When is a performance and payment bond required for federal construction contracts?

Question

My company is looking at a federal construction project, a new office building for the Corps of Engineers. The solicitation, an Invitation for Bid, has a NAICS code of 236220, Commercial and Institutional Building Construction. It mentions performance and payment bonds. We do a lot of county and city work, and those agencies often have their own bonding rules, or sometimes let us use alternative payment protections like an irrevocable letter of credit for smaller jobs.

I want to understand the federal rules. Does the Miller Act apply to every federal construction contract? What is the threshold for when a performance and payment bond is required?

Marcus T. · Answer

The Miller Act applies to federal construction contracts, and it requires performance and payment bonds for any construction contract that exceeds a certain threshold. For construction contracts above that threshold, the Miller Act at FAR 28.102-1(a) requires performance and payment bonds. For construction contracts that are above $35,000 but below the Miller Act threshold, the contracting officer selects two or more alternative payment protections, such as a payment bond, an irrevocable letter of credit or a tripartite escrow agreement, as stated in FAR 28.102-1(b)(1).

My firm mostly does county and school work, and those agencies often have different rules. For federal work, the Federal Acquisition Regulation (FAR) governs these requirements. You will find that state and local government contracts follow state procurement codes, which vary by state and sometimes by county or city. Always check the specific solicitation for the bond requirements, and if you have questions, ask the contracting officer.

When is a performance and payment bond required for federal construction contracts?

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When is a performance and payment bond required for federal construction contracts?

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