Surety bonding is an important aspect of all contracting and construction businesses. Whether you’re a new startup company, or you’re a well-established large firm, you need to be bonded to grant peace of mind to those with whom you contract. Bonding allows you to reassure your clients that you’re going to perform the job you promised, and it gives assurance to your subcontractors and the providers of goods and services that you’ll pay what’s owed.

No business wants to use the bonds they secure—using a bond means something unforeseen has happened to interfere with your business. Still, the law requires that you hold such bonds. At the Federal level, the Miller Act specifies what bonds you need to carry, and Little Miller Acts do the same at the state level. Learn about the Michigan Little Miller Act, the bonds it requires you to carry, the levels of contract for which they’re required, and where to get bonded.

The Miller Act Statute

The requirement for companies to carry surety bonds has existed in some form since as far back as the late 19th century. The Heard Act of 1894 was the first attempt to establish performance and payment bonds that allowed for a degree of protection against a company’s failure to complete its duties. Unfortunately, this statute was fraught with issues and difficult to enforce.

The Heard Act was replaced in 1935 by the Miller Act, which is still in force today. It requires that all government contracts of over $150,000, a contractor must carry two types of bonds:

  •         Performance bonds cover the abandonment or nonperformance on government contracted jobs which cause delays and expense.
  •         Payment bonds cover material suppliers, vendors and subcontractors who need a guarantee of payment for services rendered, regardless of unforeseen circumstances.

What Is a Little Miller Act?

A Little Miller Act is the same as the Federal Miller Act at its core, but it applies to state-level contracts as opposed to federal contracts. Each state has its own version of the Miller Act in place, which sets not only the types of bonds (payment and performance) that a company must carry, but the level of contracts (their value) under which such bonds are required.

Since each state has its own version of the act, it’s important for any contractor working in a given state be well-versed in the bonds they have to carry on any specific job. Michigan is no different in this regard.

The Michigan Little Miller Act

The Michigan Little Miller Act requires that any contract which exceeds $50,000 in value cannot be awarded until the principal contractor establishes and posts performance and payment bonds to cover potential emergencies that delay or halt the job. Performance bonds will be no less than 25% of the contract value, as will payment bonds, with the exact value set by the government unit awarding the contract.

Secure Your Bonding Today

If you’re in need of Michigan bonding services to remain in compliance with the Michigan Little Miller Act, NSSI is here to help. Get in touch with us to learn how we can get you the surety bonding services you need today.