Dealing with the government can be intimidating. Many people are frightened of going to the courthouse to deal with traffic citations. Some people pay advisors to do their taxes for them, so they won’t make a mistake and upset the IRS. How many of us enjoy going to the DMV? For construction workers, the Miller Act was created to make things a little bit easier.
The Miller Act was passed into law back in 1935. The act requires that all contractors hoping to take on government jobs have bonding secured for the price of the job and the cost of the materials. This means that all contractors hoping to have their construction company build something for the job must first get assurance that a payment bond will cover the cost of the project should the job fall apart for any reason.
The Miller Act led to more trust between construction companies and the federal government. The Pentagon was built as a direct result of it passing. It indicated that the United States was serious about expanding its infrastructure, and serious about their relationship with the contractors that they use.
Under the Miller Act, all contractors must have two types of bonds secured:
- A performance bond, which guarantees that an amount be paid if the job is not done or not done well.
- A payment bond, which guarantees payment for all materials and subcontractor fees undertaken on the job.
The Miller Act is mutually beneficial. For the government, it assures that if a job does not go well, they will not be paying for it themselves. They will also not be passing the cost of the unsuccessful job onto taxpayers. The performance bond means that the government can use the bond to pay another contractor to do the job successfully. The payment bond means that the government will not be sued for the costs of the material on an incomplete job. The bond system in general ensures that the government will be working with trustworthy contractors.
For contractors, the Miller Act should give a sense of security too. It means that if you work hard at crafting your construction company, you will get approved for a bond. This rewards good behavior and makes you more likely to secure the contract with the government, which is normally well funded. It also means that a bond is in place to cover the costs undertaken on materials and subcontractors should anything go awry. It means that the government has confidence in you, and you can have confidence in the job.
If you have any questions, contact the Florida Construction Law Group. We want to consistently exceed your expectations.