North Carolina Building Contractor License Practice Exam

Which of the following statements is true about federal bonding requirements?

1. They only apply to private projects

2. They apply to all federal projects under $10,000

3. They are mandated by the Miller Act

4. They are optional for small projects

The correct answer is: They are mandated by the Miller Act

The statement about federal bonding requirements being mandated by the Miller Act is true because the Miller Act specifically requires contractors on federal construction projects to provide surety bonds to protect against default. This law was enacted to ensure that subcontractors and suppliers are paid for their work and materials on federal contracts, as the government needs to safeguard the public interest by minimizing the risk of financial loss associated with contractor defaults. The Miller Act applies to contracts that exceed $100,000, ensuring that contractors are bonded for both performance and payment. It sets forth the requirement for a bid bond, a performance bond, and a payment bond, thus creating a framework that enforces responsible contracting practices on federal projects. Understanding the Miller Act is crucial for contractors operating in the federal space, as it sets clear expectations and requirements for bonding activities.