Can a lien be filed on a federal construction project?

The Federal Project Lien Myth: Why Standard Liens Don’t Apply

The most critical concept to internalize is this: you cannot place a mechanic’s lien on a federal building or asset. Period. The no-lien rule on federal projects is not a legal loophole or a technicality—it’s a direct consequence of the doctrine of sovereign immunity. The federal government, as a sovereign entity, cannot be sued or have its property encumbered without its explicit consent. This creates a fundamental power imbalance that shifts the entire risk calculus for subcontractors and suppliers.

WHY this matters: The inability to file a lien removes the single most powerful leverage tool in construction: the threat of clouding the project owner’s title. On private projects, this threat forces payment conversations. On federal jobs, that pressure point vanishes, transferring significant financial risk downstream. Your security is no longer tied to real property but to a financial instrument—the payment bond—and your relationship with the bonding company. This fundamentally alters your pre-qualification and credit management strategy; you must vet the prime contractor’s bonding capacity as rigorously as you would a private client’s credit.

HOW it works in real life: Imagine you’re a flooring subcontractor on a VA hospital renovation. The general contractor stalls your $150,000 payment. Your standard playbook—sending a lien notice, then filing against the property—hits a wall. The property is owned by the U.S. government. Any lien filing will be summarily rejected by the county recorder, and attempting to sue the government directly for payment is barred. Your only path is against the payment bond. This changes your behavior from day one: your contract administration, documentation, and notice procedures become your lifeline, not just best practices.

WHAT 99% of articles miss: They treat sovereign immunity as a dry legal fact without exploring its behavioral impact. Because lien rights are off the table, the alternatives to mechanic’s lien aren’t just different procedures; they require a different business mindset. The risk isn’t just non-payment—it’s the cost and delay of pursuing a bond claim versus the relative speed of lien foreclosure. This environment can inadvertently encourage “slow pay” culture among primes who understand the diminished immediate threat. Successful subs on federal work build their operational model around airtight notice and documentation, treating them as core profit-center activities, not administrative overhead. For a deep dive on structuring your business to manage these unique risks from the outset, see our guide on writing a construction business plan.

The Miller Act: Your Federal Project Safety Net (Beyond the Basics)

The Miller Act payment bond claims process is your exclusive remedy, but it’s not a simple lien substitute. It’s a statutory claim against a surety bond. The Miller Act (40 U.S.C. § 3131 et seq.) mandates that prime contractors on federal projects exceeding $150,000 must furnish both a performance bond and a payment bond. The payment bond is your guarantee.

WHY this matters: The bond creates a three-party relationship: you (the claimant), the non-paying prime contractor, and the surety (the bonding company). The surety’s financial strength and reputation become paramount. A claim is a legal action against this third-party guarantor, not the government. This introduces a new variable: the surety’s claims department and its appetite for settlement versus litigation. Your leverage is contractual and financial, not property-based.

HOW it works in real life: The process is rigidly procedural. For first-tier subcontractors and suppliers (those with a direct contract with the prime), you must give written notice to the prime contractor within 90 days from your last day of furnishing labor or materials. You then have one year from that last day to file a lawsuit against the payment bond. For second-tier claimants (sub-subs or suppliers to a sub), there’s an additional notice requirement for subs on federal jobs: you must deliver a written notice to the prime contractor within 90 days of last furnishing, and that notice must be sent via registered or certified mail. Missing these filing deadlines for bond claims by a single day is fatal to your claim.

WHAT 99% of articles miss: Two critical, underreported nuances define success:

1. The Scope of “Labor and Materials”: It’s broader than many assume. It can include equipment rentals, fuel for dedicated machinery, and even certain project-specific software licenses, provided they are directly incorporated into the project. Documenting the “incorporation” is key.
2. Bond Tiering and prime contractor bond access: Your claim is against the bond furnished by *your* contractor’s direct principal. If you’re a second-tier sub, you claim against the prime’s bond, not your direct subcontractor’s bond (if they even have one). This creates a “pass-through” liability dynamic. The prime contractor is financially motivated to ensure their subs get paid to avoid a claim on *their* bond, which affects their bonding capacity and premiums. Savvy subs use this by formally notifying the prime of payment issues early, activating this leverage. Understanding these dynamics is as crucial as knowing the deadlines. For more on the legal structures that govern these relationships, review the implications of flow-down clauses in federal subcontracts.

