If you are working on a federal government construction project as a subcontractor or supplier, you know (hopefully!) about the Miller Act. You also know (hopefully!) that a prime contractor’s Miller Act payment bond is an avenue to pursue payment in the event you are not paid.
An action against a Miller Act payment bond must be initiated within one year from your final furnishing date. Generally speaking, repairing one’s own work does NOT extend this period. For this reason, when considering your final furnishing date, do NOT factor in the last date you were performing warranty or punchlist work. Factor it on a date you were performing base contract work or approved change order work (i.e, work approved in a change order), if possible.
In a recent case, a subcontractor, after it completed its work, was asked to repair its work due to an issue caused by another subcontractor. Before the subcontractor proceeded with this work, it sent an e-mail to the prime contractor stating that this is additional work and it will need confirmation that it will receive a change order. Although the prime contractor confirmed such points, no change order was ever issued. The issue in the case was whether this so-called additional work constituted the subcontractor’s final furnishing date. If it did not, then the subcontractor filed its Miller Act lawsuit too late. (For more information on this case, please read this article.)
The issue the case discussed, however, was a truly avoidable issue. The subcontractor should have instituted its lawsuit much earlier meaning it should not have based its final furnishing date on the date it did the purported additional work by repairing its own work due to an issue caused by another subcontractor. Had the lawsuit been filed earlier, this issue would be off the table and the subcontractor would not have given the Miller Act payment bond surety and prime contractor the defense that the subcontractor filed its lawsuit after the one-year statute of limitations expired.
Please contact David Adelstein at email@example.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.