Miller Act Bond

The Miller Act is the federal statute that requires prime contractors on U.S. government construction, alteration, or repair contracts above a dollar threshold — currently $150,000 — to furnish two surety bonds before starting work. The first is a performance bond that guarantees the contractor will complete the project according to the contract, protecting the federal government against default. The second is a payment bond that guarantees subcontractors, laborers, and material suppliers will be paid. This payment guarantee exists because no one can place a mechanic's lien on federal property — so the bond is the only recourse unpaid lower-tier parties have. Together these are the classic Miller Act bonds.

For a small subcontractor, the Miller Act is a powerful protection: if the general contractor doesn't pay you on a federal job, you can sue on the payment bond directly, though strict notice and timing rules apply (generally a 90-day notice for parties without a direct contract with the prime, and a one-year suit deadline). For a contractor bidding federal work, the practical reality is that you cannot win the award without a surety willing to issue these bonds, so your bonding capacity effectively caps the size of federal jobs you can pursue. Like every surety bond, the contractor indemnifies the surety, so a default that triggers a bond payout becomes a debt the contractor owes back to the surety.

A key nuance is scope: the Miller Act governs federal contracts only. States have their own "Little Miller Acts" imposing similar performance-and-payment bond requirements on state and municipal projects, often with different thresholds. Contractors also frequently confuse the required bonds with a bid bond, which is a separate guarantee submitted with the proposal itself; see contract vs. commercial surety for how these contract bonds fit together.