Miller Act
The Miller Act (ch. 642, Sec. 1-3, 49 stat. 793,794, codified as amended in Title 40 of the United States Code) requires prime contractors on some government construction contracts to post bonds guaranteeing both the performance of their contractual duties and the payment of their subcontractors and material suppliers.
The Act was originally enacted as the Heard Act in 1893. It came to be known as the Miller Act in 1935.
Background and Purpose
The Miller Act addresses two concerns that would otherwise exist in the performance of federal government construction projects:
Performance Bonds: The contractor's abandonment or other non-performance of a government job may cause critical delays and added expense in the government procurement process. The bonding process helps weed out irresponsible contractors while the bond itself defrays the government's cost of substitute performance. The subrogration right of the bond surety against the contractor (i.e., the right to sue for indemnification) is a deterrent to non-performance.