Remarks from Congresswoman Carolyn Maloney (D-NY)

Aug 2, 1999
Press Release

WASHINGTON, D.C. – Congresswoman Carolyn Maloney (D-NY) was joined today by Rep. George Gekas (R-PA), other Members of Congress and representatives from the construction industry, in urging support for H.R. 1219, the Construction Industry Payment Protection Act of 1999.

"Thank you all for coming this afternoon on what we hope will be an historic day for the construction industry.

"As you know, this afternoon, the House of Representatives will consider bipartisan legislation that my colleagues and I introduced earlier this year to reform and modernize the Miller Act. Thanks to the broad coalition before you today, we are on the verge of acting to provide real payment protection for the first time in almost sixty-five years.
"The bill before the House, H.R. 1219, will make a number of important changes to the Miller Act. Most importantly, it will provide for full payment protection for subcontractors working on federal projects. For many of you who have watched this issue in recent years, today’s victory will be especially meaningful because we have agreement from all the industry groups that care about this issue. Everyone involved in federal procurement – from subs to generals to sureties – agrees that it is time to fix the Miller Act. And now, if the House passes this bill tonight, we will be one step closer to achieving that goal.

"This bill is particularly important to me, not just because it helps small businesses, but also because it helps out one of my constituents who experienced first-hand the problems with the Miller Act.

"I first got involved in this issue because of the story of what happened to one of my constituents, Fred Levinson, who lost millions of dollars because the Miller Act didn’t provide adequate protection. Several years ago, Mr. Levinson was hired to work on a federal prison in New York City. When the prime contract on the project was canceled, he found himself without sufficient payment protection.

"Even before being elected to Congress, I became aware of the obstacles general and subcontractors face when working on government projects, as a member of New York’s City Council.

"After hearing Mr. Levinson’s story, I began to understand how hopelessly outdated
the Miller Act’s protections were. It was then that I realized if Congress didn’t fix the Miller Act, many good subcontractors would simply stop taking federal work. And if that happened, then all of us – especially the taxpayers – would pay for it.

"Thanks to this bill, no subcontractor will have to worry about facing what Fred Levinson faced. This bill will fix the Miller Act and finally give subcontractors real payment protection."

Background:

Under the Miller Act (40 U.S.C. 270a-270d), all contractors who perform work on government projects must provide a payment bond to "all persons supplying labor and material." Yet the total amount of such payment bonds need not be more than $2.5 million, regardless of the size of the contract. While this amount may have been appropriate in 1935, it is no longer sufficient to provide subcontractors with adequate protection.

Rep. Maloney’s bill, the "Construction Industry Payment Protection Act of 1999," will raise the ceiling on payment bonds to the total amount of the contract, except in those situations in which the contracting officer determines that such a bond is not feasible. In addition, it would modernize the Miller Act in other ways, by permitting notification of payment bond suits by any means that permits written, third-party verification of delivery, and by voiding waivers of the right to sue before work on the contract has begun.

Maloney’s bill enjoys the strong support of over twenty industry organizations with an interest in Miller Act reform, including the American Subcontractors Association, the Surety Association of America, and the Associated General Contractors of America. The bill is largely based on a memorandum of understanding signed by representatives of numerous trade organizations outlining agreed-upon changes to the Miller Act. The bill was passed unanimously by the Government Reform Committee on May 19, 1999.

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