What the Miller Act Means For You

In the construction industry, we speak a lot about the filing of a mechanic’s lien. But what if you are working on a public project? In the event a government project goes sour, contractors and materials suppliers must turn to the Miller Act, or its parallel state legislation, as a remedy. Whether for the federal, state, county or municipal government, here are some basic facts you need to know today!

What is the Miller Act?

The federal Miller Act was originally enacted as the Heard Act in 1893. This law, which later became known as the Miller Act, requires prime contractors on some government construction projects to post bonds guaranteeing both the performance of their contractual duties and the payment of their subcontractors and material suppliers. Similarly, a “Little Miller Act” is a U.S. state statute that imposes the same requirement on prime contractors in certain state construction projects. Keep in mind that there are generally two types of bonds being asked for here – one for performance and one for payment.Louisiana does not have a “Little Miller Act” exactly, we have the Public Works Act, La. R.S. 38:2241 et seq.

What does the Miller Act Do?

The Act was intended to address some important concerns that exist in the performance of government construction projects. Firstly, the contractor’s abandonment or non-performance on a government job could lead to substantial delays and excessive expenses to the government procurement process. The performance bond requirement aids in differentiating between which contractors are serious about the project and which are not. Of course, the bond itself helps offset some of the cost of potential non-performance and the need for a substitute. Similarly, the payment bond requirement helps mitigate some of a subcontractor’s and/or material supplier’s potential reluctance to work on such projects in light of sovereign immunity preventing one from filing a mechanic’s lien against the government.

How do you file a Miller Act Claim?

If you are a subcontractor or material supplier, the process of filing a Miller Act claim is relatively straightforward. Firstly, you will need to determine if you have the right to file a claim. Second, you will need to send a Miller Act Notice to the prime contractor within 90 days from the last furnishing of labor and/or materials. You may also send notice to the surety (optional). Lastly, you may then file suit against the bond within 1 year from the last furnishing of labor/materials. The Miller Act requires that suit is filed in Federal Court and there are some strict requirements that need to be followed.

Make sure you file your Miller Act Claim properly and on time. Here at Wolfe Law, we are always ready to take your bond related questions. Contact us today for an initial consultation.

What the Public Bid Law Means for You

Over the past few years, public contracts have become increasingly more popular amongst our clients. As a result, public bid law has come into frequent use. If you are in the construction industry, understanding public bid law can help you be aware of the potential risks/rewards of your next public works project. Public projects can be lucrative, yet they also have many pitfalls that can damage an unknowledgeable company.

What is Public Bid Law?

The Louisiana Public Bid Law applies to any work, construction project or improvement to (immovable) property that is owed by the State of Louisiana or an arm of the state, such as parish or city government (“public entity”). It applies to political subdivisions, locally elected public officials, the state Legislature and even the state Judiciary. Under Louisiana law, “public work” is formerly defined as the “erection, construction, alteration, improvement or repair of any public facility or immovable property owned, used, or leased by a public entity.” Many times these projects are for public schools, public universities, public hospitals, prisons, roads and state highways or any other project that is put out for bid by a public entity, outside of the Federal government.

Regulatory Framework of Public Bid Law

Public contracts involve tax-payer funds. Because of the public funds in use for a public project, there are strict regulations in play when entering into a contract with a public entity. To help curb potential corruption, strict rules and regulations have been implemented by the State legislature. These rules and regulations often dissuade contractors, equipment lessors and materials suppliers from entering into or even bidding such contracts. For instance, there are special rules governing the form of the bid for a public works project; purchase of materials, supplies, vehicles, or equipment; verification of employees in contracts for public works; notice requirements; and the procurement of surety bonds and insurance. Any violation of such rules or regulations may result in a civil action or even an investigation brought by the attorney general.

How to Proceed

Because of the possible legal ramifications involved, public bid law is an increasingly important area of law to be familiar with as soon as possible. Additionally, rather than shy away from public work contracts altogether, we recommend that our clients merely be well-versed in legal framework governing public bid law.

If you are knowledgeable about the relevant laws and regulations, there is not much to fear. In fact, when everything runs smoothly, public work projects are not all that different from your ordinary private projects. Armed with the right facts and knowledge, you can enter into your next public works contract with the right expectations and goals. Here at Wolfe Law, we are ready to take all your public bid law questions. Contact us today for your next public contract needs.

5 Must-Have Clauses in Your Next Construction Contract

If you’re about to sign a construction contract, you need to be aware of some important clauses that may and/or should be incorporate into your contract. Certain clauses are critical for any contract to effectively protect your rights and minimize your liabilities.

