Little Miller Act

On state and federal projects across the entire United States, prime contractors are required to post bonds guarantying the performance of their contractual duties and/or the payment of their subcontractors and materials suppliers. If unpaid on these projects, the supplier or subcontractor can file a lien or bond claim against the bond. On Federal projects, these bond requirements and claims are governed by the Federal Miller Act. Each state has a Little Miller Act, which is a state statute based on the Federal Miller Act. When performing work on a State or Federal project anywhere in the United States, contractors, subcontractors and suppliers cannot turn to the states generic mechanic lien laws to understand the applicable notice and lien requirements. Following those regular laws would do absolutely no good. Instead, potential claimants must understand a completely different set of statutory requirements. On a Federal project, they will look to the "Miller Act. If on a State project, they will look to that states individual Little Miller Act. Little Miller Acts typically require the posting of a performance bond - a type of surety bond that covers the cost of substitute performance if the prime contractor fails to fully perform his duties under the contract. Little Miller Acts also typically require the posting of a payment bond, which provides an alternate source of payment to the subcontractors and material suppliers who worked on the job. If the claimant did not have a direct contractual relationship with the prime contractor, the claimant is typically required to give some form of notice to the prime contractor within a specified time after the completion of the work to preserve the right to make a claim against the payment bond. The purpose of the notice requirement is to give the prime contractor an opportunity to withhold payment to the first tier subcontractor, and otherwise encourage payment to the claimant. Little Miller Acts address two concerns that would otherwise exist in the performance of state government construction projects:
1. Performance Bonds: The contractor's abandonment or other non-performance of a government job may cause critical delays and added expense in the government procurement process. The bonding process helps weed out irresponsible contractors while the bond itself defrays the government's cost of substitute performance. The subrogation right of the bond surety against the contractor (i.e., the right to sue for indemnification) is a deterrent to non-performance. 2. Payment Bonds: Subcontractors and material suppliers would otherwise be reluctant to work on such projects (knowing that sovereign immunity prevents the establishment of a mechanic's lien) - decreasing competition and driving up construction costs.