Claimant Tier	Action Required	Deadline
First-Tier Sub/Supplier (Direct to Prime)	Lawsuit against Payment Bond	1 year from last furnishing
Second-Tier Sub/Supplier (To a First-Tier Sub)	1) Certified Notice to Prime Contractor 2) Lawsuit against Payment Bond	1) 90 days from last furnishing 2) 1 year from last furnishing

Effectively enforcing rights without lien means operating with military precision on notices and deadlines, while cultivating a professional rapport with the prime’s project management team to resolve issues before they escalate to a claim. Your best outcome is getting paid without ever filing suit; your imperative is to be fully prepared to file if you aren’t.

The Critical Path: Navigating Notice and Deadlines on Federal Jobs

For subcontractors on federal projects, the Miller Act replaces the mechanic’s lien with a payment bond claim—a powerful tool, but one with procedural tripwires far more unforgiving than state lien laws. Understanding the notice requirements for subs on federal jobs isn’t about compliance; it’s about activating your only financial safety net. The system is designed for precision, not leniency, and a single misstep can extinguish your right to payment, regardless of how deserving your claim may be.

Why the 90-Day Notice is Your Most Important Document

The 90-day preliminary notice to the prime contractor is not a formality; it’s a statutory condition precedent. Its purpose is systemic: to alert the paying parties (the prime and their surety) of your involvement and potential claim, allowing for early intervention and resolution before the project concludes. The vast majority of bond claim denials stem from failures here—not in the merit of the work, but in the technical perfection of the notice. What most articles miss is that the “first furnishing” date that triggers this 90-day clock is often ambiguous. Did it start with the first material delivered to the site, the first labor performed off-site (like shop drawings), or the first meeting? Courts interpret this strictly, and your assumption could be fatal.

How to Execute Flawless Notice and Meet Filing Deadlines

The mechanism is deceptively simple on paper but complex in practice. Your process must be evidence-driven, assuming every detail will be scrutinized by a surety claims adjuster.

1. Determine Your “First Furnishing” Date Rigorously. Do not rely on the contract signing or project start date. Document the exact calendar date you first provided labor or materials. This is your day zero.
2. Serve the 90-Day Notice with Forensically Verifiable Proof. The statute allows service by any means that provides written verification. While certified mail is the gold standard, other methods can work if proven.
   

   Method	Best Practice for Evidence	Risk Level
   Certified Mail, Return Receipt	Keep the postal receipt and the signed green card. Note the mailing date.	Low
   Overnight Courier (FedEx, UPS)	Use a service that provides tracking and signature confirmation. Archive the delivery proof.	Low
   Email	Only use if the prime contractor has agreed in writing to accept service this way. Request a read receipt and save all headers.	High (unless contractually agreed)
   Personal Delivery	Have a third-party process server or neutral party do it, creating a sworn affidavit of service.	Medium

3. Prepare for the One-Year Lawsuit Deadline. Your right to sue on the bond expires one year from the last day you furnished labor or materials. This is an absolute bar. Calendar this date aggressively and file suit well in advance. Do not wait for “negotiations” to conclude.

The overlooked trade-off is between speed and completeness. Sending a bare-bones notice on day 89 to beat the deadline may preserve your right, but a detailed, well-documented notice sent on day 45 is a stronger tool for prompting immediate payment without a lawsuit. For a deeper dive into structuring your business to manage these critical paths, see our guide on writing a construction business plan.

Accessing the Bond: Overcoming the Prime Contractor’s Invisible Wall

Knowing you have rights under a Miller Act payment bond is meaningless if you cannot identify the surety and obtain the bond particulars. This is the most common practical hurdle, often treated as a minor detail. In reality, prime contractor obstruction on prime contractor bond access is a tactical delay strategy, betting you’ll run out of time or patience. Your ability to bypass this wall defines your leverage.

Why Bond Information is Often Obscured

The root cause is misaligned incentives. While the law requires the prime to provide bond information upon request, there is no immediate penalty for stalling. The prime contractor may wish to hide payment issues from their surety or simply use your lack of information as a bargaining chip to negotiate a lower settlement. The systemic effect is that subcontractors without a proactive process enter the claims race at a severe disadvantage.