At Wolfe Law, we always carefully review the contracts our clients are considering. Here are 5 clauses we recommend you pay attention to in your construction contract:

1. Scope of Work

Though the scope of work clause may seem simple enough, it is often overlooked or taken for granted.It is critical to clearly define the scope of your assignment and to make sure that each party is satisfied with the understood terms. To avoid disagreements in the future, expectations should be set out from the very beginning.

2. Indemnification

An indemnification clause obligates one party to compensate the other party for certain losses or damages resulting from third-party claims. This compensation is unrelated to other contractual obligations and damages. An indemnification clause can help protect you against future liability.

3. Payment Conditions

Make sure you know the conditions upon which you will receive payment for your work. To help determine this, you should have a cost breakdown of the entire project ready as part of the contract negotiation process.

4. ADR Clause

This can be Arbitration and/or Mediation. Though not all construction contracts have them, arbitration clauses may prove to be extremely helpful in case of a future dispute. Arbitration and meditation can help cut costs of potential litigation. Consider what sort of arbitration suits both of your needs best and include these provisions in the contract. There are many versions of arbitration and we recommend you consult an attorney before deciding which one to incorporate into your contract.

5. Choice of Law and Jurisdiction

The choice of law clause helps determine which set of laws governs the contract.This is a critical clause, especially where parties and the work cross state borders. Different states have different laws and it is important for you to know which set of laws governs your contract. In addition to knowing which law governs, it is also helpful to decide where the parties will go to court. The jurisdiction clause may save you in time and cost of travel, not to mention inconvenience, in the case of future litigation.

We understand that contracting is never easy. Negotiations and drafting can become confusing and burdensome.Thus, an attorney should be on hand to help your understand the risks and benefits of the contract you are considering. At Wolfe Law, we have years of contracting experience, especially in the construction industry. We would be happy to help you with all your contracting needs.

Particularly in the construction industry, where timing and cost may vary greatly depending on the project, the type of contract you sign can have an incredible impact on your future earning potential. We recommend you speak to an attorney before picking which contract works for you. Contact the attorneys at Wolfe Law for all your construction contract needs.

Guest Blog: 5 Ways Construction Will Change In The Next 50 Years

Jessica Kane is a professional blogger who writes for Federal Steel Supply, Inc., a leading supplier of carbon, alloy and stainless steel in pipe, tube, fittings and flanges.

The construction industry has a bright future. In the next 50 years, there will be more jobs and new techniques that suit people who have specific preferences at construction sites.

New Construction Technology

Because there are new technologies at the Harvard School of Engineering and Applied Sciences, robots may tackle various construction projects in the future. The students at the school have developed bots that look like termites. These bots can build many small buildings without any supervision. According to industry experts, construction companies will only use these bots during dangerous or risky building projects.

Eco-Friendly Building Materials

Many construction businesses will buy self-healing concrete 50 years from now. Eric Schlangen and Henk Jokers developed this concrete by mixing various spores together. After the nutrients are activated in water, the spores consume calcium lactate and produce lactite. If self-healing concrete continues to evolve, construction workers will use it to eliminate cracks and costly maintenance.

Builders will also use better sustainable materials during the construction phase. A few companies are already using foam material that is made from bamboo, kelp, or hemp. Foam has good moisture properties and solid heat resistance, so mold never grows on the surfaces.

New Design Opportunities

Although many businesses may still use familiar construction techniques, innovative construction methods will dominate the industry in the future.

There is a company in Indonesia that has a design for a 99-story building that looks like various flower petals. Thanks to its unique design, the structure will harness energy from the wind by funneling air currents into different energy sources. In addition, the team will place solar panels in a number of locations to reduce carbon dioxide emissions.

Another construction company plans to build a skyscraper out of trash. The Organic London Skyscraper has durable panels because the builders will combine discarded paper with plastic waste.

Drones

According to Colin Guinn of 3-D Robotics, drones will help engineers and architects tackle various construction tasks more accurately. Drones are already building structures in Switzerland; the Swiss Federal Institute of Technology developed bots that have the ability to construct rope bridges.

In the future, construction workers will use drones to view structures at a high level. Because the bots can fly to different locations, builders can increase their workflow visibility dramatically.

3-D Printing

Currently, many industries are using 3-D printing to make small structures. However, future 3-D technologies will help workers create materials directly at the construction site.

3-D printing is very useful during the collaboration process because it helps designers make better decisions. Design teams will use the technology when they plan and sequence advanced assemblies.

Construction companies that use 3-D printers today mainly print concrete materials. The technology is not every efficient because it prints concrete slowly. However, over the next few years, the machinery will print concrete within hours instead of weeks.

As the technology evolves, more construction companies will use 3-D to build houses. The homes will be built fast because the 3-D houses use less materials than traditional homes.

