{
  "id": "R41230",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R41230",
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  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
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      "id": 448188,
      "date": "2015-12-18",
      "retrieved": "2016-04-06T17:41:54.254261",
      "title": "Legal Protections for Subcontractors on Federal Prime Contracts: In Brief",
      "summary": "Payment and other protections for subcontractors on federal contracts are of perennial interest to Members and committees of Congress, in part, because many subcontractors are small businesses, and it is the \u201cdeclared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns.\u201d Subcontractors on federal contracts do not have \u201cprivity of contract\u201d\u2014or a direct contractual relationship\u2014with the federal government. As such, subcontractors would generally lack the payment and other protections that federal prime contractors enjoy. However, Congress has enacted several measures that give small business and other subcontractors certain protections. Key among these are the Miller Act, the 1988 amendments to the Prompt Payment Act, and Section 8(d) of the Small Business Act. \nThe Miller Act of 1935, as amended, authorizes subcontractors who furnished labor or materials used in carrying out federal construction projects valued in excess of $150,000 to bring a civil action against prime contractors\u2019 payment bonds to obtain payments due. Congress enacted the Miller Act to compensate for the difficulties that subcontractors would otherwise have in obtaining payment from federal construction contractors, given that they cannot place a mechanic\u2019s lien on the work because the government has sovereign immunity. The doctrine of sovereign immunity protects the government from being sued without its consent, and the Contract Disputes Act waives the government\u2019s sovereign immunity only as to suits involving contracts to which the government is a party, not subcontracts under these contracts. Relatedly, because there is no privity of contract between the government and the subcontractor, the subcontractor generally cannot sue to enforce the payment or other terms of the subcontract against the government. \nThe 1988 amendments to the Prompt Payment Act provide an additional form of payment protection for subcontractors on federal construction contracts by requiring federal agencies to include in their contracts a clause obligating the prime contractor to pay the subcontractor for \u201csatisfactory\u201d performance within seven days of receiving payment from the government. Absent such a clause in the prime contract, the prime contractor would generally be free to agree to whatever payment terms it wishes with the subcontractor and would not necessarily pay the subcontractor as quickly. However, the federal government cannot be interpleaded as a party to any disputes between contractors and subcontractors over late payments or interest, and contractors\u2019 obligations to pay subcontractors cannot be passed on to the federal government in any way, including by contract modifications or cost-reimbursement claims.\nSection 8(d) of the Small Business Act provides yet another payment protection for subcontractors by requiring that prime contractors notify officials of the federal agency that awarded the contract (known as \u201ccontracting officers\u201d) in writing whenever they pay a \u201creduced price\u201d to a subcontractor for completed work, or whenever payment is more than 90 days past due. Section 8(d) also generally requires that prime contractors agree to plans for subcontracting certain percentages of the work to be performed under federal contracts to various types of small businesses. In addition, under Section 8(d), prime contractors must make \u201cgood faith efforts\u201d to work with the subcontractors whom they \u201cused\u201d in preparing their bids or proposals, and provide agency contracting officers with a written explanation whenever they fail to do so. Without these subcontracting plans, or similar contract terms, prime contractors would generally be free to subcontract with whomever they wish for the completion of work under the contract and would not be required to deal with various categories of small businesses.",
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        {
          "source": "IBCList",
          "id": 2636,
          "name": "Small Business Policy"
        },
        {
          "source": "IBCList",
          "id": 4628,
          "name": "Government Contracts"
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    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc463442/",
      "id": "R41230_2014Jan27",
      "date": "2014-01-27",
      "retrieved": "2014-12-05T09:57:41",
      "title": "Legal Protections for Subcontractors on Federal Prime Contracts",
      "summary": "This report provides an overview of the payment and other protections for subcontractors on certain federal prime contracts under the Miller Act, the 1988 amendments to the Prompt Payment Act, and the Small Business Act.",
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          "source": "LIV",
          "id": "Business",
          "name": "Business"
        },
        {
          "source": "LIV",
          "id": "Contractors",
          "name": "Contractors"
        },
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          "source": "LIV",
          "id": "Subcontractors",
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    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc461979/",
      "id": "R41230_2012Dec10",
      "date": "2012-12-10",
      "retrieved": "2014-12-05T09:57:41",
      "title": "Legal Protections for Subcontractors on Federal Prime Contracts",
      "summary": "This report provides an overview of the payment and other protections for subcontractors on certain federal prime contracts under the Miller Act, the 1988 amendments to the Prompt Payment Act, and the Small Business Act.",
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      "topics": [
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          "source": "LIV",
          "id": "Business",
          "name": "Business"
        },
        {
          "source": "LIV",
          "id": "Contractors",
          "name": "Contractors"
        },
        {
          "source": "LIV",
          "id": "Subcontractors",
          "name": "Subcontractors"
        }
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    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc29591/",
      "id": "untl-crs-collection/data/metadc29591/metadc29591.metadata.untl.xml",
      "date": "2010-10-06",
      "retrieved": "2010-12-04T14:26:25",
      "title": "Legal Protections for Subcontractors on Federal Prime Contracts",
      "summary": "This report provides an overview of the payment and other protections for subcontractors on certain federal prime contracts under the Miller Act, the 1988 amendments to the Prompt Payment Act, and the Small Business Act. Congress enacted these statutes to give subcontractors rights and remedies they would not otherwise have because of legal doctrines relating to sovereign immunity, privity of contract, and freedom to contract. The report also discusses legislation introduced in the 111th Congress that would provide additional protections for subcontractors.",
      "type": "CRS Report",
      "typeId": "REPORT",
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      "topics": [
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          "source": "LIV",
          "id": "Business",
          "name": "Business"
        },
        {
          "source": "LIV",
          "id": "Contractors",
          "name": "Contractors"
        },
        {
          "source": "LIV",
          "id": "Subcontractors",
          "name": "Subcontractors"
        }
      ]
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  "topics": []
}