Federal Construction Contracting Guide: Miller Act Bonds, Davis-Bacon Wages and Design-Build Bids

Federal construction contracts fund military bases, VA hospitals, federal buildings, ports, dams and more. Contractors who understand Miller Act bonding, Davis-Bacon prevailing wages and federal design-build procurement have a big advantage. This guide covers the essentials.

Who Buys Federal Construction?

• U.S. Army Corps of Engineers (USACE): military construction and civil works
• Naval Facilities Engineering Systems Command (NAVFAC): Navy and Marine Corps facilities
• Air Force civil engineering and installation contracting offices
• Department of Veterans Affairs: medical centers and clinics
• GSA Public Buildings Service: federal buildings and courthouses

Many also award Multiple Award Task Order Contracts (MATOCs) and Job Order Contracts (JOCs) for recurring work.

Miller Act Bonding Requirements

The Miller Act requires prime contractors on federal construction contracts over $150,000 to post:

• A performance bond, protecting the government if the contractor fails to perform
• A payment bond, protecting subcontractors and suppliers who are not paid

Bid guarantees, usually 20% of the bid price up to $3 million, are commonly required with the bid. For smaller contracts, alternative payment protections apply. Build a relationship with a surety early. Your bonding capacity sets the size of projects you can pursue. The SBA Surety Bond Guarantee Program can help small contractors qualify.

Davis-Bacon Act Prevailing Wages

The Davis-Bacon Act applies to federal construction contracts over $2,000. Contractors must pay laborers and mechanics at least the locally prevailing wages and fringe benefits listed in the wage determination for the project. Key compliance steps:

• Use the correct wage determination from SAM.gov included in the contract
• Classify workers correctly by trade
• Submit weekly certified payrolls
• Post wage determinations and notices at the job site
• Flow down requirements to every subcontractor

Design-Bid-Build vs. Design-Build

In design-bid-build, the government provides a completed design and contractors bid on construction, often with sealed bidding. In design-build, one team handles design and construction. Federal agencies often use a two-phase design-build selection: Phase One shortlists teams based on qualifications and approach, and Phase Two requests detailed technical and price proposals from the shortlisted offerors.

Small Business Construction Opportunities

Many construction projects are set aside for small businesses, HUBZone firms, SDVOSBs and 8(a) firms. Remember the limitations on subcontracting: a small prime may not pay more than 85% of the contract amount to non-similarly situated subs on general construction, or 75% on special trade construction.

Facilities Maintenance and Service Contracts

Facilities operations and maintenance work is generally a service contract and falls under the Service Contract Act rather than Davis-Bacon. Read the solicitation to know which labor law applies.

Frequently Asked Questions

What is the Miller Act threshold?

Performance and payment bonds are required for federal construction contracts over $150,000.

Does Davis-Bacon apply to subcontractors?

Yes. Prime contractors are responsible for subcontractor compliance, including certified payrolls.

How can a small contractor increase bonding capacity?

Strong financial statements, working capital, a track record of completed projects and the SBA Surety Bond Guarantee Program all help.

What federal construction projects are you bidding? Share tips with fellow contractors below.