In short
The Miller Act requires that prime contractors on most federal construction contracts provide a payment bond and a performance bond. 40 U.S.C. § 3131. These bonds protect the government and unpaid subcontractors and suppliers. For AI data centers built on federal land, the Act’s strict deadlines mean a claim can be lost forever if notice or a lawsuit is filed even a day late. 40 U.S.C. § 3133. Recent executive actions have pushed AI data centers onto Department of Energy sites through ground leases. Under those lease models, the Miller Act may not apply automatically because the government is often not a party to the construction contract. District court analysis of Miller Act and federal leases. But private lenders and lease terms often demand Miller Act style bonds as a condition of financing.
What is the Miller Act and why does it matter for AI data center construction?
On private construction projects, an unpaid subcontractor can file a mechanics lien against the property. That lien gives the subcontractor a security interest in the land or building until they are paid. But on federal property, the government has sovereign immunity. You cannot put a lien on a federal building. The Miller Act, enacted in 1935, solves this problem by requiring surety bonds. GSA Miller Act brochure, Duke Law Journal.
A surety bond is a guarantee from a third party, the surety company, that the prime contractor will perform the work and pay its subcontractors and suppliers. If the contractor fails, the surety must step in. The Act protects subcontractors, laborers, and material suppliers who would otherwise have no remedy because the land is immune from liens.
For AI data centers, the federal government is now actively encouraging construction on federal sites. The Department of Energy has selected four DOE sites and announced plans to issue lease solicitations for private developers to build AI data centers. DOE site selection announcement. These projects can cost billions of dollars. Knowing when Miller Act bonds are required, who gets protection, and how to preserve a claim is essential for anyone working on these projects.
When are Miller Act bonds required?
The Miller Act applies to any contract of more than $100,000 awarded by the federal government for the construction, alteration, or repair of a public building or public work. 40 U.S.C. § 3131. The bonding threshold has two parts.
The statute itself says bonds are required for any contract over $100,000 for the construction, alteration, or repair of a public building or public work of the Federal Government. 40 U.S.C. § 3131(b). But the Federal Acquisition Regulation, the FAR, sets a higher practical threshold. Under FAR 28.102-1, the rules are these.
| Contract value | Bonding requirement |
|---|---|
| Over $150,000 | For construction contracts exceeding $150,000, FAR 28.102-1(a) requires performance and payment bonds, and FAR 52.228-15(b) sets each at 100 percent of the original contract price. FAR 28.102-1(a), FAR 52.228-15(b) |
| $35,000 to $150,000 | At least two alternative payment protections. These can include a payment bond, an irrevocable letter of credit, a tripartite escrow agreement, certificates of deposit, or another security deposit. FAR 28.102-1(b) |
The two bonds are different.
The performance bond protects the government if the contractor defaults. It guarantees that the project will be completed according to the contract. The amount is set at 100 percent of the original contract price unless the contracting officer determines that a lower amount is adequate. FAR 28.102-2(b)(1). The bond must specifically cover unpaid federal employment taxes that the contractor was supposed to collect, deduct, or withhold from wages. 40 U.S.C. § 3131(c).
The payment bond protects subcontractors, laborers, and material suppliers. It guarantees they will be paid for their work and materials. The payment bond amount must also equal 100 percent of the original contract price. A lower amount is allowed only if the contracting officer makes a written finding that a full bond is impractical. In that case, the payment bond can never be less than the performance bond amount. 40 U.S.C. § 3131(b)(2).
Both bonds must be issued by a surety company listed on the U.S. Department of the Treasury’s Circular 570, the approved surety list. Surety industry reference. The bonds must be furnished before the contractor receives a notice to proceed or is allowed to start work. FAR 28.102-1(c). Bond premiums typically run 0.5 to 3 percent of the contract amount. How much do contractor bonds cost, NASBP surety bond guide.
Who can claim against a Miller Act payment bond and what are the deadlines?
The payment bond protects only two groups of workers and suppliers.
- First tier claimants. These are subcontractors and suppliers who have a direct contract with the prime contractor. They do not need to give any pre suit notice. They can file a lawsuit after 90 days have passed from the last day they performed labor or supplied material. 40 U.S.C. § 3133(b)(1).
