It’s vital as a small- to medium-sized contractor for you to understand not just how surety bonding works, but the importance of it and how it plays into the legal aspects of your business. For example, when you begin to bid on government jobs to grow your company, there are laws in place that require you to post certain specific bonds at certain values before you can take the job. These laws, at the Federal level, are under the Miller Act.
Laws exist at the State level to regulate the same things, known as Little Miller Acts. Every state has its own with its own requirements. Let’s look at the requirements under the Wisconsin Little Miller Act, what bonds you’ll need to carry and where to go to make sure your company is in compliance.
Understanding How the Miller Act Works
The Miller Act is a federal statute which at its most basic level requires you, as a contractor, to carry two specific types of bonds in order to bid on a government job. If the job you’re bidding is valued at over $100,000, or in some cases $150,000, you’ll have to post payment bonds and performance bonds in the amount of the job in order to take it on.
Since this statute only covers Federal jobs, states needed their own protections in place. This is where Little Miller Acts come into play. A Little Miller Act is based off the Federal Act but carries its own minimum contract value and bond levels. For the most part, it also requires payment bonds and performance bonds.
Payment Bonds are in place to protect the interests of the people you bring on board to expand your services for the job. That means additional staff and laborers you bring in temporarily as subcontractors, people who provide equipment and machinery, plus vendors and providers of materials.
A payment bond ensures that these entities will get paid. If you fail to complete the job, they can attach a lien to the bond, called a bond claim, and get the money that they’re owed. You’ll then have to pay the bond agency back.
In the same way, a performance bond protects the contracting body. In the case of the Miller Act, this is the Federal Government, and in a Little Miller Act, it’s the state. If you don’t complete the job, the contracting body can file a claim against the bond to recover their losses.
Wisconsin Little Miller Act
When you perform a contract job for the state of Wisconsin, the state statutes Chapter 779.1 outline the Wisconsin Little Miller Act under which you’re obligated to hold payment and performance bonds. Payment bonds are required for all jobs over $10,000, while payment and performance bonds are required for jobs over $30,000 in value.
Learn More with NSSI
These acts can be complicated and you need an expert company with experience getting you in compliance. Call NSSI today to learn how the Wisconsin Little Miller Act works, and get your company in compliance today!