Bonding Requirements: Public vs Private Jobs
Public works projects require surety bonds by law. Private projects leave bonding to the owner's discretion. The rules, thresholds, claim procedures, and strategic implications are fundamentally different. This guide breaks down both sides so you know exactly what to expect.
Public Works Bonding Requirements
Federal, state, and local government projects require surety bonds by law. Here is how the requirements break down by jurisdiction.
Federal Projects (Miller Act)
- Performance and payment bonds required on contracts over $150,000
- Bid bonds required on competitively bid contracts (FAR requirement)
- Bonds must be from sureties on the Treasury Department's approved list (T-List)
- Payment bond claimants must provide 90-day written notice to GC
- Suits must be filed in federal court within one year of last furnishing labor/materials
State Projects (Little Miller Acts)
- Every state has a Little Miller Act; thresholds range from $5,000 to $150,000+
- California: bonds required on public works over $25,000 (PCC 20162)
- Nevada: bonds typically required on contracts over $100,000
- Texas: bonds required on state contracts over $100,000 (Gov Code Ch 2253)
- Notice and filing deadlines vary significantly by state (30 days to 1 year)
Municipal and Local Government
- Cities, counties, school districts, and special districts follow state Little Miller Act requirements
- Some municipalities impose stricter requirements than the state minimum
- Subdivision bonds required for off-site infrastructure improvements
- Permit bonds required for specific construction activities (encroachment, demolition)
- Maintenance bonds commonly required for 1 to 2 years post-completion
Private Project Bonding
Private bonding is not mandated by law but is increasingly common on larger projects. Understanding when owners require bonds helps you prepare.
When Private Owners Require Bonds
- Large commercial developments over $1M to $5M (varies by owner)
- Institutional projects: hospitals, universities, religious facilities
- Projects with construction lender requirements
- Owner-occupied facilities where completion is critical to business operations
- Multi-phase developments where each phase depends on the prior
When Private Owners Typically Do Not Require Bonds
- Smaller commercial projects under $1M
- Residential custom homes (owners rely on mechanics' liens instead)
- Tenant improvement projects in leased spaces
- Design-build and negotiated contracts with trusted contractors
- Renovation projects with short timelines and established relationships
Public vs Private Side by Side
| Public Works | Private Projects | |
|---|---|---|
| Bonding Required By | Law (Miller Act, Little Miller Acts) | Owner or lender discretion |
| Typical Threshold | $25K to $150K+ depending on jurisdiction | $1M to $5M+ (varies by owner) |
| Mechanics' Liens Available | No (cannot lien government property) | Yes (primary alternative to bonds) |
| Surety T-List Required | Yes, for federal projects | No, but A-rated surety typically required |
| Bond Forms | Standardized (AIA A312, federal forms) | May use custom forms; negotiate carefully |
| Claim Filing Deadlines | Strictly enforced by statute | Governed by bond form and contract terms |
| Pre-Qualification Impact | Bonding capacity often determines bid eligibility | Bonding demonstrates financial strength |
| Subcontract Bonds | GC may require on subs over $100K to $500K | Less common; GC's choice |
Related Bonding Guides
Bid Bonds
Required on most public works bids
Performance Bonds
Project completion guarantee
Payment Bonds
Subcontractor and supplier protection
Related Educational Guides
Bid vs Performance
Side-by-side comparison
How Bonding Works
Step-by-step bonding process
Bond Requirements
Complete bond type reference
State Contractor Bonds
Public vs Private Bonding FAQ
Are bonds required on private construction projects?
There is no law requiring surety bonds on most private construction projects. Bonding on private work is at the owner's discretion, or required by the construction lender. Private owners use bonds when they want financial assurance of completion and subcontractor payment. On private projects, subcontractors have mechanics' lien rights as an alternative remedy, which reduces but does not eliminate the need for bonds.
What is the difference between public and private bonding requirements?
Public bonding is mandated by law. The Miller Act requires bonds on federal projects over $150,000, and every state has a Little Miller Act for state-funded work. Private bonding is voluntary, driven by owner or lender requirements. Public projects also require sureties to be on the Treasury Department's approved list (for federal work), use standardized bond forms, and comply with statutory claim filing deadlines. Private bonds may use custom forms with different terms.
Can subcontractors file mechanics' liens on public projects?
No. Mechanics' liens cannot be filed against government-owned property. This is precisely why the Miller Act and Little Miller Acts exist. They require payment bonds to give subcontractors, suppliers, and laborers a financial remedy when they cannot lien the property. On private projects, subcontractors have both mechanics' lien rights and (if a payment bond exists) bond claim rights.
Do bonding requirements differ between states?
Yes, significantly. Each state's Little Miller Act sets different thresholds, notice requirements, and claim deadlines. California requires bonds on public works over $25,000. Texas sets the threshold at $100,000 for state contracts. Nevada's requirements vary by contract type. Notice requirements range from 30 days to 90 days. Filing deadlines range from 6 months to 2 years. Always review the specific state law for the project location.
Should I get bonded even if my projects do not require it?
Having bonding capacity is a competitive advantage even on non-bonded projects. It demonstrates to owners, GCs, and lenders that a qualified surety has vetted your finances and capabilities. Many contractors establish a surety relationship before they need it so they are ready when a bonded opportunity arises. The cost of maintaining a surety program without active bonds is minimal, and the credibility it provides is significant.
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