Federal construction contracts have specific bonding requirements under the Miller Act that differ fundamentally from state contractor license bonds. If you're pursuing federal work — or working as a subcontractor on federal projects — understanding these requirements before you bid is essential. Getting bonded on a federal project requires more lead time and more financial documentation than a standard license bond.
The Miller Act — What It Requires
The Miller Act (40 U.S.C. §§ 3131–3134) requires contractors on federal construction contracts exceeding $150,000 to furnish two bonds before work begins:
| Bond Type | Amount | Who It Protects | Claim Deadline |
|---|---|---|---|
| Performance Bond | 100% of contract value | Federal government / project owner | Within contract period + completion |
| Payment Bond | 100% of contract value | Subcontractors, suppliers, laborers | 90 days from last furnishing labor/materials |
For contracts between $30,000 and $150,000, the contracting officer has discretion on whether bonds are required. Below $30,000, Miller Act bonds are not required, though individual agencies may impose their own requirements.
Your state contractor license bond (e.g., $12,000 in Washington or $25,000 in California) satisfies your licensing board's requirement. Miller Act performance and payment bonds are project-specific, typically at 100% of contract value, and are required separately for each qualifying federal project you win. You need both simultaneously.
Treasury Circular 570 — The Approved Surety List
For federal work, your surety must be on the U.S. Treasury Department's Circular 570 — the official list of sureties accepted on federal bonds. The Circular specifies each surety's underwriting limit (the maximum bond they can write without additional approval).
How to use it: find the current Circular at fiscal.treasury.gov/surety-bonds/list-certified-companies.html, search by surety name to confirm they're listed and find their per-state underwriting limits. If the bond amount exceeds a surety's listed limit, co-surety arrangements or reinsurance may be available — ask your bond agent. Sureties not on the Circular 570 cannot write Miller Act bonds under any circumstances.
Bonding Capacity — Establishing It Before You Bid
Bonding capacity is the maximum dollar amount a surety will pre-authorize for your bond obligations. It is not the same as having a bond — it's prior approval to obtain bonds up to a specified amount. Establishing capacity takes time and documentation. Start 60–90 days before you plan to bid on federal work.
What Sureties Evaluate
| Factor | What Underwriters Look For |
|---|---|
| Financial statements | CPA-reviewed or audited for last 2 years. Working capital, net worth, debt ratios. |
| Work-in-progress (WIP) schedule | All current projects: contract value, % complete, billings, estimated cost to complete. |
| Completed projects history | 5-year history of completed projects with dollar values and references. |
| Bank reference | Letter confirming credit line availability and account history. |
| Personal financial statements | Net worth of all owners — personal assets matter for smaller contractors. |
| Equipment schedule | Owned equipment with values — demonstrates ability to perform. |
| Claims history | Any prior bond claims, litigation, or project defaults. |
Typical Capacity Formulas
Surety underwriters use rough rules of thumb to establish initial capacity:
- Single project limit: Typically 10–15× working capital, or 1–2× net worth
- Aggregate limit: Typically 15–20× working capital across all active projects
- Example: A contractor with $200,000 working capital might get a single project limit of $2–3 million and an aggregate of $3–4 million
These are starting points, not hard formulas. Experienced contractors with strong completion histories often exceed what the ratios suggest.
Little Miller Acts — State Public Works Bonds
Every state has a state-level Miller Act equivalent governing state and local government construction projects. Bond requirements, thresholds, and claim procedures vary significantly:
| State | Threshold | Bond Amount | Sub Claim Deadline |
|---|---|---|---|
| California | $25,000 | 100% of contract | 30 days after completion |
| Texas | $25,000 | 100% of contract | 90 days from last furnishing |
| Florida | $200,000 | 100% of contract | 90 days from last furnishing |
| New York | $100,000 | 100% of contract | 120 days from contract completion |
| Washington | $35,000 | 100% of contract | 30 days after acceptance |
| Oregon | $50,000 | 100% of contract | 180 days from completion |
If you are an unpaid subcontractor on a public works project, the notice deadlines for payment bond claims are non-negotiable. Missing the deadline forfeits your right to claim regardless of how much you're owed. If you are owed money on a public project, consult a construction attorney immediately.
Performance Bond Premium Rates for Federal Work
| Contract Amount | Typical Rate Range | Example Premium |
|---|---|---|
| Under $500,000 | 2.0–3.5% | $500K contract: $10,000–$17,500 |
| $500K–$1M | 1.5–2.5% | $1M contract: $15,000–$25,000 |
| $1M–$5M | 1.0–2.0% | $2M contract: $20,000–$40,000 |
| $5M–$10M | 0.75–1.5% | $7M contract: $52,500–$105,000 |
| Over $10M | Negotiated | Case-by-case underwriting |
Frequently Asked Questions
Can I use a bond agent for federal bonds rather than going directly to a surety?
What if I can't get bonded for the full contract amount?
As a subcontractor on a federal project, how do I protect myself if the GC doesn't pay?
Miller Act and Little Miller Act requirements vary and change. This is not legal advice. For public works bond claims or federal contracting disputes, consult a licensed attorney experienced in construction law.