Congress enacted the Miller Act to provide protection to contractors furnishing labor and material on federal projects. Many states, including Nebraska and Iowa, have enacted “Little Miller Acts,” which provide that same protection on state and county public projects. These laws require general contractors on certain government jobs to carry a performance bond to protect the government against delays and incomplete work. Those covered are also required to carry payment bonds to protect material suppliers and subcontractors.
Ultimately, these acts help create competition, keep costs down, and ensure payment on projects. Here’s important information for Nebraska and Iowa:
Nebraska Little Miller Act:
In Nebraska, general contractors are required to carry a payment bond with a minimum value of the contract price. Payment bonds are not required for any state project which is $15,000 or less or local project which is $10,000 or less. These bonds must be filed, approved, and kept by the government entity awarding the contract.
Subcontractors furnishing labor or materials do not need to provide notice of their claims but must wait at least 90 days after the last payment was due before filing suit. A lawsuit must be filed within 1 year of the public entity finally settling the contract. Keep in mind that final settlement does not mean final payment.
If a subcontractor has contracted with another subcontractor, the sub-subcontractor must provide notice of his/her intention to file a claim on the bond with the general contractor within 4 months of performing work or providing materials to the project. This notice must be sent by registered or certified mail, or personally served on the general contractor. Although not required, it’s a good idea to provide this notice to the bonding company too.
Iowa Little Miller Act:
In Iowa, payment bonds are required when the contract price is $25,000 or more. The amount of the bond is fixed and approved by the government entity in an amount not less than 75% of the contract price. For contracts in which no part of the contract price is paid until after completion of the project, the bond amount must not be less than 25% of the contract price.
Subcontractors furnishing labor or materials may file an itemized and sworn written statement of the claim with the government entity contracting the public work. These claims may be filed any time before 30 days following the completion and acceptance of a public projection. The Iowa Little Miller Act allows a court to permit belated claims if such claim does not materially delay the litigation. However, it is best practice to timely file the claim.
Similar to Nebraska, in Iowa the statute of limitations for bringing an action on a bond is 1 year from the time the work is accepted. A subcontractor may bring an action to enforce the bond after 30 days of the expiration of the project, but not more than 60 days following completion and final acceptance of project.
While the Little Miller Acts may protect subcontractors furnishing labor or materials on public projects, it is crucial for subcontractors to understand the requirements for asserting a bond claim. Failure to comply with deadlines may result in a complete bar to recovery. If you have questions or need help getting paid on a public project, we recommend you contact an experienced construction attorney.
Thanks to Callie Kanthack for writing this article.