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🏗️ The '''Miller Act''' is a federal statute enacted in 1935 that requires contractors on U.S. government construction projects exceeding $100,000 to furnish both a [[Definition:Performance bond | performance bond]] and a [[Definition:Payment bond | payment bond]], making it one of the foundational laws governing [[Definition:Surety bond | surety bonding]] in the United States. Because the federal government cannot place [[Definition:Mechanic's lien | mechanic's liens]] on public property, these bonds serve as the primary mechanism to protect the government and the chain of [[Definition:Subcontractor | subcontractors]] and suppliers who contribute labor and materials. For [[Definition:Surety company | surety companies]] and the [[Definition:Insurance broker | brokers]] who place these bonds, the Miller Act defines the baseline demand for federal contract surety.

📜 Under the Act, the performance bond guarantees that the contractor will complete the project according to the contract's terms, while the payment bond ensures that laborers, subcontractors, and material suppliers receive what they are owed. If the contractor defaults, the [[Definition:Surety company | surety]] must either arrange for project completion or compensate the government — an obligation that can involve substantial [[Definition:Claim | claim]] payouts and complex project takeover logistics. Claimants on the payment bond must typically file suit within one year of their last day of work or delivery, and second-tier claimants (those without a direct contract with the prime contractor) must provide written notice within 90 days. [[Definition:Underwriter | Underwriters]] assess the contractor's financial strength, work history, and bonding capacity before issuing these bonds, effectively performing a credit-underwriting function that differentiates surety from traditional [[Definition:Insurance product | insurance products]].

⚖️ The Act's influence extends well beyond the federal sphere. Nearly every state has enacted a "Little Miller Act" imposing analogous bonding requirements on state and local public construction projects, vastly expanding the market for [[Definition:Contract surety bond | contract surety bonds]]. For surety carriers, this legislative framework creates a steady, regulation-driven demand floor that insulates the line of business from some of the cyclical swings affecting other [[Definition:Property and casualty insurance | property and casualty]] segments. At the same time, shifts in federal infrastructure spending — such as those triggered by major appropriations bills — directly influence bond volume and [[Definition:Premium | premium]] growth, tying surety underwriting fortunes closely to public policy decisions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Surety bond]]
* [[Definition:Performance bond]]
* [[Definition:Payment bond]]
* [[Definition:Contract surety bond]]
* [[Definition:Little Miller Act]]
* [[Definition:Bid bond]]
{{Div col end}}

Definition:Miller Act - Revision history

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