Federal Payment Bond Claims
Mechanics liens are not permitted on federal projects. However, that does not mean that filing a breach of contract lawsuit against the contractor who hired it is the only remedy for a subcontractor. The reason is the Miller Act. This statute creates the right to bring Federal Payment Bond claims for first and second tier subcontractors and material suppliers. But, unlike the Illinois Public Construction Bond Act, the Miller Act does not allow third and lower tier subcontractors and material suppliers to file Payment Bond claims. Design professionals such as architects and engineers, are also protected under the Act.
The Miller Act requires general contractors with contracts on federal projects in excess of $100,000.00 to obtain a Payment Bond from a surety company satisfactory to the government.
In order to prevail, you must perfect a bond claim and, like a Mechanics Lien claim, establish that you are owed money for performing your subcontract to improve the project.
How does one perfect a bond claim? If you are not hired by the general contractor, you must first provide written notice of your claim to the contractor within ninety days of your last work or delivery of materials. You will lose you claim if you fail to serve notice within the ninety days. Like Mechanics Liens, doing replacement and warranty work does not extend the notice period. Those for whom notices are required must wait ninety days from their last work to file suit under the bond. Those hired directly by the general contractor need not service notice. If notice is not required, then neither is the ninety day waiting period. In either event, suit must be filed within one year of your last work or material delivery and must usually be filed in the Federal District Court in which the work was performed.