- Second tier claimants. These are sub subcontractors and suppliers who have a direct contract with a first tier subcontractor, but no contract with the prime contractor. They must give written notice to the prime contractor within 90 days after their last work or delivery. The action must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. 40 U.S.C. § 3133(b)(2). After that 90 day waiting period, they can sue.
Third tier and more remote subcontractors, and suppliers to a supplier, have no Miller Act remedy at all. United States ex rel. Tomkins Co., 322 U.S. 102 (1944).
The deadlines are strict. A lawsuit can be filed no sooner than 90 days after the claimant’s last work. 40 U.S.C. § 3133(b)(1). The lawsuit must be filed no later than one year after that same last work date. 40 U.S.C. § 3133(b)(4). Missing the one year deadline is an absolute bar to recovery. Repair work, warranty work, or a contractual pass through provision does not extend the deadline. Understanding the Miller Act’s bonding requirements.
A real case shows how unforgiving the rule can be. In the A&C Construction case, a sub-subcontractor on a U.S. Army Corps of Engineers project at an overseas air base sent its Miller Act notice in August 2016. Even using the contractor’s own claimed last work date of February 28, 2017, the Seventh Circuit held the notice was sent too early, because it did not fall within 90 days after the last work. The sub-subcontractor’s claim for over $8 million was dismissed. Seventh Circuit decision summary.
A Miller Act lawsuit must be brought in the name of the United States for the use of the person suing. It must be filed in the United States District Court for any district in which the contract was to be performed and executed, regardless of the amount in controversy. 40 U.S.C. § 3133(b)(3). The government does not pay the costs or expenses of any such suit. 40 U.S.C. § 3133(b)(5). An unpaid subcontractor can also request a certified copy of the payment bond and contract from the agency head by submitting an affidavit that they supplied labor or materials and have not been paid. 40 U.S.C. § 3133(a).
Can the government waive Miller Act bonds for AI data centers?
Waivers are rare. The statute allows a contracting officer to waive bonds only for work performed in a foreign country when it is impracticable for the contractor to furnish the bonds. 40 U.S.C. § 3131(d). The Secretaries of the Army, Navy, Air Force, and Transportation may also waive bonding for certain cost type and military manufacturing contracts. 40 U.S.C. § 3134.
A GAO report from 2017 found that agencies have no tracking system for waivers. Officials interviewed reported that waivers almost never happen. An Army Corps of Engineers official could not recall a single waiver in his career. A VA official recalled not a single surety bond waiver in nearly 30 years. GAO-17-683R. No general waiver exists for AI data center construction. If a project is a federal construction contract that meets the dollar threshold, bonding is mandatory.
How do DOE land leases for AI data centers interact with the Miller Act?
In January 2025, President Biden signed Executive Order 14141. It directed the Secretaries of Defense and Energy, if possible, to each identify at least three federal sites for leasing to private developers to build frontier AI data centers. EO 14141. That order was revoked by President Trump’s EO 14318 in July 2025, which also called for accelerating federal permitting and using federally owned land for AI data centers. EO 14318.
The Department of Energy followed through. In April 2025, DOE announced 16 potential federal sites. DOE identifies 16 federal sites. In July 2025, four sites were selected to move forward, including Idaho National Laboratory, Oak Ridge Reservation, Paducah Gaseous Diffusion Plant, and Savannah River Site. DOE site selection. In September 2025, DOE issued a Request for Applications for long term lease agreements at Idaho National Laboratory for AI data centers integrated with energy generation and storage. DOE INL RFA. The lease model means a private developer enters a ground lease with DOE and then hires its own construction contractors. The government is the landowner but not a party to the construction contracts.
The legal question is whether construction contracts under this model are contracts for the construction of a public building or public work of the Federal Government. If they are, the Miller Act applies. The answer depends on the specific lease terms and the project’s structure.
One federal district court addressed a similar situation. In U.S. ex rel. Roc Carter Co. v. Freedom Demolition, Inc., a sub-subcontractor sought payment for work on military housing at Robins Air Force Base. The Air Force had leased the land to a private developer. The lease stated the construction was a private undertaking, the government’s interest was limited to that of a lessor, and the improvements were owned in fee simple by the private lessee. The court dismissed the Miller Act claim, holding that the Act did not apply because the United States was not a party to the construction contract. District court analysis of Miller Act and federal leases. This reasoning suggests that if the DOE leases follow a similar private-undertaking model, the Miller Act may not reach the developer’s construction contracts.
