed the last of the labor or furnished or supplied the material for which the claim is made may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due.
(2) Person having direct contractual relationship with a subcontractor.–A person having a direct contractual relationship with a subcontractor but no contractual relationship, express or implied, with the contractor furnishing the payment bond may bring a civil action on the payment bond on giving written notice to the contractor within 90 days from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made. The action must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. The notice shall be served–
(A) by any means that provides written, third-party verification of delivery to the contractor at any place the contractor maintains an office or conducts business or at the contractor’s residence; or
(B) in any manner in which the United States marshal of the district in which the public improvement is situated by law may serve summons.
(3) Venue.–A civil action brought under this subsection must be brought–
(A) in the name of the United States for the use of the person bringing the action; and
(B) in the United States District Court for any district in which the contract was to be performed and executed, regardless of the amount in controversy.
(4) Period in which action must be brought.–An action brought under this subsection must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.
(5) Liability of Federal Government.–The Government is not liable for the payment of any costs or expenses of any civil action brought under this subsection.
(c) Waiver of right to civil action.–A waiver of the right to bring a civil action on a payment bond required under this subchapter is void unless the waiver is–
(1) in writing;
(2) signed by the person whose right is waived; and
(3) executed after the person whose right is waived has furnished labor or material for use in the performance of the contract.
(Portions of the GSA pamphlet THE MILLER ACT How payment bonds protect subcontractors and suppliers, August 2009 are reproduced in this article above.)
Article by: Andrew Douglas, Esq., Andrew Douglas, P.A., 954.474.4420