A newly introduced House bill would update an outmoded law and provide additional benefits for subcontractors working on federal projects.

The “Construction Subcontractors Payment Protections Enhancement Act of 1998,” or H.R. 3032, is expected to have hearing later this year, according to Colette Nelson, executive vice president of the American Subcontractors Association.

Introduced by Rep. Carolyn Maloney (D-NY) in November, H.R. 3032 will update the Miller Act, which has not had its ceiling for bonded work raised since 1935.

The Miller Act requires the federal government to have prime contractors provide a payment bond to protect all persons supplying labor and material, and a performance bond to guarantee completion of the project. The performance bond protects the government and is generally equal to the cost of the project. However, the payment bond is only required to be in the amount of $2.5 million if the project exceeds $5 million.

Protections from the Miller Act have been eroded by changes in construction practices and by the courts. On federal projects that exceed $5 million, subcontractors are not provided real protections from the $2.5 million payment bond. The cost of federal projects can soar to more than $100 million.

“At present, there are 34 states where the payment bond protections for subcontractors are better than what the Miller Act currently provides for contractors,” said ASA Government Relations Committee Chairman Bob Lee. “We just want sufficient protection for subcontractors who do federal construction.”

H.R. 3032 will make the Miller Act:

• Require the payment bond to equal the performance bond.
• Extend the liability to the government if its agent fails to assure that a proper bond is in place.
• Prohibit the waiver of rights under a payment bond.
• Allow a claimant to provide notice at any time prior to 90 days after furnishing labor or materials.
• Allow the filing of a suit upon the denial of a claim.
• Extend the protections to lower tiers.

“The bill is in its embryonic stages,” Nelson said. “We’re working on generating grassroots support.”

In a statement released in early November, Maloney said that “modernizing the Miller Act is the only way that contractors and suppliers will be protected in the manner which Congress intended.”

Lee said the only way to protect subcontractors and suppliers on federal jobs is by modernizing the Miller Bill.

“This bill will directly impact subcontractors, even if you are not doing federal work,” said Nelson.

“What the federal government does is mirrored by states and in private work. This will have an effect.”

Nelson expects the bill to go through variations this year before being reintroduced as a new bill in 1999.

The bill is supported by the PHCC-National Association.