Understanding Georgia House Bill 137: the 2025 Changes to Georgia Payment Bond Requirements

Georgia’s construction industry, particularly the public works sector, is poised for a significant change with the advancement of House Bill 137 (HB 137). This legislation, which proposes to raise the threshold at which payment and performance bonds are required on public construction projects, reflects a much-needed update in response to rising construction costs and inflation. As of now, the bill is awaiting final consideration by Governor Brian Kemp.

HB 137 is more than a simple adjustment in dollar figures—it represents a legislative effort to balance fiscal responsibility with essential protections for subcontractors, laborers, and material suppliers. To fully appreciate its impact, it’s important to explore the purpose and history of Georgia’s Little Miller Act, examine the provisions of HB 137, and consider the implications for construction professionals across the state.

What Is Georgia’s Little Miller Act?

Georgia’s Little Miller Act, codified under O.C.G.A. § 13-10-1 et seq., mirrors the federal Miller Act and governs bonding requirements on public construction projects in the state. The Act is designed to protect those who supply labor and materials to public projects, since these parties cannot file mechanic’s liens against publicly owned property.

Under the current law, any public construction contract awarded by the state or a municipality with a value of $100,000 or more must include both a payment bond and a performance bond. These bonds serve different but complementary purposes:

• Payment Bonds ensure that subcontractors, suppliers, and laborers are paid for their contributions to the project, even if the general contractor fails to compensate them.
• Performance Bonds guarantee that the contractor will fulfill the obligations outlined in the construction contract.

The rationale behind this requirement is clear: it ensures the financial integrity of public projects while protecting the many small businesses and workers who depend on timely payment for their services.

Overview of House Bill 137

House Bill 137, introduced with the backing of AGC Georgia (Associated General Contractors of Georgia), proposes a major revision to the threshold for these bonding requirements. Specifically, it raises the minimum contract amount requiring payment and performance bonds from $100,000 to $250,000.

This increase acknowledges the realities of modern construction economics. Due to inflation, supply chain challenges, and rising labor costs, many small-to-medium-sized public works contracts now exceed the $100,000 mark, triggering bond requirements that may be burdensome, particularly for local governments and smaller general contractors. By raising the threshold to $250,000, HB 137 aims to reduce unnecessary bonding costs on lower-value projects while maintaining protections for larger ones.  To ready the full text of HB 137, please click here >>

Legislative History and Status of HB 137

HB 137 was introduced during the 2025 legislative session in the Georgia House of Representatives. Spearheaded by proponents of public construction reform and supported by industry groups such as AGC Georgia, the bill quickly gained traction due to its practicality and minimal fiscal impact.

The bill successfully passed both chambers of the Georgia General Assembly—first the House and then the Senate—with bipartisan support. Lawmakers cited the importance of adjusting the law to reflect current market realities and align with similar thresholds in other states.

As of now, HB 137 is on Governor Brian Kemp’s desk for review and potential signature. If signed into law, the updated threshold would take effect on July 1, 2025, or on the date specified in the enacted bill.

Why This Change Matters

The proposed change carries several important implications for Georgia’s construction sector:

1. Economic Relief for Local Governments

Smaller local and municipal projects—like library renovations or minor infrastructure improvements—often hover around the $100,000 mark. Under the current threshold, these projects are required to secure bonds, which can be costly and time-consuming. By increasing the threshold to $250,000, HB 137 aims to relieve local governments of these obligations for smaller-scale projects.

2. Risk Management for Contractors

Contractors are still responsible for meeting contractual and legal obligations regardless of bond requirements. The raised threshold does not eliminate liability but rather reallocates the risk and cost associated with bonding to more significant projects.

3. Continued Protection for Subcontractors and Suppliers

While the threshold increase may reduce the number of bonded projects, it does not strip protections from those working on larger projects. The core function of the Little Miller Act—to ensure fair payment—remains intact for contracts exceeding $250,000.

4. Legal Clarity and Simplicity

The updated threshold aligns Georgia’s laws more closely with those in other jurisdictions, helping contractors who operate in multiple states by reducing administrative complexity.

How Payment and Performance Bonds Work

To better understand the impact of this legislation, let’s briefly review the process for securing and enforcing bonds under the current law:

Bond Issuance

A general contractor awarded a public project exceeding the statutory threshold must obtain a payment and performance bond from a surety company licensed in Georgia.

Project Execution

As the project progresses, the contractor hires subcontractors and suppliers. These lower-tier participants rely on the bond as a backstop if the contractor fails to pay.

Nonpayment Claims

If subcontractors or suppliers are not paid, they may assert a claim against the bond. Under Georgia law, these claims must typically be initiated within 90 days of last furnishing labor or materials.

Lawsuit Deadline

If the claim is not resolved within a reasonable period, claimants have up to one year from their last date of work or supply to file suit on the bond.

Historical Context and Similar Reforms

The $100,000 threshold has been in place in Georgia for decades, originally adopted when that amount represented a significant investment. However, in the modern economy, $100,000 often covers only modest repairs or small capital improvements. As construction materials and labor costs have steadily increased, lawmakers in many states have revisited their bonding laws.

States like Texas, Florida, and North Carolina have recently examined or adjusted their bonding thresholds. These updates are seen not as a dilution of public protections but as necessary adjustments to reflect inflation and economic conditions.

Final Thoughts

House Bill 137 marks a thoughtful evolution of Georgia’s public works policy. By raising the bonding threshold to $250,000, it balances the need to reduce costs and administrative burdens on smaller projects with the continued protection of subcontractors and suppliers on larger ones.

Contractors, municipalities, and construction professionals should take time to understand this legislation and prepare for its potential enactment. That includes:

• Reviewing internal contract policies
• Updating risk management protocols
• Communicating with surety providers
• Consulting legal counsel on how the changes might affect upcoming bids

As HB 137 moves toward final approval, the Georgia construction community awaits the outcome with interest. We’ll continue to monitor the bill and share updates as they become available.

Need Help Navigating a Payment Bond Cliam in Georgia?
Our experienced legal team assists contractors, suppliers, and municipalities in understanding Georgia’s public construction laws, including the Little Miller Act and recent legislative developments. Contact us today for a consultation.