| Description |
Federal law requires contractors executing federal construction contracts that exceed $150,000 to obtain two types of surety bonds: payment bonds, which guarantee that suppliers and subcontractors will be paid for material and work performed under the contract, and performance bonds, which guarantee that the contractor will perform the contract in accordance with its terms and conditions. This law, which is sometimes referred to as the Miller Act, allows for these surety bond requirements to be waived under certain conditions, such as when the contracting officer determines it is impracticable for the contractor to furnish a bond for work performed in a foreign country, or for specified Department of Defense (DOD) and Department of Transportation cost-reimbursement construction contracts. The Small Business Administration helps small businesses obtain surety bonds in instances where a lack of financial strength or experience may create challenges meeting surety bond requirements. (Highlights by Government Accountability Office) |