But the analysis is not settled. The Supreme Court has broadly interpreted public work to include projects that serve the public interest or are aided by public authority, regardless of who holds title. United States ex rel. Noland Co. v. Irwin, 316 U.S. 22 (1942). A court might find that an AI data center built on federal land for national AI infrastructure is a public work even if the government is not the contracting party. As of early 2026, no court has yet addressed that question for the new federal lease projects, which are still at the solicitation stage, so the issue is unsettled.
Even where the Miller Act does not apply directly, the DOE lease or the private construction lender will often require performance and payment bonds that mirror the Miller Act. Private financing for AI data centers routinely adopts bond requirements that follow public sector practices. Surety capacity drivers 2026. So subcontractors may still have bond protection, just under a different legal source.
What if the contract omits bonding? The Christian Doctrine
A federal agency can sometimes issue a construction contract without including the standard bonding clause. When that happens, the Christian Doctrine reads the bonding requirement into the contract by operation of law.
In K-Con, Inc. v. Secretary of the Army, the Army awarded two contracts for pre engineered metal buildings on commercial item forms. The forms did not include the FAR clause that requires performance and payment bonds. After award, the Army told the contractor that bonds were required. The contractor obtained bonds nearly two years later and sought $116,336 in delay costs. The Federal Circuit held that the bonding requirements were mandatory and incorporated into the contracts by the Christian Doctrine. The contractor could not recover its delay costs. K-Con, Inc. v. Secretary of the Army, 908 F.3d 719 (Fed. Cir. 2018).
The practical lesson is that even a government contract that looks like it does not require bonds likely does if it is for construction. If a solicitation is patently ambiguous about whether the work is construction or commercial items, a contractor must seek clarification before award or risk being stuck with bonding obligations it did not expect.
How subcontractors can protect their rights on federal AI data center projects
Subcontractors and suppliers on a project that is covered by the Miller Act, or that has private bonds, should take these steps.
Know your tier. A first tier subcontractor with a direct contract to the prime can sue without prior notice. A second tier subcontractor must give written notice within 90 days of its last work.
Track the last work date carefully. This date starts the 90-day notice clock and the one-year lawsuit clock. Do not rely on punch list items or warranty work to extend it.
Send notice that meets the statutory requirements. For a second tier claimant, the notice must go to the prime contractor, state the amount owed with substantial accuracy, and name the party for whom the work was done. Sending it too early can be fatal, as the A&C Construction case showed.
Do not rely on contractual pass-through provisions. A mandatory pass-through clause in a subcontract does not pause or extend the Miller Act deadlines. The safest course is to file the Miller Act lawsuit within one year and then ask the court to stay the case while the pass-through claim works its way through.
Understand that pay if paid clauses do not block Miller Act claims. Under a typical pay-if-paid clause, a subcontractor gets paid only when the owner pays the general contractor. But federal courts routinely hold that this defense does not work against a Miller Act claim. The subcontractor’s right to sue on the bond is conditioned on the passage of time after completing work, not on upstream payment. Primer on Miller Act bonding requirements.
Watch out for bond waivers in subcontracts. You cannot waive your right to sue on a Miller Act payment bond before you have performed the work. Any waiver must be in writing, signed by the person whose right is waived, and executed after that person has furnished labor or material for use in the performance of the contract. 40 U.S.C. § 3133(c).
Small contractors can tap the SBA bond guarantee. If a small contractor cannot obtain bonding on the standard market, the SBA Surety Bond Guarantee Program may help. The SBA guarantees a portion of the surety’s loss on contracts up to $9 million, and up to $14 million for federal contracts when a federal contracting officer certifies the guarantee is in the government’s interest. The guarantee ranges from 80 to 90 percent, depending on the contract size and the contractor’s status. The contractor pays a fee of 0.6 percent of the contract price. SBA surety bonds, SBA surety bond guarantee rates. Eligible small contractors include those with average annual receipts of $45 million or less for building and heavy construction, or $19 million for most specialty trades. SBA size standards.
