Required on every federal construction contract exceeding $150,000. Both performance and payment bonds, each at 100% of the contract amount. Premium typically 0.5%–3% combined. SBA-backed programs for emerging contractors.
The Miller Act, enacted in 1935 and codified at 40 U.S.C. §§3131–3134, is the federal statute that protects the government and its subcontractors on federal construction projects. It requires the prime contractor on any federal construction contract over $150,000 to post two bonds before starting work.
The performance bond protects the federal government. If the contractor defaults, the surety either hires a completion contractor, funds the contractor's completion, or pays the government damages up to the bond penalty — 100% of the contract.
The payment bond protects subcontractors, suppliers, and laborers. Because federal property cannot be liened by subs, the payment bond is their only legal recourse for unpaid work. First-tier subs can sue on the bond directly; second-tier subs and suppliers must send written notice to the GC within 90 days of last furnishing labor or materials.
Miller Act bonds are the federal counterpart to Texas's Little Miller Act (Gov Code §2253). Every state has adopted a similar "Little Miller Act" structure for state and local construction.
Like any contract surety, Miller Act bonds are hand-underwritten. Sureties assess the three Cs — capital, capacity, and character — then set a combined rate covering both the performance and payment bond.
| Contractor tier | Combined rate | $1M contract cost |
|---|---|---|
| Preferred 3+ yrs, strong balance sheet | 0.5–1.0% | $5,000–$10,000 |
| Standard Middle-market contractors | 1.0–2.0% | $10,000–$20,000 |
| SBA-backed Emerging / small contractors | 2.0–3.0% | $20,000–$30,000 |
| Sub-standard Credit or financial issues | 3.0–5.0% | $30,000–$50,000 |
Rates cover both performance and payment together. SBA-backed bonds add a small SBA fee but unlock capacity for newer contractors.
Reviewed or audited business financial statements (required over $500K), work-in-progress schedule, bank reference, personal financial statements from owners, and signed general indemnity agreement.
Surety reviews the three Cs, sets single-job and aggregate capacity, assigns a rate. First submission takes 1–3 weeks. Standard sureties or SBA-backed program depending on the contractor profile.
Federal solicitations typically require a bid bond at 20% of bid amount or $3,000,000 (whichever is less) on SF-24. Bid bonds issue same-day once your program is set.
Within days of award, the performance bond (SF-25) and payment bond (SF-25A) are executed, each at 100% of the contract amount. Bonds are filed with the contracting officer before work starts.
Performance bond runs through final acceptance. Payment bond remains exposed through the statutory claim window — 1 year from last furnishing of labor or materials.
40 U.S.C. §§3131–3134 — the Miller Act. §3131 sets the bond requirement; §3132 covers waiver for cost-type contracts; §3133 covers payment-bond rights and suit procedures.
$150,000. Applies to construction, alteration, or repair of federal buildings or public works. The threshold is fixed and does not adjust for inflation.
Performance: 100% of contract. Payment: 100% of contract (contracting officer may set lower payment amount under FAR 28.102-2(b)(1), but 100% is the default and usual).
SF-25 (Performance Bond), SF-25A (Payment Bond), SF-24 (Bid Bond), SF-1414 (Consent of Surety). Agencies may use agency-specific forms (VA, DOD, USPS) but the standard forms cover most contracts.
Second-tier subs and suppliers must send written notice to the prime contractor by certified mail within 90 days after last furnishing labor or materials. First-tier claimants (direct contract with GC) do not need the 90-day notice.
Suit must be filed in the U.S. District Court for the district where the contract was performed — not before 90 days after last work and not later than 1 year after last work.
Treasury-listed sureties with real federal-construction appetite — the markets that actually write Miller Act business, not just "would consider it."
SBA-backed programs for emerging contractors on federal projects up to $14 million. We handle the SBA paperwork alongside the standard application.
Same-day bid bonds on SF-24, performance + payment bonds issued within days of award on SF-25 / SF-25A.
The Miller Act (40 U.S.C. §§3131–3134) is the federal law that requires contractors on federal construction contracts over $150,000 to post both a performance bond and a payment bond, each in the full amount of the contract. It is the federal counterpart to Texas's Little Miller Act (Gov Code §2253). Named after Rep. John Miller, it has governed federal construction bonding since 1935.
Any federal construction contract for the construction, alteration, or repair of a federal building or public work exceeding $150,000. This includes military bases, federal courthouses, VA hospitals, USPS facilities, national-park construction, and any federally owned building project. The threshold was last adjusted and is fixed at $150,000 — it does not adjust for inflation.
Performance bond: 100% of the contract amount. Payment bond: 100% of the contract amount (the contracting officer may set a lower payment bond amount in some cases, but 100% is the default and most common). Both bonds are required together on every qualifying contract.
Premium runs 0.5%–3% of the contract amount for qualified contractors, bundled for both performance and payment. Preferred contractors with strong financials pay at the low end. Emerging or credit-challenged contractors pay 3%–5%. SBA's Surety Bond Guarantee program backs bonds for small contractors who would not otherwise qualify for standard surety credit.
First-tier subs and suppliers who contracted directly with the GC may sue on the bond. Second-tier subs and suppliers must send a written notice to the GC within 90 days of last furnishing labor or materials, by certified mail. Suit must be filed in the U.S. District Court for the district where the contract was performed, and no sooner than 90 days after last work and no later than 1 year after last work.
Miller Act: federal contracts, $150,000 threshold for both bonds, 40 USC §3131. Texas Little Miller Act: state/local contracts in Texas, $100,000 threshold for performance and $25,000 threshold for payment, Gov Code §2253. Claim notice deadlines differ: Miller Act uses 90 days from last work; Texas uses the 15th day of the third month after the month of work. Both require 100% bond amounts.
Yes — SBA's Surety Bond Guarantee program backs up to 90% of the bond amount for small contractors on projects up to $9 million (and up to $14 million on federal contracts). This lets emerging contractors access Miller Act bonding even without the capital or credit standard sureties require. We place SBA-backed programs alongside standard sureties.
Treasury-listed markets, SBA-backed programs, SF-25 / SF-25A — one Houston agent, nationwide issuance.
