When you bid on a government project in our nation’s capital, there are certain kinds of bonds that you will be required to provide and post. These bonds are those that fall under the District of Columbia’s Little Miller Act. Based on the Federal Miller Act, almost every state has a Little Miller Act on file, which is in place to ensure that contractors fulfill their duties and responsibilities to the government agencies with whom they contract.
Many small contracting businesses are unfamiliar with how these acts work, and yet, they are some of the most important laws in the industry. Let’s take a look at the Washington, DC, Little Miller Act, what it entails, the kinds of bonds it requires you to post, and where you can get help getting bonded.
The Miller Act
Originally called the Heard Act, and first enacted in 1894, the Miller Act was put in place to require prime contractors on certain government construction projects to post performance and payment bonds to both ensure that they fulfill their contractual responsibilities to the government, and that they pay their suppliers and subcontractors.
In order to ensure compliance at all levels, and to follow the federal lead, many states have since followed up this act with statutes of their own. These are called Little Miller Acts.
Little Miller Acts
As with the federal Miller Act, each state’s version requires the posting of performance bonds and payment bonds to cover the cost of replacement work should the contractor fail to complete their duties, and to cover the cost of materials and subcontractor services, should the prime contractor fail to pay those.
In general, payment bonds tend to be more commonly used than performance bonds. This is because as soon as services are provided, any subcontractors or vendors can file a lien against the payment bond to ensure their later payment. Performance bonds, on the other hand, only kick in if the contractor fails to complete the work.
Both kinds of bonds are loans; unlike insurance policies, you as the prime contractor are on the hook to repay them if you have to use them. Using a bond also makes it more difficult for you to get bonded in the future, and can be damaging to your reputation.
Washington, DC, Litter Miller Act
The Washington, DC, Little Miller Act is provided for under the District of Columbia Code title 2, chapter 2, sections 2-201.01 through 2-201.03, and 2-201.11. a performance bond for any contract exceeding $25,000 equal to the value of the contract, and a payment bond for at least half the value of the services provided if the contract is $1 million or less, or 40% for contracts up to $5 million. For contracts over $5 million, the payment bond must equal $2.5 million.
If you need help navigating the Washington, DC, Little Miller Act, NSSI has been helping with Washignton, DC, surety bonding services for over 20 years running. We provide fast, simple bonding services to protect you in all aspects of your contracting company. Get in touch with us to get started today!