Guest Blog: Choosing a Crane Hire Company

Sammy Blackmore is currently a writer for Membrey’s Transport and Crane Hire. She is an avid truck and engine fan and shows her passion through her writing. In this article, she talks about the key things a crane hire company should offer.

The construction industry is a constantly growing one. With newer advancements in mechanics and technology, companies are able to offer more robust and efficient service. Cranes are a favourite among contractors. This heavy duty equipment is used almost always as it focuses on transporting materials from one place to another. Humans can physically do the task themselves but it can be taxing and requires a longer turnaround time. Likewise, the materials are also at risk of wear and tear when handled by humans.

Crane hire companies are companies that offer the lease of cranes as their main service. This service realizes tons of benefits for the customer like customizable lease periods, adherence to construction legislation and the like. These are further detailed below.

Flexible and Stackable Lease

Need a crane for only a day? Go right ahead. Even if you find out later that you need it for an additional two days, the crane hire company will be more than happy to extend your lease. You can rent a crane anywhere from one day to several months. Likewise, if the need arises to two or more cranes, the company will also be able to accommodate.

No Legislation Worries

Just like purchasing your own vehicle, owning a crane also warrants several licenses and permits. Also, there may be times when you need to coordinate with the proper authorities when you are transporting things. This can be troublesome especially if you aren’t planning on using the crane regularly. If this is so, you should opt to rent instead as crane hire companies.

Different Cranes at your Disposal

Cranes have various attributes. If you don’t know exactly what you need, the company will be able to help. They have all sorts of cranes you can choose from. The length of the boom, the radius of rotation and the carrying capacity are all crucial in determining what type of lift you need. The company can also send you further information and crane specifications should you need them before availing of the service. This should help in the decision making process.

Safety

Crane hire companies are experienced in their field. Due to their regular exposure to workplace hazards, they have best practices in place to help you maximize the service without putting anybody at risk.

Competitive Pricing

There are tons of crane hire companies out there. Even if they are in a different part of the country, they will most likely service all regions on the same continent. Due to this, pricing is extremely competitive. What you want is a service that is priced justly and also offers decent customer support and timely delivery.

Image Sources: [1] [2] [3] [4] [5] [6] [7]

Author: Sammy Blackmore

Construction Management – Truck Fan – Content Curator

e: Sammy@SammyBlackmore.com| w: http://sammyblackmore.com/

a: Australia Port Melbourne, VIC 3207

Guest Blog – 5 Common Misconceptions About Surety Bonds

Getting construction bonds is not as scary and difficult as some think

If you are a contractor working on public projects, you’ve most likely heard a lot of myths about construction bonds.

Common misconceptions range from the idea that surety bonds are unaffordable to questioning whether they are necessary at all. Due to this misinformation, many contractors either avoid projects requiring bonds, thus missing great work opportunities; or sometimes even operate without them, which jeopardizes their legal standing and puts their whole company at risk.

For the sake of clarity, let’s bust a few of those myths, so that you can conduct your business with the truth in your toolbox.

Myth #1: Construction Bonds Are Very Costly

Probably the most widely spread misconception about contractor bonds is that they are too expensive, and thus out of reach for many small-scale contractors. The reality is quite different, though. The contractor often does not pay anything in the end.

The bond price is usually somewhere between 1% and 3% of the contract sum. However, the contractor needs to pay the bond premium after she actually wins the bid. If bonding is needed for the project, all applying contractors face the same requirement, but only the winning bidder will pay the payment and performance bonds. In most cases, the obligee on the contract, the owner of the project, reimburses the bond price with the first payment towards the contractor.

Myth #2: No Surety Bonds Are Needed by Large Construction Companies

This misconception is based on the idea that big players in the construction field are immune from failure, so they should not and do not obtain construction bonds. While it might be surprising to some, this is not true. Large construction companies can and do have financial problems or suffer from mismanagement and improper financial handling.

A recent case of this is the bankruptcy of the 105-year-old company Truland Group Inc., Washington, D.C.’s largest electrical contractor. Truland had been in turmoil for months if not years prior to its shutdown, and while there were many indications of problems, the end was still unexpected. Currently, the company that provided bonding to Truland, XL Specialty Insurance Co., could be forced to cover more than $35.6 million because of claims from suppliers and subcontractors.

Truland is not the only large company that met this unexpected end. The same thing happened to industry giants Morrison Knudsen, Modern Continental, or Ballenger. It’s easy to see that without the required bonding, there would be nobody to pay to affected parties and to cover the risk in such situations.

