XL EaglePerformance bond (Little Miller Acts) (State performance and payment bonds)
Performance bond (Little Miller Acts) stands for State performance and payment bonds. A performance bond is a surety guarantee that the contractor will complete the work according to the contract. A payment bond, usually required alongside it, guarantees that subcontractors and suppliers get paid. Federal construction uses the Miller Act; states have their own versions, nicknamed Little Miller Acts.
Each state sets its own dollar threshold and rules for when these bonds are required on state and local public works. Because a private lien usually cannot be placed on public property, the payment bond is how subs and suppliers protect themselves on government jobs.
Why it matters to a small contractor
If you are a sub or supplier on a public job, the payment bond is your safety net. Ask the prime for a copy of the bond, and learn your state's notice deadlines for making a claim, because missing a deadline can cost you the right to be paid from it.
Example
An electrical sub on a county library renovation is not paid for its final month. Because the general contractor posted a payment bond under the state's Little Miller Act, the sub files a timely claim with the surety and recovers what it is owed.
Performance bond (Little Miller Acts): common questions
What is a Little Miller Act?
It is a state law modeled on the federal Miller Act. It requires bonds on public construction contracts above a threshold the state sets.
Who pays for the performance bond?
The contractor buys it from a surety, and the premium is a cost the contractor builds into the bid. The premium rate depends on the contractor's finances and history.
Can a sub file a lien on a public building?
Generally no. That is why states require payment bonds, so subs have a claim against the bond instead.
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