How to Securely Obtain Bond Details and Enforce Your Rights

Beginners need a clear pathway; experts need enforceable tactics. Follow this escalating strategy:

1. The Contractual Request. Before work begins, include a clause in your subcontract requiring the prime to provide a copy of the payment bond and the surety’s contact information within 7 days of signing. This creates a contractual right beyond the statute.
2. The Formal Written Demand. Upon non-payment, send a written request for bond information via certified mail. Cite the Miller Act (40 U.S.C. § 3133). Document this request separately from your 90-day notice.
3. The FOIA Workaround. For federal projects, the contracting officer is required to hold a copy of the bond. If the prime is unresponsive, submit a Freedom of Information Act (FOIA) request to the specific agency overseeing the project (e.g., the U.S. Army Corps of Engineers, GSA). While the bond itself is not subject to FOIA, the contracting officer’s name and contact information are, which you can use to formally request the bond directly from the officer. For more on navigating government contracts, review our resource on applying for government construction contracts as a small business.
4. The Legal Leverage. If the prime contractor willfully refuses to provide information, it can be grounds for a claim of bad faith. Mention this potential in later communications. In a lawsuit, you can subpoena the bond directly from the surety.

The counterintuitive truth is that the surety is often your easiest point of contact once identified. Their business is risk management, and they often prefer to resolve valid claims from subs promptly to avoid litigation costs and potential liability for the prime’s bad faith. Your goal is to transform your claim from an argument with the prime into a documented claim process with the surety. This strategic shift is the core workaround. Understanding the role of a surety bond in U.S. construction projects is crucial for this negotiation.

Ultimately, enforcing your rights without a lien demands a higher standard of administrative discipline than state-level work. Your business systems—from document tracking to calendar triggers—must be impeccable. This procedural rigor isn’t just legal compliance; it’s the foundation of your financial security on the most significant projects. For strategies on building these robust operational systems, consider insights on essential financial statements for construction and managing construction cash flow.

Beyond the Bond Claim: Underutilized Legal Tools and Evolving Protections

The Miller Act bond claim is the primary shield for subcontractors and suppliers, but treating it as the only weapon in your arsenal is a critical mistake. The federal payment protection framework is a multi-layered system. Understanding and leveraging its lesser-known layers can mean the difference between a full recovery and a costly write-off. This isn’t just about having a backup plan; it’s about building a comprehensive strategy that applies pressure at multiple points, often forcing a resolution without ever filing a formal claim.

Strategic Use of the Federal Prompt Payment Act

WHY it matters: While the Miller Act provides the ultimate security, the Prompt Payment Act (PPA) governs the timing of payments throughout the contractual chain on federal projects. Its power lies in its ability to create leverage early, often resolving disputes before they escalate to a bond claim. The root cause of many payment delays is not insolvency but inefficient bureaucracy or intentional cash-flow manipulation; the PPA directly attacks this by imposing mandatory interest penalties.

HOW it works in real life: The PPA mandates that federal agencies pay prime contractors within 14 days of receiving a proper invoice. Crucially, primes must then pay their subs within 7 days of receiving payment from the government. If they fail, they must pay interest at a rate set by the Department of the Treasury. For retainage disputes, this is particularly potent. If the government is withholding retainage from the prime without proper cause, the prime can invoke the PPA against the government, and subs can, in turn, use it against the prime. The mechanism is a formal written notice citing the PPA, which triggers the interest clock. It’s a low-cost, high-impact first step.

WHAT 99% of articles miss: The PPA’s interest is not discretionary. Once triggered, it is a mandatory contractual debt. Many subcontractors fail to explicitly reference the PPA in their payment demands, leaving this powerful tool on the table. Furthermore, recent board of contract appeals decisions have shown a willingness to apply PPA interest to situations where payment is delayed due to disputes over minor closeout documentation, not just outright non-payment.

Mastering the “Flow-Down” Clause in Your Subcontract

WHY it matters: Your subcontract is not an island. On a federal project, it is tethered to the prime contract through the flow-down clause. This clause legally binds you to the terms and conditions of the prime contract that the general contractor holds with the federal government. For more on foundational contract terms, see our guide on construction contract review best practices. The hidden incentive for primes is to push all federal compliance risk down to you. The systemic effect is that you inherit both burdens and, if you’re strategic, significant rights.

