Image courtesy of Flickr (Licensed) by © Nick Carter
Image courtesy of Flickr (Licensed) by © Nick Carter

When a construction project goes sideways, a subcontractor’s ability to place a lien or perfect a bond claim is often the difference between making a profit (or breaking even) and taking a loss. And, as any contractor that does a substantial amount of government contracting work knows, bonds are the only game in town for most local, state and federal government work.

On federal projects, the statutory requirement for the provision of Miller Act payment bonds provides a measure of confidence for subcontractors that there will be payment at the end of the job, even if the prime defaults or breaches its agreement. To perfect a Miller Act claim, a first tier subcontractor need only bring suit on the bond within one year of completing itswork. A second tier subcontractor need only give notice to the prime contractor within 90 days of completing its work. Compared to a Texas public bond (which includes third month notice, sworn statement of account, and copies of contract requirements), perfecting a Miller Act bond claim is as simple as it gets.
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Image courtesy of Flickr (Licensed) by © Mike Licht, NotionsCapital.com
Image courtesy of Flickr (Licensed) by © mark6mauno.

That Public Works Project you are bidding may not be bonded after all.  Under Texas Law, state and local projects with a price tag of $25,000 or more are required to be bonded.  Apparently, at least one Texas municipality has decided to save money and eliminate the bonding requirement from one of its projects.  This is a clear violation of law that places huge risks on the backs of subcontractors in the event their prime contractors experience a financial collapse.

According to an August 30, 2014 article in the Kilgore News Herald,
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