I have attached some information provided by Consensusdocs which is an excellent resource for contractors bidding on public projects.
Link to Consensusdocs Guidelines
Please contact Clay Olson if you would like to discuss public bidding and procurement in South Carolina. 843-224-6676 (m0bile) or email email@example.com
The Miller Act, 40 U.S.C. §§ 3131–3134, provides that, before any contract for the construction, alteration, or repair of any public building or public work of the United States of more than $150,000 (increased fris awarded to any person, that person (usually the general contractor) must furnish:
(1) A performance bond in an amount the contracting officer considers adequate for the protection of the United States;
The United States and federally created bodies such as GSA are the beneficiaries of the performance bond piece. If an awarded prime contractor defaults in the performance of its work or is terminated for cause, the United States may turn to the surety to step in and take over the general contractor’s obligations under the prime contract. Bond language allows the surety to bring another qualified entity to finish the work, at the surety’s expense on behalf of citizens.
The Miller Act is codified at 40 U.S.C. §§ 3131-3134. The Act requires a general contractor contracting with the federal government or a federal governmental entity for a construction project with a contract in excess of $150,000 to obtain both a performance bond and a payment bond.
The Miller Act’s primary function is to foster construction and development in the public sector, while protecting infrastructure and public projects from the potential lien rights of material suppliers and subcontractors.
Miller Act v. Mechanics Lien
When a subcontractor is not paid for labor or materials furnished to a prime contractor in a private construction contract, the aggrieved party is normaly able to seek recourse if not paid by taking out a mechanic’s lien against the property. However, the doctrine of sovereign immunity prohibits a lien being taken out against any public property, and this applies to construction contracts awarded by the federal government.
To afford subcontractors a form of redress, Congress enacted the Miller Act (40. U.S.C.A. § § 3131 and 3133). In our next installment we will discuss specific details covered by the Act including the distinctions between a payment bond and performance bond.
If interested in this topic, please see next post on performance bonds.