When it comes to getting paid in the construction industry, we have some good news and some bad news.
Let’s take the bad news first: unfortunately, not only is getting paid in construction extremely complicated and confusing, it also takes longer to get paid in construction than in any other industry. That’s the bad news…
But the good news is that there are powerful rights that are almost universally available in all 50 states to help construction industry participants get paid the money they’ve earned on their projects.
Generally speaking, when the construction project in question is private (which can be residential, commercial, or industrial projects), these rights are called mechanics lien rights. Bond claim rights are for participants on public construction projects (which are typically state, county, or municipal projects). And last but not least, Miller Act claims are for those working on federal construction projects.
A Trick Question
So, the title of this article is actually a trick question since lien rights don’t exist on federal projects at all. As we stated above, the remedy for payment issues on a federal construction project is a Miller Act claim.
Please read on for a further explanation of how to leverage a Miller Act claim to solve a non-payment issue when working on a federal project.
Federal Projects – Where the Miller Act Applies
Simply stating that “the remedy for payment issues on a federal construction project is a Miller Act claim” is the easy part, however. The more more difficult part of this is trying to answer these two questions:
1. When is a construction project considered a “federal project?”
2. Are there any exceptions?
Here’s the thing: federal funding is used for a lot of construction projects across the country, but using federal money to fund a construction project does not necessarily make it federal.
For example, federal funds are provided to interstate road construction projects in all 50 states, and this type of project is always considered a state project. Another example is all the FEMA money granted to the New Orleans area after Hurricane Katrina as well as the FEMA money that is surely to flow to Texas, California, Florida, and the other areas that were hit by natural disasters in 2017. Although the FEMA money is federal, the construction projects that it will be used to fund will be primarily state and private.
Further Reading – 2 Essential Articles
If It’s Not the Money, then What Is It?
So if it’s not federal money that deems a project federal, what is it? The answer is pretty simple – when work or materials are furnished to federally owned buildings or federally owned land, the project is considered to be federal.
This would include military bases, U.S. courthouses, the US Capital Building, the Smithsonian, Army Corps of Engineers projects on levees, etc.
Miller Act Exceptions
Now that you know what a federal project is let’s move to a wrinkle: the Miller Act contains some exceptions. Therefore, even when a federal construction project is involved there may be an exception that takes it outside the Miller Act rules. The most robust explanation of this is found in the “Waivers for Certain Contracts” section of the Miller Act which generally provides exceptions for:
- Contracts to repair vessels, aircraft, munitions
- Materials or supplies to the Army, Navy, Air Force, or Coast Guard when there is a cost-type contract
How the Miller Act Works
The Miller Act mandates that whenever the entire project’s price is larger than $100,000, the general contractor is required to acquire a payment bond. That payment bond acts as a “pile of money” that protects all of the subs and suppliers on the project.
What happens is, if the subs or suppliers are unpaid for materials or labor furnished they are entitled to file a claim against the GC-furnished payment bond. The claim against the bond must be initiated pursuant to the Miller Act, and is referred to as a Miller Act Claim.
Filing a Miller Act Claim
It’s fairly easy to file a Miller Act claim. zlien has Miller Act claim forms available for free – follow the link to download your own copies free of charge.
Or if you’d rather, you can also file a Miller Act claim using zlien‘s Document Navigator, our web-based, pay-as-you-go construction document service.
For more information about your claims and rights under the Miller Act, check out zlien’s Miller Act Frequently Asked Questions.