The Miller Act

The statute—40 U.S.C. §§ 3131-3134

The Miller Act is the federal statute requiring surety bonds on federal construction contracts. It is codified at 40 U.S.C. sections 3131 through 3134 and implemented through the Federal Acquisition Regulations at 48 CFR Subpart 28.1. The statute has three main components:

• Section 3131 requires the prime contractor on a federal construction contract exceeding one hundred fifty thousand dollars to furnish (1) a performance bond in an amount that the contracting officer considers adequate to protect the government, and (2) a payment bond in an amount equal to the total amount payable under the terms of the contract.
• Section 3132 addresses alternate payment protection for contracts between thirty thousand and one hundred fifty thousand dollars.
• Section 3133 establishes the rights of persons furnishing labor or material to bring civil actions against the payment bond, subject to notice and limitations requirements.

The Miller Act's fundamental architecture—a performance bond to protect the government and a payment bond to protect labor and materialmen—has remained essentially unchanged since 1935.

Historical background

The Miller Act was enacted in 1935, during the New Deal building boom, as a replacement for the Heard Act of 1894. The Heard Act had established the original federal requirement that contractors on public work post a single bond covering both performance to the government and payment to labor and materialmen. Experience under the Heard Act revealed a structural defect: the same penal sum was answerable to two distinct classes of claimant, and the government's claims for completion could exhaust the bond before unpaid subcontractors were paid.

The Miller Act solved this by requiring two separate bonds, each with its own penal sum. The performance bond runs to the United States; the payment bond runs to the class of persons furnishing labor and material. Neither bond's proceeds may be applied to satisfy claims against the other.

The statute takes its name from Representative Kirk Miller of Michigan, its principal sponsor. Substantial amendments followed in 1978, 1999, and 2000, each generally directed at expanding the class of covered claimants or clarifying notice requirements.

Thresholds and coverage

Two thresholds matter under the Miller Act:

Contract price	Required protection
Under $30,000	No statutory bonding requirement (contracting officer discretion)
$30,000 – $150,000	Alternate payment protection required under 40 U.S.C. § 3132
Over $150,000	Miller Act performance bond and payment bond required

The performance bond amount is set by the contracting officer at a level "adequate for protection of the government." In practice, the Federal Acquisition Regulations direct that 100% of the original contract price be the default requirement.

The payment bond amount equals the total amount payable under the terms of the contract. For fixed-price contracts, this is straightforward. For cost-reimbursement contracts and contracts with substantial change-order allowances, the payment bond amount may be adjusted by rider as the contract evolves.

The T-List and Circular 570

The Department of the Treasury publishes Circular 570, formally titled "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies." Colloquially this list is called the "T-List." Only surety companies appearing on the T-List may issue bonds obligating the United States government.

The T-List is published semi-annually and updated as circumstances warrant. Each listed company appears with an "underwriting limitation"—the maximum penal sum of any single bond the carrier may issue to a federal obligee without co-surety or reinsurance. Underwriting limitations are set by Treasury based on the carrier's capital and surplus.

All surety carriers writing on PerformanceBond.com's paper appear on the T-List. Our maximum single-program capacity across our carrier panel is two hundred fifty million dollars.

SF 25 and SF 25A

Federal construction bonds are executed on standard forms prescribed by the Federal Acquisition Regulations:

• Standard Form 25 — Performance Bond
• Standard Form 25A — Payment Bond
• Standard Form 24 — Bid Bond

The forms are short and their essential terms are prescribed by the regulations. Attempts to modify the standard forms are generally rejected by federal contracting officers.

Who can claim on the payment bond

The class of persons entitled to sue on a Miller Act payment bond is defined narrowly.

First-tier claimants—those with a direct contractual relationship with the prime contractor—include subcontractors and suppliers of material. A subcontractor is a person who furnished labor or material for a specific part of the work; a supplier of material is a person who furnished material for the work. Suppliers of consumables not incorporated into the work, and suppliers of capital equipment used for the contractor's general operations, are generally excluded.

Second-tier claimants—those with a direct contractual relationship with a subcontractor, one step removed from the prime—are also covered, subject to a notice requirement described below. Suppliers of subcontractors are covered; sub-subcontractors are covered.

Third-tier and more remote claimants generally have no direct claim on the payment bond. Case law under the statute has been consistently strict on this point.

Notice and limitations

The Miller Act imposes two hard deadlines that trap the unwary:

• Ninety-day notice. Second-tier claimants—those with no direct contract with the prime—must serve written notice on the prime contractor within ninety days of the date on which the claimant last performed labor or furnished material. First-tier claimants are not subject to the notice requirement.
• One-year limitation. Suit against the payment bond surety must be commenced in the United States District Court for the district in which the contract was to be performed and executed, within one year of the day on which the claimant last performed labor or furnished material.

Both deadlines are strictly enforced. Notice must be served in writing, by any means providing verifiable receipt. Verbal notice is insufficient. The suit-limitation period is jurisdictional and cannot be tolled by ordinary equitable considerations.

Alternative payment protection

For federal contracts between thirty thousand and one hundred fifty thousand dollars, 40 U.S.C. § 3132 requires the contracting officer to accept alternate payment protection. The permitted alternatives are a payment bond, an irrevocable letter of credit, a tripartite escrow agreement, certificates of deposit, or United States bonds or notes.

Little Miller Acts—the state analogs

Every U.S. state has enacted a "Little Miller Act" imposing bonding requirements on state-owned construction projects analogous to the federal statute. Little Miller Act thresholds, forms, notice requirements, and limitations periods vary. Some states track the federal statute closely; others have developed distinctive frameworks—California's Public Contract Code, Texas's Government Code Chapter 2253, Florida's Statutes Chapter 255, New York's State Finance Law, and Illinois's Public Construction Bond Act each have their own architecture and case law.

Practical guidance for federal contractors

1. Engage a real surety early. Federal solicitations frequently require bid bonds at 20% of the bid price. Sureties writing bid bonds without a full underwriting relationship are effectively taking uncompensated risk.
2. Confirm T-List standing before selecting a carrier. The Treasury updates the list; carriers can be removed. A bond from a carrier not on the T-List at the moment of contract award is defective.
3. Confirm underwriting limitation before selecting a carrier. A carrier's underwriting limitation caps single-bond size to federal obligees. Larger bonds require co-surety or reinsurance arrangements pre-agreed with the carrier.
4. Preserve documentation. Federal claims investigation is thorough. Contract documents, change orders, correspondence, and pay applications should be organized and retained.
5. Address disputes early. Federal bond claims are typically preceded by cure periods and demand letters. Engagement with the contracting officer and the surety at the earliest sign of trouble is nearly always better than deferral.

Federal construction bonding by agency and program

The Miller Act framework is universal on federal prime construction over $150,000. What varies by agency and program is the specific procurement machinery, the bond form language, the risk profile of the work, and — critically for small businesses — the availability of the SBA Surety Bond Guarantee and its interaction with small business set-asides. The pages below cover the five federal contracting environments where our practice sees the highest bond volume.

Related pages: performance bonds, payment bonds, bid bonds.