Construction parties working on federal properties in the US are protected by a powerful law known as the Miller Act. This law requires general contractors to execute a payment bond on a federal project so that lower-tier subcontractors and material suppliers are protected from non-payment.
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This guide will explain all the basic information about serving the Federal Miller Act Notice. Serving this notice is important if you are a lower-tier contractor or supplier on a federal project and you want to recover payment by making a payment bond claim.
- What is a Federal Miller Act Notice?
- Who may serve a Federal Miller Act to recover payment?
- When must you serve a Federal Miller Act Notice?
- How to serve a Federal Miller Act Notice
- Best practices when serving a Federal Miller Act Notice
What is a Federal Miller Act Notice?
The Federal Miller Act Notice is a document served by a lower-tier construction on the general contractor when the former is looking to recover their payment after working on a federal project. This notice is in essence similar to a mechanics lien, except a mechanics lien is a payment remedy that is applicable only to private projects.
If you are working on a construction project on a federal property (e.g. a US military base or a US Postal Service office), you are not covered by your state’s mechanics lien laws. However, the federal Miller Act ensures that every general contractor on a federal project must furnish a payment bond. Lower-tier construction parties are then allowed to make a claim to the furnished payment bond.
Who may serve a Federal Miller Act to recover payment?
The lower-tier parties covered by the Federal Miller Act are only the first- and second-tier subcontractors and material suppliers. This means that you have the right to make a payment bond claim on a federal project only if you supply labor or materials to either the general contractor themselves or the first-tier subcontractor (i.e. the party with a direct contract with the general contractor).
All other parties beyond the second tier have no federal payment bond rights. Unfortunately, second-tier suppliers to material suppliers are also exempted from the Miller Act payment bond coverage.
Note that general contractors are also not covered by the Federal Miller Act with respect to payment remedies. The general contractor is the party who furnishes the bond and they are therefore not allowed to make a claim against their own bond.
When must you serve a Federal Miller Act Notice?
The Federal Miller Act Notice must be served within 90 days of your last day of work, which corresponds to the last day when you furnished labor or materials to the federal project. Note that there is no preliminary notice requirement for serving the Federal Miller Act Notice – as long as you are one of the parties protected by the Miller Act, your payment rights remain intact without serving a pre-bond claim notice.
Technically, only second-tier subcontractors and suppliers are required to serve the Federal Miller Act Notice and meet this 90-day deadline. First-tier subcontractors are allowed to immediately go straight to initiating a lawsuit against the bond.
However, it is still best practice to serve the Federal Miller Act Notice within the 90-day period before enforcing a bond. By bringing the payment issue to the surety, a full-on lawsuit may be avoided if the surety honors the payment obligation and duly releases the payment.
How to serve a Federal Miller Act Notice
1. Request for payment bond information
It is always a good idea to ask for a copy of the payment bond as soon as you secure a job on a federal project. When you have a copy of the payment bond, you get access to important information such as the name and address of the surety. Knowing these details can make the payment process easier, as you will find out in the later steps.
To request a copy of the federal payment bond, you can write a letter addressed to the general contractor or to the awarding public entity. They usually provide copies of the payment bonds to lower-tier contractors. This step is not a strict requirement, but it is definitely a good business practice to always have a copy of the payment bond related to the project you are working on.
2. Prepare the Federal Miller Act Notice form
The Federal Miller Act Notice form must have certain details, including the following:
- Your name and address
- The name and address of the general contractor
- The name and address of the party who hired you
- The name and address of the surety
- A description of the services you provided
- A description of the project location sufficient for identification
- The total amount of your services
- The amount that you have received so far
- The amount that you are trying to claim through the payment bond
- The date of your last day of work
Technically, only the amount being claimed and the name of the hiring party are mandatory in a Federal Miller Act Notice, but including all the details above can best illustrate your specific case.
Also note that the surety may also ask for additional information, and these project-specific requirements are usually written on the payment bond document itself. If you successfully completed step 1 then you will know right away which added information must be included in your Federal Miller Act Notice form so the surety can process it quickly.
You should also make it a habit to go over your Federal Miller Act Notice form and make sure that all details are correct and accurate. Avoid spelling errors and other minor mistakes – it does not reflect well on your professionality if your Federal Miller Act Notice is filled with misspelled names and addresses.
3. Serve the Federal Miller Act Notice on the general contractor
Once the Federal Miller Act Notice is ready to go, you have to serve it on the general contractor via certified mail with return receipt requested. Note that the Federal Miller Act Notice is only required to be delivered to the general contractor, but it is also a good idea to serve a copy on the surety.
The surety will eventually touch base with you to verify your payment bond claim, and you may also have to contact them to follow up on the progress of your claim. Make sure that you have the surety’s required information so you know how to reach them when you need the necessary updates.
Also keep in mind that you only have 90 days after your last day of work to serve the Federal Miller Act Notice. It is best to serve this notice early and to not wait until the 90th day to prepare and mail the notice. Missing the deadline may cost you your payment, so try your best to prepare the Federal Miller Act Notice form early and serve it way before the 90-day period elapses.
4. Enforce the bond claim if payment is not received
Finishing step 3 should be enough to get the surety to cover your payment; however, the surety may also have issues and they may not pay up. If this is the case, you have to enforce the bond claim by initiating a lawsuit against the bond itself.
Keep in mind that the Federal Miller Act Notice is enforceable for only 1 year after your last day of work. You, therefore, have to file your lawsuit within this period if you want to recover your payment. Filing a lawsuit after this deadline will most likely be unsuccessful, so make sure that you abide by it.
Note that the lawsuit must be filed in the US District Court where the federal project is located. The lawsuit is also initiated against the surety and not the general contractor. Since you will be initiating a federal lawsuit in this step, you are highly advised to hire a legal counsel for help.
However, if you successfully receive your payment after step 3, then enforcing the bond claim through a lawsuit is no longer necessary.
Best practices when serving a Federal Miller Act Notice
1. Ask for a copy of the payment bond in the beginning of the project
While requesting for the payment bond information is not a technical requirement, it is always a good idea to do it if you want to have all the necessary details that you need in making a federal payment bond claim. It is very important that you at least know the name and contact information of the surety—you will most likely have to negotiate with them if payment disputes come up.
2. Always verify the accuracy of the information included in your Federal Miller Act Notice form
When you prepare your Federal Miller Act Notice form, make sure to double- and triple-check the spelling of the names and addresses that you include in it. Also ensure that the amounts are accurate and that you have the invoices and contract documents to prove that your payment claim is reasonable and valid. A federal payment bond claim will have a higher chance of success if your Federal Miller Act Notice form is prepared properly.
3. Serve the Federal Miller Act Notice form on both the general contractor and the surety
The Federal Miller Act Notice form is required to be served only on the general contractor, but serving a copy of it on the surety is also a good business practice. It is important to cover all the important bases, so even if delivering the notice to the surety is not mandatory, it wouldn’t hurt if they too are made aware of your federal payment bond claim.