Published 2026 | TIKC NewsWire
If you do federal construction work above a certain size, you run into the Miller Act. It requires the prime contractor to post two bonds: a performance bond that guarantees the work, and a payment bond that guarantees your subcontractors and suppliers get paid. For a small construction firm, these bonds are not just paperwork to get past at award. They shape your cash, your relationships with subs, and your exposure if payments down the chain go wrong. Treat the payment bond as a formality and you can end up with bond claims, sureties on your back, and a reputation that scares off good subs.
What the Miller Act requires
On covered federal construction contracts, the prime must furnish a payment bond to protect those who supply labor and materials. If a sub or supplier does not get paid, they can make a claim against that bond rather than being left empty-handed. The government requires this because, unlike on private projects, a sub cannot put a lien on federal property. The bond is their protection. So your payment bond is a promise, backed by a surety, that the money will reach the people who did the work.
Where contractors get into trouble
The trouble usually starts with cash. You are waiting on the government, money is tight, so you stretch your subs. But on a bonded federal job, an unpaid sub has a direct route through a bond claim, and a pattern of that damages you with your surety and your crews. It connects to the same discipline behind progress payments, because money the government advances for the work is supposed to flow down. Worse, if you certify that your subs have been paid in order to draw funds when they have not, that certification becomes a false statement.
The bond runs down the chain too
Your payment obligations do not stop at your first-tier subs. The Miller Act’s protection reaches certain lower-tier suppliers and subs as well, which means a payment failure deep in your chain can still surface as a claim on your bond. This is part of why your flow-down responsibilities matter so much on construction. Knowing who is owed what, all the way down, is not just good management. It is how you avoid being blindsided by a bond claim from someone you did not even contract with directly.
What to do now
- Know your bond duties. Understand that on covered federal construction you must bond payment to subs and suppliers.
- Pay your subs on time. Treat timely payment down the chain as a core obligation, not a cash-flow option.
- Never falsely certify payment. Do not certify subs are paid to draw funds when they are not.
- Track lower tiers. Know who is owed money down the chain, since the bond can reach them.
- Protect your surety relationship. A clean payment record keeps your bonding capacity and your reputation strong.
On federal construction, your payment bond is a promise that the people who build the job get paid. Honor it, pay down the chain on time, and never certify a payment you have not made, and the bond stays a tool that wins you work instead of a trap that follows you. Your subs talk, and so do sureties. Brick by brick.
FAQ
What is the Miller Act?
A law requiring the prime on covered federal construction contracts to post a performance bond and a payment bond. The payment bond guarantees that subcontractors and suppliers get paid.
Why a payment bond instead of a lien?
Subs and suppliers cannot place a lien on federal property, so the payment bond is their protection if they are not paid.
How does this become a fraud issue?
If you certify that your subs have been paid in order to draw funds when they have not, that certification is a false statement, on top of any bond claim.
Does the bond reach lower-tier subs?
It can reach certain lower-tier suppliers and subcontractors, so a payment failure deep in your chain can still become a claim on your bond.
Sources
Miller Act, 40 U.S.C. 3131 through 3134. (2026).
Federal Acquisition Regulation. (2026). Part 28, Bonds and Insurance.
This article is general information, not legal advice.
About the Author
Melanie Patterson
Founder and CEO of Team Integrity Knowledge Center and creator of GovCon iSource. Former nurse turned entrepreneur with over 10 years guiding small, women-owned, and minority-owned businesses to over $10 million in government awards. Build, grow, scale, brick by brick. Contact