Myth #3: Surety Companies Never Have Losses

One might assume that surety companies never pay for anything, as the contractors for which they underwrite bonds have to cover the bill at the end. However, this isn’t always the case.

For example, between 2002 and 2013, sureties have covered more than $13 billion in claims, which do not include additional claim expenses that also go in the billions. The above-mentioned case of Truland is a good illustration of that. In the event of bankruptcies and pending claims, there is nobody else but the surety provider to cover the costs.

There are additional hidden costs that surety companies also cover. Sometimes they finance contractors through tough times, especially if they have a well-built long-term relationship. They can also help negotiations in case of conflicts, which saves money for contractors but of course means expenses for sureties in terms of time and engagement.

Myth #4: All Sureties Are Created Equal

Sadly, not all surety bond companies are the same. Even if a name sounds familiar, if you haven’t used their services you cannot be sure that all will go smoothly during your bonding.

That’s why verifying the surety is an essential step when obtaining bonding for a project. The National Association of Surety Bond Producers recommends to follow a two-step authentication process when choosing a surety. First, check the authority of the surety to issue the bond. Your state insurance department can provide the information on whether the surety is within the appropriate project jurisdiction. You also need to check whether the surety you’ve chosen is included in the U.S. Department of the Treasury Listing of Approved Sureties. If the company covers both points, it’s safe to use its services.

The final step to check your bonding is to inquire directly from the surety company whether your surety bond has been authorized. You can find further information and surety companies’ contacts in the Surety and Fidelity Association of America Bond Obligee Guide. Once you’ve verified this has been done, you can be sure that your bonding is complete and secure.

Myth #5: Other Insurance Products Can Do the Job, Too

If you’ve heard that a letter of credit or Subcontractor Default Insurance (SDI) are alternatives to bonding, this is a myth that urgently needs busting. No other product gives the same level of complete protection as surety bonds do.

A letter of credit secures a part of the contract amount in cash in case the contractor defaults. However, there is no overview whether the contract is being strictly and fully completed, which sureties do provide. Reimbursement of subcontractors, employees, and suppliers is also not considered.

SDI is also not an option equal to bonding. It’s actually much closer to regular insurance because the insured entity is the contractor and not the owner of the project or the subcontractors and suppliers, who are most affected in cases of default or bankruptcy. SDI is also not ideal for contractors themselves, as they have to cover all losses at first, and then to get reimbursement from the insurance. This puts their finances in great jeopardy and makes them often unable to repay all due costs to other affected parties. It’s clear that bonding remains as the most effective and comprehensive security method, after all.

These are the five most common misconceptions about construction bonds that we thought you’d find relevant for your contractor business.

Have you heard any other myths about contract bonds? We’ll be happy to discuss details about them in the comments section below.

Written by Vic Lance

Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps contractors get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.

Louisiana Lien Waivers Made Simple

A mechanic’s lien is a last-resort measure used by construction procurers to obtain payment withheld by a client. In this day and age, however, many clients harbor valid concerns about fraudulent liens, especially considering Louisiana’s loose requirements for filing a mechanic’s lien. Whether you’re a contractor, supplier or equipment lessor, a mechanic’s lien waiver is an effective way to protect your clients from fraudulent liens.

Basic Types of Lien Waivers

A lien waiver is a document stating that you waive your right to any future liens against your client’s property. Depending on the type of waiver, it is furnished either prior to receiving payment or afterward. Four factors combine in different configurations to create the type of lien waiver necessary for any given situation, and they are:

1.Conditional;

2.Unconditional;

3.Progress payment; or

4.Final payment.

Conditional Waiver Upon Progress Payment

A conditional waiver upon progress payment is usually attached to a mid-project invoice and stipulates that you waive your right to any future liens on the client’s property up to a certain date if you receive and process payment on it. It excludes returned or stopped payment checks. This type of waiver is the safest for you as the procurer.

Unconditional Waiver Upon Progress Payment

An unconditional waiver upon progress payment is issued after receiving and processing a mid-project payment, and states that you waive your right to any future liens on the client’s property through a specified date. It excludes returned or stopped payment checks.

Conditional Waiver Upon Final Payment

A conditional waiver upon final payment is usually attached to a final invoice and stipulates that you waive your right to any future liens against the client’s property if you receive and process payment on it. It excludes returned or stopped payment checks.

Unconditional Waiver Upon Final Payment

An unconditional waiver upon final payment is issued after receiving and processing the final payment, and states that you waive your right to any future liens against the client’s property regardless of whether the payment check has been returned or payment stopped. This is the safest type of waiver for the client.

With a lien waiver, you aren’t just building a structure—you’re building trust. Let the attorneys at Wolfe Law help you secure that trust with a lien waiver that works for you.