Surety bonding is a fact of life for construction and contracting businesses. It’s a vital form of security that protects your reputation as a contractor, and protects your clients in case of unforeseen circumstances that prevent you from completing the agreed upon work. There are a wide variety of different kinds of surety bonds, and knowing which you need to carry can be tricky if you’re a new company or small business.
There are laws in place that regulate exactly which bonds a contractor is required to hold to work on government jobs. These laws are outlined in the Miller Act. At the state level, so-called Little Miller Acts carry the same function. Learn about the Maryland Little Miller Act, what it requires, what it means for you as a contractor, and where you can go to get the surety bonds you need for the job.
Federal Miller Act
The Federal Miller Act was first enacted in 1894 and was called the Heard Act. Unfortunately, the original act was so hampered by bureaucracy, red tape and limitations that it failed to provide the essential protections it was designed to provide. Over the years, it was revised and eventually became the 1935 Miller Act.
This act addresses two important concerns in the exercise of construction projects for the federal government. The first is performance bonds, which guarantee that a contractor will neither abandon, nor otherwise fail to complete a contracted job. The second is payment bonding, which guarantees that any material suppliers and subcontractors that contribute to the job.
Little Miller Acts
Little Miller Acts provide similar protections to the Miller Act, but at the state level. Each state has its own version of a Little Miller Act. While each is different, the majority of them provide the same sort of regulation, requiring both performance and payment bonds to ensure that a contractor working on a state job fulfills their duties.
The things that generally differentiate a Federal from a Little Miller Act is the level of contract—not just that it’s a state job, but the value of the contract.
Maryland Little Miller Act
Like most states, Maryland does have its own version of the Miller Act. The Maryland Little Miller Act requires any contractor bidding on a state project to carry specific surety bonds for the protection of the client. Specifically, any job on which a contractor bids that has a value of over $100,000 is required to carry a performance bond equal to the value of the job, and a payment bond equal to half the contract amount.
Getting the Bonds You Need
Surety bonds don’t just protect your client; they protect your reputation. When you don’t use a bond, your reputation as a bonded company grows, and you’ll have an easier time getting bonds for future projects. If you’re in Maryland and you need payment or performance bonding to comply with the Maryland Little Miller Act, NSSI can help. Get in touch with us to start the process today!