Reform of Miller Act passes House and Senate

July 1, 2000
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WASHINGTON — The Construction Industry Payment Protection Act of 1999 was passed by the U.S. House of Representatives and the Senate. This is a victory for hvacr contractors who work on federal projects, said John Saucier, chairman of the ACCA Government Relations Task Team.

The vote in Congress is the result of an agreement reached among subcontractors, general contractors, and surety companies to reform the 65-year-old Prompt Payment Act, known as the Miller Act.

The legislation provides full payment protection for all segments of the construction industry by stipulating that the payment bond must equal the contract price.

The current law caps the collective payment bond for subcontractors and suppliers on a federal project at $2.5 million.

“Although it may have been a reasonable figure in 1935, it is totally unrealistic today,” Saucier said.

The proposed reform also prohibits waiving payment bond protection prior to the subcontract being awarded. This is a common practice.

Finally, in addition to the traditional method of using certified mail, the bill allows for the use of new communication channels for subcontractors to serve notice on general contractors that they are initiating an action under the Miller Act.

Saucier, president of Temperature Inc., a commercial contractor located in Memphis, Tenn., said the reforms “will go a long way in ensuring that subcontractors and suppliers get paid for all their work on federal and federally funded construction projects. It will also serve as a model for the states, many of which have ‘Little Miller Acts’ for state construction projects.”

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