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the general contractor does not have a bond, how can we get paid?

we are a small electrical company doing work for a General contractor working on a Federal job at Offutt air force base. We are about 75% done with the job but are having trouble getting paid for the last couple pay apps we’ve sent in. We are waiting for 1/2 of Feb, all of March and now we’ve billed for April. The General contractor keeps making excuses and we have paid out for labor and materials out of pocket. The General contractor does not have a bond on this job but the Main contractor Dyncorp out of Texas does have a bond and they are the ones that pay the general we are working with.

3 replies

May 12, 2020

If the main contractor has a payment bond on a federal contract, then claims against that bond may well be available. First-tier subcontractors (i.e. contractors hired by the party who provides the bond) are able to make claims against the bond, and so are second-tier subcontractors (i.e. subcontractors hired by a first-tier contractor). So, if your customer was hired by the party who provided the bond, a payment bond claim under the Miller Act should be available. For more information about making a Miller Act payment bond claim, these resources should be really useful: (1) Federal Miller Act Guide, Forms & FAQs; and (2) The Miller Act Claims: What You Need to Know to Make a Claim.

Recovery options outside of the bond claim process

Let's look at a few separate options broken down below.

Invoice reminders, demand letters, Notices of Intent

Sometimes, a simple but formal invoice reminder is enough to spur payment. Providing the customer with formal document saying "We're still unpaid and need to change that," is often enough. Alternatively, ratcheting things up by threatening to file a bond claim could be useful, too. Just like price projects, a Notice of Intent sent to the main contractor and the GC will get their attention and force them to deal with the issue. Finally, threatening to pursue legal claims - like breach of contract or under the federal prompt payment laws - can force others to take you seriously, as well. So, sending a payment demand letter including those threats could lead to payment.

Legal claims

As mentioned above, legal claims will be available if you aren't being paid what you're owed. And, consulting with a construction lawyer in Nebraska could help to identify what legal claims may be on the table and worth pursuing. What's more, if you think that others on the job have been getting draws of the contract funds but have been failing to pass payments down the chain, then threatening to blow the whistle under the False Claims Act can get the main contractor or GC's attention. The False Claims Act puts strict penalties on companies who use improper billing and payment practices on federal jobs - and the potential of such a claim could scare other contractors into doing the right thing and paying what's owed.

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May 15, 2020

You should take steps to secure your bond rights against Dyncorp and its surety immediately. While under both the Freedom of Information Act and the federal Miller Act, the payment bond is supposed to be readily provided to claimants such as yourselves who have furnished labor and materials to the job but are unpaid, it can sometimes be a long and drawn-our process just to get the agency to release the bond. At minimum, something you can do TODAY is send a certified mail letter to Dyncorp indicating the amount due and owing, the name of your customer who has not paid you, a description of the work provided, and a statement of your intent to file suit against any available payment bonds. This is the notice requirement under the federal Miller Act. You are welcome to contact me directly through my Levelset profile with any additional questions.

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Sep 16, 2020

It sounds like you are a sub of a sub. The GC, Dyncorp, hire the GC that you are working with. If that is the case, you can make a claim on the GC, Dyncorp's, bond. Your claim is likely a Miller Act claim, the federal law that requires a general contractor to post a bond for the benefit of subcontractors and suppliers on a project. These claims can be tricky and there are very specific time frames that must be followed.

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