Miller Act Reformed
Kegler Brown Construction Newsletter November 1, 1999
The Miller Act requires payment bonds on sizable Federal Government projects to ensure that subcontractors and suppliers are paid even in the event there is a financial default by the prime contractor. This important Act has not been revised for decades. However, House Resolution 1219, The Construction Industry Payment Protection Act of 1999, has passed Congress and was signed into law by the President on August 17th. This legislation introduced by Representative Carolyn Maloney of New York amended the Miller Act to help subcontractors and suppliers by: 1) requiring the payment bond to equal the contract price; 2) prohibiting the waiver of rights under a payment bond; and 3) allowing notice to a prime contractor by any method that provides sufficient proof of receipt.
This legislation was a result of negotiations between key groups in the construction industry and received the consensus support of the industry, including ASA, AGC, ASC, and the surety industry. It expands payment protections for subcontractors and suppliers and modernizes service requirements for claims without adversely affecting the rights of solvent general contractors or sureties.
Federal regulators must issue regulations no later than February, 2000 and the new law will take effect 30 days after final regulations are issued.