Masonry Magazine October 1999 Page. 20
ASA Hails Passage of H.R. 1219 by House of Representatives
Leaders of the American Subcontractors Association (ASA) applauded the U.S. House of Representatives for its expeditious approval of H.R. 1219, the Construction Industry Payment Protection Act of 1999. A broad cross-section of construction industry and surety industry groups, including the ASA-led Coalition to Modernize the Miller Act, supported the bill. Rep. Carolyn Maloney, D-N.Y., is the original sponsor of the legislation.
The House of Representatives approved H.R. 1219 by a vote of 416-0 on Aug. 2. The House Government Reform Committee favorably recommended H.R. 1219 to the House on May 19.
The bill would modify the Miller Act, which requires payment bonds to be in place on federal and federally funded construction projects. In general, a payment bond provides financial protections to companies working on a construction project by guaranteeing that they will be paid for their work in case the general contractor defaults or in case payment is wrongfully withheld.
However, the Miller Act, which was enacted in 1935, has not been updated to reflect economic and technological changes that have occurred since 1935, such as higher project costs and advances in electronic communication.
H.R. 1219 would update the Miller Act by:
* Requiring the payment bond to equal the full price of the contract. The law currently caps the total amount of the payment bond for subcontractors and suppliers at $2.5 million on federal and federally funded construction projects, no matter what the amount of the contract is.
* Prohibiting prime contractors from requiring subcontractors to waive their payment bond rights prior to commencement of work. At present, federal law permits agreements between prime contractors and subcontractors that require the subcontractor to waive its rights, even before work has begun.
* Permitting a subcontractor to notify a prime contractor that the subcontractor has initiated an action under provisions of the Miller Act by any means of notification that can be verified by a third party. Current law restricts the means of notification to registered mail delivery through the U.S. Postal Service.
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20 MASONRY-SEPTEMBER/OCTOBER, 1999