XL EaglePayment bond
Payment bond. A payment bond protects subcontractors and suppliers who provide labor and materials on a project. Because you cannot put a mechanic's lien on federal property, the Miller Act requires payment bonds on federal construction contracts over $150,000 so unpaid subs have someone to collect from.
Strict deadlines apply. A subcontractor or supplier that worked directly for a subcontractor (not the prime) must give written notice to the prime within 90 days of the last labor or material it provided, and any lawsuit on the bond must be filed within one year.
Why it matters to a small contractor
If you sub on federal construction, ask the prime for a copy of the payment bond before you start. Track your last day of work, because missing the deadlines can wipe out your rights.
Example
A drywall sub working under a mechanical subcontractor is not paid. It sends written notice to the prime and the surety within 90 days of its last day on site, preserving its claim on the payment bond.
Payment bond: common questions
Can I file a lien on a federal building?
No. Federal property cannot be liened, which is why the payment bond is your main protection.
Who is protected by the payment bond?
Subcontractors that work directly for the prime, and their subcontractors and suppliers. Remote tiers further down the chain are generally not covered.
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