Public Works Projects are governed by different statutes than private construction projects; generally, public works projects are governed by some version of The Miller Act. Officially, The Miller Act is a Federal statute and applies only to Federal Projects such as military bases, Federal buildings, etc. Most states, have adopted a similar statutes to govern their own state’s public works projects, and these are generally referred to as “Little Miller Acts.” Although Little Miller Acts often mirror their Federal counterpart, they also differ. Thus, for contractors, subcontractors and material suppliers working on public works projects, it is vital to know which law(s) apply and how the law(s) impact the rights and remedies available to the project’s participants. Furthermore, there are payment bonds on private construction projects which are altogether different which add to the confusion as to the type of payment bond and the applicable law.
The Georgia legislature adopted a version of the Federal Miller Act to cover public works projects in Georgia, and this Georgia statute is commonly referred to as Georgia’s Little Miller Act. Construction professionals, including contractors, specialty subcontractors and material suppliers working on Georgia public works projects are obligated to comply with all of the requirements of the Little Miller Act. Although it is similar to its Federal counterpart, the Georgia Miller Act has some distinct differences which can impact your business, your bids, and your payment bond claims.
Although the various Millers Acts cover a lot of territory, two of the most typically questions we receive revolve around the Payment Bonds and the Performance Bonds required on almost all public works projects. Also, it is very important to note that Georgia actually has two different statutes to govern two different types of public works. The first Georgia statute, O.C.G.A. § 13-10-1 et seq., governs contractor for projects owned by the State of Georgia (e.g., state prisons, universities, etc.); the second Georgia statute, O.C.G.A. § 36-91-1 et seq., governs projects owned by municipalities and counties within the Georgia of Georgia (e.g., school buildings, waste-water treatment facilities, etc.)
Construction bonding has its own vocabulary, and those involved in the bonding process are the obligee, the principal, the surety and the bond claimant. The project owner (e.g., the State of Georgia or the City of Atlanta) is typically called the“Obligee”; the purchaser of the payment bond (which is often the general contractor and, frequently, also the subcontractor) is called the “Principal”; the insurance company or underwriter of the payment bond is referred to as the “Surety”e underwriter (which is usually an insurance company); and those making a claim against a bond (e.g., an unpaid subcontractor or an owner with an incomplete project) is known as the “Claimant“.
Georgia Little Miller Act Performance Bonds:
Since public tax monies are used to fund public works projects, the governmental authority in charge of the project has an obligation to make sure that the tax dollars are spent wisely; consequently, most governmental projects in Georgia require that the general contractor working on the project obtain a Performance Bond. The Performance, in essence, is a guarantee that the project will be completed; if the prime contractor is unable to fully perform under the construction contract, the surety can step-in and complete the project. (Of course, the surety usually has collateral, indemnifications, and personal guarantees from principal. All public works construction contracts greater than $100,000.00 are required to have a Performance Bond, and the bond shall be in an amount equal to or greater than the total amount of the construction contract; furthermore, the bond shall be increased as the contract amount is increased.
Performance Bond claims significantly impact every aspect of the public works project. Claims may include critical path delays, construction defects, construction delays, lower-tier payment issues, payment bond claims, mitigation of damages, and liquidated damages. In addition, the claim might affect the principal’s bonding capacity, credit worthiness, and business. Thus, in the event of a Performance Bond claim under Gerogia’s law, claimants, principals, sureties, and obligees need to have experienced construction lawyers guide them through the process.
Georgia Little Miller Act Payment Bonds:
Many subcontractors and suppliers use the advantages of the Mechanics and Materialmen’s Lien Statutes to solve their payment issues. In these cases, the project is liened by the lien claimant, and the real estate where the project occurred serves as a type of collateral for the debt owed to the contractor, subcontractor or material supplier. Ultimately, the lien can be enforced by foreclosing upon the project, and the real estate is sold to satisfy the debt to the lien claimant. It is rather obvious that foreclosure is not–nor should it be–an option on public works projects. It goes against public policy, for example, to allow a lien claimant to foreclose upon a school building. Thus, in order to address this, Georgia Little Miller Act requires that most projects be covered by a payment bond to, effectively, guarantee payment to subcontractors and suppliers on the public project. In fact, all public works construction contracts greater than $100,000.00 are required by the Little Miller Act to include a Payment Bond for the protection of subcontractors, sub-subcontractors and suppliers. The payment bond must be in the amount of at least the total amount of the contract, and it shall be increased if requested by the governmental entity as the contract amount is increased
The vocabulary for claims under Georgia’s Little Miller Act Payment Bonds, is identical to that used in Performance Bonds; however, the claimant is usually an unpaid subcontractor or surety seeking its payment from the surety. There are deadlines for payment bond claimants which vary, but a typical deadline for initiating the claim is 90 days from the last day that a claimant worked on the project or 60 days from the date of a valid, Georgia lien waiver whichever is shorter.
Georgia Little Miller Act Litigation:
Although many Georgia Little Miller Act Claims are amicably resolved, unfortunately, there are times when litigation become necessary to protect the project or collect payment owed to a subcontractor or material supplier. Bond litigation is one aspect of a successful construction practice, and our attorneys bring the experience and the knowledge to each case. In these cases, we partner with our clients to develop a litigation strategy as we work together toward resolution. We understand construction law, and, more specifically, we understand the nuances of the different Miller Acts. Using this knowledge, we zealously represent our clients in their Georgia Little Miller Act disputes and claims.
Georgia payment bond claims, for example, must meet strict deadlines, and the Cobb Law Group has prepared and defended hundreds of payment bond claims throughout the state. Our experienced and knowledgeable staff and attorneys help steer our clients through every step in the process–from preserving their claim with a Notice to Contractor, filing a payment bond claim, and, if necessary, litigating your claim against the surety. Our Georgia construction law firm regularly provides guidance to prime contractors, specialty subcontractors, material suppliers on public works projects in Georgia. We also serve as counsel to corporate attorneys that need assistance in navigating the complex state regulations and surety disputes.
If you are working on a public works project anywhere in Georgia, then you need a law firm with the experience and expertise to confidently handle your Georgia’ Little Miller Act claim. Please contact us today to see how we can assist you.