Miller Act FAR 28.102-1 Checklist: Federal Bonding for Bidders
Pricing federal construction work requires estimators and trade contractors to understand statutory bonding rules before submitting proposals. Under federal procurement guidelines, prime contractors and trade subcontractors must navigate specific financial protection requirements based on total project value. Use this bid-day checklist to verify bonding thresholds, evaluate required payment protections, and avoid compliance delays when estimating federal work under Acquisition.GOV FAR 28.102-1.
Check 1: Confirm Contract Value Against the $150,000 Statutory Threshold
The first item on your federal bid checklist is checking whether the overall construction contract exceeds $150,000. Under 40 U.S.C. chapter 31, subchapter III, Bonds (formerly known as the Miller Act), performance and payment bonds are mandatory for any federal construction contract exceeding $150,000.
Estimators pricing work as a prime contractor must verify whether their bid exceeds this threshold, as the cost of securing these bonds must be built directly into the estimate. Waivers to this requirement are extremely narrow. The contracting officer may waive the bond requirement for work performed in a foreign country if it is found to be impracticable for the contractor to furnish a bond, or as otherwise authorized by the Bonds statute or other law. For domestic federal work, assume the requirement stands if the contract exceeds $150,000. Review our guide on bid bonds, performance bonds, and payment bonds to plan ahead for these overhead obligations.
Check 2: Review Selection Options for Contracts Between $35,000 and $150,000
Federal contracts do not simply drop bonding requirements when the price falls below $150,000. When pricing smaller federal construction tasks, estimators must review the specific tier established by 40 U.S.C. 3132.
For construction contracts greater than $35,000, but not greater than $150,000, the contracting officer must select two or more payment protections from a defined list. As an estimator or small general contractor building your proposal, you cannot choose whatever security you prefer; the contracting officer makes the selection, giving particular consideration to the inclusion of an irrevocable letter of credit as one of the alternatives. The contractor must then submit to the government one of the payment protections selected by the contracting officer. Factor the administrative cost and financing mechanics of these protections into your proposal review.
Check 3: Evaluate Alternative Payment Protections Listed by the Government
When bidding a project in the intermediate dollar tier, examine which specific mechanisms the solicitation allows. Under Acquisition.GOV FAR 28.102-1, the contracting officer selects two or more of the following payment protections:
- A payment bond: Standard surety coverage guaranteeing payment to trade subcontractors and material suppliers.
- An irrevocable letter of credit (ILC): A dedicated credit commitment provided through a financial institution.
- A tripartite escrow agreement: An arrangement involving the prime contractor, a federally insured financial institution as escrow agent, and suppliers of labor and material.
- Certificates of deposit: Certificates of deposit from a federally insured financial institution deposited with the contracting officer in an acceptable form executable by the contracting officer.
- Security deposits: A deposit of the specific types of security listed in FAR 28.204-1 and 28.204-2.
Check 4: Verify Subcontractor Safeguards in Tripartite Escrow Agreements
Trade subcontractorsâincluding drywall, metal framing, and acoustic ceiling installersâmust understand how their payment rights operate if the prime contractor uses a tripartite escrow agreement instead of a standard payment bond. This structure introduces distinct legal steps that should be reviewed before finalizing pricing.
Under a tripartite escrow agreement, the prime contractor establishes an escrow account in a federally insured financial institution. The prime contractor then enters into a tripartite escrow agreement with the financial institution, acting as escrow agent, and all of the suppliers of labor and material. The agreement establishes the explicit terms of payment under the contract and outlines dispute resolution procedures among the parties. Payments from the government flow into the contractor's escrow account, and the escrow agent distributes the funds according to the agreement or triggers dispute resolution procedures if required. Estimators and trade owners should verify these terms to ensure their cash flow expectations align with the escrow release rules.
Check 5: Confirm Security Submittal Timing Prior to Notice to Proceed
A critical bid-day and preconstruction pitfall is failing to account for when security must be delivered to the government. Federal contracting rules strictly govern when site access and mobilization can take place.
The contractor must furnish all bonds or alternative payment protection, including any necessary reinsurance agreements, before receiving a notice to proceed with the work or being allowed to start work. Small general contractors pricing federal jobs cannot start on-site activities or collect initial project disbursements without finalized bonds or protections in place. Subcontractors should also coordinate this milestone with the prime contractor when reviewing their schedules on our bid day checklist to prevent idle crew mobilizations.
Sources
Official federal acquisition regulations referenced in this article include:
Published October 29, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.