HOW it works in real life: A well-drafted flow-down clause gives you, as a sub, the right to enforce the payment terms of the prime contract. This includes the right to request copies of the prime’s payment applications to the government and to receive information about the status of government payments. In a dispute, you can argue that the prime’s failure to pay you constitutes a breach of its contract with the government, giving you a potential contractual claim alongside your bond claim. The concrete mechanism is to formally request a copy of the prime contract’s relevant payment clauses and then mirror its payment application requirements in your own invoicing.

WHAT 99% of articles miss: The flow-down clause is a double-edged sword that most subs only see one side of. Yes, it flows burdens down, but it also flows remedies up. An emerging trend is for sophisticated subcontractors to use the flow-down clause to invoke federal contract dispute procedures, potentially gaining access to forums like the Civilian Board of Contract Appeals (CBCA) under the “pass-through” theory, which can be faster and less expensive than federal district court for a Miller Act claim.

Emerging Trends: Electronic Tracking and Expanding Claimant Rights

The landscape of federal payment security is not static. Two nascent trends are beginning to reshape the playing field:

• Electronic Payment Tracking Pilots: Agencies like the General Services Administration (GSA) are piloting blockchain and other distributed ledger technologies to create immutable, transparent records of payment applications and approvals. The long-term implication is near-real-time visibility into whether the prime has been paid by the government, eliminating the common “we haven’t been paid yet” excuse. For now, participants in these pilot programs gain a significant informational advantage.
• Broadening “Covered Claimant” Definitions: Recent federal court rulings have shown a trend toward liberally interpreting who is entitled to Miller Act protection. Cases have successfully extended coverage to design professionals providing off-site, project-specific support and to suppliers of rental equipment where the rental period extends through project completion. This challenges the traditional, narrower view of what constitutes “labor or material” furnished.

Case Study Deep Dive: The $52M VA Hospital Renovation & The 89-Day Notice

Consider the anonymized case of “Precision Electrical, LLC,” a subcontractor on a major Department of Veterans Affairs hospital renovation. The project was plagued by delays and change orders. Precision performed its final work, worth $287,000, and submitted its invoice. The prime contractor, citing unresolved back-charges with another sub, refused payment. A year passed.

The Critical Path to Success

Precision’s success hinged on three non-obvious factors that generic guides rarely connect:

1. Pre-Notice Relationship & Documentation: From day one, Precision sent all delivery tickets and daily reports with a project-specific header that included the VA contract number and project title. This created an irrefutable paper trail that each item was furnished for this federal project, a foundational requirement for a bond claim.
2. Understanding “Final” Labor or Material: The prime argued Precision’s 90-day notice clock started when its electricians left the site. However, Precision had provided a critical as-built drawing 89 days before sending its notice. The court ruled this drawing constituted “material” (specialized information) furnished to the project. Sending the Miller Act notice on the 89th day after furnishing that drawing was timely, saving the claim. This highlights that “final furnishing” is a legal concept, not just a physical one.
3. Leveraging Partial Payments Against the Bond: During the dispute, the prime made a small, $15,000 “good faith” payment without specifying what it was for. This is a common tactic to muddy the waters and reset relationship clocks. Precision’s counsel immediately applied this payment directly to its oldest, non-disputed invoice, ensuring the entire $287,000 claim remained a single, coherent “unpaid balance” eligible for the bond. This prevented the prime from arguing the claim was fragmented or partially satisfied.

The Fatal Mistake (Averted) and the Government’s Role

The near-fail moment came from an external factor: government acceptance delays. The VA took 120 days after physical completion to issue its formal “Certificate of Final Acceptance.” A novice might assume the one-year statute of limitations to sue on the bond starts from this date. It does not. It runs from the date the claimant performed its last labor or furnished its last material. Precision was ready to file suit at the 11-month mark from its final drawing, correctly ignoring the VA’s administrative delay. Waiting for the government’s acceptance would have been a fatal error.

This case underscores that enforcing rights on a federal project requires a systems-thinking approach. It’s not just one notice or one deadline. It’s the integration of meticulous documentation, a strategic understanding of what triggers key clocks, and the tactical use of every payment and communication to box in the non-paying party. For any business operating in this space, this level of proactive financial and legal management is as crucial as the operational work itself. Building this capability starts with a solid foundation, much like the one outlined in our U.S. construction business plan writing guide. The bond is your guarantee, but your process is what enforces it.