Can I File a Claim Against a Federal Project?

March 20, 2023
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Construction contractors, sub-contractors, and suppliers are very familiar with the process of filing a lien or claim for payment involving private contracts. If payment for services, wages, construction, or supplies goes unpaid, state law allows for the filing of a mechanics’ lien against the property, in the case of contractors and workers, or a materialmen’s lien against the property, in the case of suppliers.

The statutes for mechanics’ liens or materialmen’s liens give wide and general relief to anyone involved in a construction project, so long as the provisions of the act are followed. Filing a claim under these acts is also usually quite simple, with a recorded notice.

In contrast, filing claims against a federal project requires adherence to a statute known as the Miller Act, 40 U.S.C. sections 3131 et. seq. The provisions of the Miller Act are designed to preclude any long-standing liens being placed upon Federal buildings or construction projects. Unpaid contractors and suppliers must proceed under stringent time limits against a “Miller Act bond.” Any court proceedings must be undertaken in Federal court, and if the terms of the act are not precisely followed, the Miller Act claim will be lost.

While the terms of the Miller Act are quite specialized and can seem quite daunting, the help of a good Chicago construction attorney can help make sense of the provisions if you have experienced difficulties in being paid for work done under a government contract.

Filing a Claim Against a Federal Project

As a general rule, claims involving payment for work on a Federal project must be made according to the terms of the Miller Act. There are several specific requirements that must be met before a Miller Act claim can be filed.

Only Certain Contractors Can File Miller Act Claims

For a Miller Act claim to succeed, the contractor must provide “labor” or “material.” Material is easy enough to understand, but some claims have failed because of the courts’ definitions of “labor.” Since 1982, courts have interpreted the term as synonymous with “toil.” Under such an interpretation, claims for design work, planning, or other professional services do not mount a Miller Act claim.

A prime or general contractor cannot file a Miller Act claim. The general contractor making a claim follows a different procedure.

The following categories of sub-contractors can file claims under the Miller Act:

  1. First-level subcontractors who have contracted directly with the prime contractor;
  2. Second-level subcontractors who have contracted directly with a first-level sub-contractor;
  3. First-level material suppliers who have supplied directly to the prime contractor;
  4. Second-level material suppliers who have supplied directly to the prime contractor.

No other contractors or workers are eligible to file claims under the act.

How Are Claims Filed?

Prime contractors are required to file a payment bond upon winning a Federal construction contract worth more than $100,000. All claims must be filed against the bond and not placed as liens upon the property. The procedure depends on whether the claimant is a first- or second-level supplier or subcontractor.

In either case, no claims may be filed against the bond until 90 days have elapsed from the last day upon which labor or material was provided on the project.

In the case of first-tier subcontractors and material suppliers, no other notice is necessary, and a claim may be made against the bond by advising the surety company of the facts of the situation and making a formal demand. The claimant is entitled, under the Miller Act, to know the name and address of the surety company furnishing the bond. Meanwhile, for second-tier subcontractors and material suppliers, a 90-day notice must be given to the prime contractor demanding payment. If no payment is forthcoming, a claim may be filed against the bond.

In the event that the prime contractor and the bonding company refuse payment, any suit must be filed in the United States District Court for the district in which the project is located. All such suits must be filed within one year of the last day on which the claimant furnished labor or materials. The notices and limits are jurisdictional, meaning if the deadlines are missed, the claim will fail. In the event that legal action is necessary, consulting an attorney experienced in handling government contracts may be needed.

How a Chicago Construction Lawyer Can Help

The Grzymala Law Offices, P.C. has considerable experience in government contract work and can help you understand Federal and Illinois contract claims law. Our firm has helped many contractors and subcontractors navigate the pitfalls of a Miller bond claim and secure final payment for their hard work and expenses. If you are experiencing difficulty in settling a claim with a prime contractor on a Federal contract, confer with an experienced Chicago construction lawyer today. Call us today to set up a consultation.