The Miller Act is a federal law that dates back to 1935. It requires contractors to obtain performance and payment bonds before being awarded a contract to work on a public project. The bonds ensure that subcontractors and suppliers will be paid even if the contractor cannot or will not pay them. They also protect the financial interests of the government and taxpayers.
Most states, including Arizona, have what is called a Little Miller Act. The law requires any company that works on a public project for the state to have performance and payment bonds obtained by authorized surety companies. They have to meet the necessary qualifications to obtain these bonds.
What are the bonds required to cover?
The amount of the performance bond must be at least the amount contracted for the bid on the project. The payment bond is for the amount to be paid according to any contracts between the contractor and those providing labor and materials. Both bonds must also include enough to cover attorney’s fees if they have to go to court.
If they do have to take the contractor to court, they file what are known as “Little Miller claims” or bond claims. The surety company that issued the bonds reimburses the parties that have filed the claims and then seeks their money from the company that obtained the bonds. These claims are similar to mechanic’s liens for private projects.
Basically, the Little Miller Act helps guarantee that a contractor will complete their obligations on a public project, including paying those who provide materials and services to them, or they will be reimbursed for the money they’re owed. If you have questions or issues regarding Arizona’s Little Miller Act or Little Miller claims, it’s wise to seek legal guidance.