The Miller Act was enacted by Congress to provide a payment remedy to Subcontractors and suppliers who provide subcontracting work and materials on federal projects. Under the Miller Act, a prime contractor must post a payment bond in an amount equal to the total amount payable under the prime contract, securing payment for the prime contractor’s first and second tier subcontractors and material suppliers by entitling them to make a claim against the bond in the event that the prime contractor fails to pay.
To succeed in making a claim against a posted payment bond under the act, a first or second tier subcontractor or material supplier must first file a written notice with the prime contractor within ninety (90) days of the date that the claimant last performed work or provided materials it reasonably believed would be used on the project. The notice must also contain the amount that is claimed to be due, and the name of the party with whom the subcontractor contracted and to whom the subcontractor furnished labor and materials. Of supreme importance is the method of delivery of this notice – it must be delivered to the prime contractor by a means that yields a written record of delivery by a third party. This would include service through the United States Post Office by Certified Mail with Return Receipt, use of a carrier such as Federal Express or DHL with restricted delivery confirmation, or by use of the services of a commercial process service outfit usually employed by attorneys to make service of civil process or subpoenas in many jurisdictions.
If the claimant is then not paid by the prime contractor after this notice is sent, the claimant must bring a claim in Federal District Court within one year of the date of last work or forever lose the right to bring a claim against the payment bond. In order to be successful, the claimant must then establish that it is a first or second tier subcontractor or material supplier, and that it provided labor or materials in furtherance of the federal project or with a reasonable, good faith belief that the materials furnished were to be used on the federal project. If the claimant is able to support its claim and prevail, the claimant will be entitled to payment in the amount of the contract price with extra work, or the reasonable value of the labor and materials furnished, together with interest at the rate provided for similar claims in the State in which the project is located. The Circuit Courts of Appeals have come down with differing rulings regarding whether attorneys fees may be recovered, however the Third Circuit in interpreting Pennsylvania contracting law has found that attorney’s fees are generally not recoverable in cases under the Miller Act.