The Miller Act and Performance Bonds

The Miller Act, 40 U.S.C. §§ 3131–3134, provides that, before any contract for the construction, alteration, or repair of any public building or public work of the United States of more than $150,000 (increased fris awarded to any person, that person (usually the general contractor) must furnish:

(1) A performance bond in an amount the contracting officer considers adequate for the protection of the United States;

The United States and federally created bodies such as GSA are the beneficiaries of the performance bond piece. If an awarded prime contractor defaults in the performance of its work or is terminated for cause, the United States may turn to the surety to step in and take over the general contractor’s obligations under the prime contract. Bond language allows the surety to bring another qualified entity to finish the work, at the surety’s expense on behalf of citizens.

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