The Miller Act and Little Miller Act are two of the most important Acts to know when it comes to contract jobs for state-level and government construction. While many contractors are somewhat familiar with them, not all contractors understand their full ramifications. Knowing about the surety bonds you’ll be responsible for can help you succeed at a government contract. Learn more about the Little Miller Act in Delaware in this overview provided by NSSI.
What Does the Little Miller Act Do?
Although the Miller Act and the Little Miller Act might seem the same, they are not.
The Little Miller Act of Delaware refers to filing a lien claim when sureties on a state construction project have not been met. The client files the lean pursuant to the Little Miller Act of Delaware.
In some liens, a claim is filed against state property. However, under the Little Miller Act, the client files the claim against one of the specific posted bonds. This bond is where the Miller Act comes into play because it sets a legal requirement that all state project contractors must post surety bonds. if the contractor fails to deliver on the work specified in the surety bond, or if the client finds the work to be unsatisfactory, the project’s client may then authorize a lean against the posted surety bond.
What Are Surety Bonds, and Why Do You Need Them?
There are two main types of surety bonds: payment bonds and performance bonds. All public works projects require both payment and performance bonds in most cases.
A payment bond guarantees that any material suppliers, contract employees and subcontractors working on the construction will still receive payment for their materials and labor, even if you are unable or unwilling to finish the work. The Little Miller Act ensures via payment bonds that workers with no direct contract with the original contractor have an alternative source of payment for their work.
Performance bonds make certain that the contractor completes all required project performance. For whatever reason, if a contractor does not follow the performance bond’s terms, state projects may undergo delays of weeks or months. The result is that the state has to pay new contractors, which can significantly impact the original cost of the project.
Do not assume that a performance bond only protects the client, however. It also protects the contractor. If the state makes last-minute budget changes or asks for additional work, contractors can cite the surety bond as proof of this. The state government cannot wrongfully accuse the contractor of defaulting on the job, or unsatisfactory work, if this work was not included in the original bond.
The Little Miller Act Claim Provision
Should a material supplier or subcontractor not get paid under the payment bond terms, or if other terms did not meet expectations, the claimant must make a claim against the bond within a specific time frame. This claim occurs when a lien against the project.
Typically this claim is when the lien against the project has processed. This provision is designed so that the original contractor has time to try and reach a solution.
Contractors must know the provisions of The Miller Act and Little Miller Act to successfully bid on, protect and complete their work on state-level projects. This allows contractors to make bids with confidence, clients to have assurances and workers to have payment protection. Understanding the Act is a major step in bid proposals and acceptances. NSSI can help.