Key takeaways
- Miller Act bonds are mandatory on most federal construction contracts over $150,000. No special waiver exists for AI data center projects.
- Only first tier and second tier claimants have payment bond protection. Third tier subcontractors and suppliers to suppliers have no Miller Act remedy.
- The one-year lawsuit deadline is absolute. It runs from the last date of labor or material supply, not from the date of payment, and repair work does not restart it.
- Under the DOE lease model, the Miller Act may not apply directly because the government is often not a party to the construction contract. But lease or lender requirements may impose equivalent private bonds.
- Even if the government contract omits bonding language, the Christian Doctrine will likely read it in. Contractors should budget for bond premiums even when the solicitation looks like a commercial-item purchase.
- Pay-if-paid clauses do not defeat Miller Act bond claims. A subcontractor retains independent rights under the statute.
- Second tier claimants must send written notice to the prime within 90 days of their last work. Notice sent too early is just as fatal as notice sent too late.
- Subcontractors can obtain a certified copy of the bond and contract from the agency by submitting an affidavit, which helps evaluate the claim before filing suit.
Frequently asked questions
Q:What is the dollar threshold for Miller Act bonds?
A:The FAR requires full performance and payment bonds for any federal construction contract over $150,000. FAR 28.102-1, FAR 28.102-2. The statute itself says $100,000, but the FAR threshold governs most procurements. For contracts between $35,000 and $150,000, the contracting officer must require alternative payment protections.
Q:Do Miller Act bonds apply to AI data centers built on DOE leased land?
A:It depends. If the government is not a party to the construction contract and the lease treats the construction as a private undertaking, the Miller Act may not apply. District court analysis. However, the lease or lender often requires private bonds that mirror the Act’s protections.
Q:What happens if a subcontractor misses the 90-day notice deadline?
A:For a second tier subcontractor, missing the 90-day notice deadline means losing the right to make a claim on the payment bond. The notice must be sent within 90 days after the last day of work, not before. Courts enforce this requirement strictly.
Q:Are there any bond waivers available for large AI data center projects?
A:No. Statutory waivers cover only foreign construction and certain cost-type military contracts. GAO reporting found that surety bond waivers are rare, though State and DOD have used them for certain overseas construction contracts. GAO-17-683R.
Q:What if a federal contract for AI data center construction does not include a bonding clause?
A:The Christian Doctrine incorporates the bonding requirement by operation of law. In K-Con, bonding requirements were incorporated into the contracts at award by operation of law, and the contractor could not recover delay costs incurred over the nearly two years it took to furnish them. K-Con, 908 F.3d 719.
Q:Does the Miller Act protect a supplier who sells to another supplier?
A:No. The Act protects only those in direct contract with the prime contractor (first tier) or with a first tier subcontractor (second tier). A supplier to a supplier has no Miller Act claim.
Q:How much does a Miller Act bond cost?
A:Bond premiums generally range from 0.5 to 3 percent of the bond amount. For a contract with a $100 million price, the bond premium could be $500,000 to $3 million. NASBP.
Q:Can a small contractor qualify for a Miller Act bond if it cannot get one on its own?
A:Yes. The SBA Surety Bond Guarantee Program helps small contractors obtain bonds by guaranteeing a portion of the surety’s risk. The guarantee percentage is typically 80 to 90 percent, and the contract limit is $9 million for most work and $14 million for federal contracts. The contractor pays a 0.6 percent fee. SBA Surety Bond Guarantee Program.
Q:Can an arbitration clause in a subcontract block a Miller Act lawsuit?
A:No. The Miller Act remedy is independent of any private dispute resolution agreement. An unpaid subcontractor can still sue on the bond in federal court even if the subcontract requires arbitration. Miller Act claim enforcement.
Q:When does the one-year lawsuit clock start?
A:It starts on the day the claimant last performed labor or supplied material that was called for by the contract. Correction or repair work, or work done after the contract is substantially complete, generally does not restart the clock.
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Junde Liu, JD, LL.M. (Taxation) candidate at UF Law. Originally published on Compute Law Blog. This article is general information and does not constitute legal advice. Reading it does not create an attorney client relationship. The reader should not act on the basis of any content here without first consulting a licensed attorney in the relevant state. Last reviewed for accuracy May 23, 2026.