Chapter 5 - § 5.1 INTRODUCTION

• Jurisdiction: Colorado

§ 5.1 INTRODUCTION

When disputes involving payment arise on privately owned projects (residential/commercial) or on state or municipal public projects, Colorado law sets forth specific procedures/remedies that are available for an impacted party to utilize in order to secure payment. For example, in the context of privately owned construction projects, Colorado (as is more fully discussed in this book), has adopted statutes that give mechanics' lien rights to parties furnishing labor or materials on construction projects in the event they are not timely paid.¹ However, because federally owned land, buildings, and projects cannot be levied, the same set of rules does not apply despite some of the same issues associated with nonpayment remaining. In order to address such situations, Congress enacted legislation known as the Miller Act in order to provide an avenue of recourse for subcontractors and material suppliers so that they do not bear the risk of nonpayment on federal projects.² The Miller Act, originally enacted in 1935, regulates payments made on federal construction improvement projects and is codified as 40 U.S.C. §§ 3131 through 3134. While it does not provide any additional protections for general contractors, it does create additional obligations on a general contractor (which on federal public works projects is also referred to as a prime contractor). Specifically, the Miller Act places these obligations on any prime contractor that is awarded a contract of more than $100,000 for the construction, alteration, or repair of any public building or public work of the Federal Government.³

The purpose of the Miller Act is to provide an additional remedy to a breach of contract claim against the party with whom they are in privity of contract (and an alternative remedy to state mechanics' lien statutes, because a lien cannot attach to federal project), by giving unpaid subcontractors and material suppliers the ability to pursue legal action against a payment bond.⁴ Due to the remedial nature of the Miller Act, the Act is to be broadly and liberally construed.⁵ As in all situations where payments have not been timely made, in order to successfully pursue claims it is essential that deadlines and procedures be strictly followed (as discussed more fully below). Courts have put limits on Miller Act claims, such that even though the statute does not specifically state that a bond is necessary to maintain an action, courts have firmly established that a...