Chapter 5 - § 5.5 TYPES OF CLAIMS ALLOWED

• Jurisdiction: Colorado

§ 5.5 TYPES OF CLAIMS ALLOWED

While the Miller Act states that anyone who has furnished labor and/or materials on a federal project may have a claim under the payment bond, there has a been a great deal of controversy around how those terms are interpreted. Courts have extended the interpretation of "labor" to extend to an architect or other professional who provides onsite superintendent services while work is done.⁴⁰ Similarly, courts have held that an engineer responsible for inspecting work while a job is in progress is also a party able to assert a claim under a payment bond.⁴¹ Perhaps one of the more expansive claims allowed on a payment bond was for the recovery of fringe benefit plans.⁴² However, courts have limited the interpretation of "labor" as those actions that involve the physical toil or manual work on a job site and that administrative services and onsite project management do amount to a covered claim under the Miller Act.⁴³

In addition, while the scope of the Miller Act provides coverage for materials incorporated into a federal public works project, there has been extensive litigation over the interpretation of what constitutes "materials." Parties working on federal public works projects should be aware that courts have extended bond coverage to rental charges for equipment rentals, but not the purchase of such equipment.⁴⁴ However, coverage has not been extended for damage to rental equipment caused by a subcontractor's negligent use, rather than normal wear and tear.⁴⁵ Coverage has been extended for transportation costs directly related to the performance of work.⁴⁶ Being aware of the extent of coverage at an early stage of a project is important as it may be possible for a party to avoid possible issues arising at a later stage when the party may have less bargaining power.

Controversy also arises from failure to pay insurance premiums on construction insurance policies and whether insurance premiums fall under provisions for "labor" and/or "materials" incorporated into a project. The majority view is that workers' compensation premiums and liability insurance premiums are not recoverable as "labor" charges under the Miller Act.⁴⁷ Finance charges, penalties, and lost profits are also not recoverable under the Miller Act.⁴⁸ In a similar vein, attorney fees and costs are generally not recoverable against a Miller Act payment bond.⁴⁹ However, there have been exceptions when the contract provides for the payment of attorney fees⁵⁰ or...