 I've ever seen this movie where the Miller's with this guy who gets in trouble with his friend they have to create this fake family and they go and try and like sneak drugs back to Mexico. If you haven't seen it that's okay but it's a really fine movie. The reason why I brought up the movie where the Miller's is because the movie ties in today's lesson which is what's called the Miller Act and the Miller Act is a provision on their USC chapter 31 which helps protect contractors from non-payment of supplies and or labor when working on federal contracts. You've probably never heard of it but this is going to save you a lot of money and a lot of headache in the future by knowing this information. Pay attention the Miller Act well actually what's called the it was formally known as the Miller Act what happens is it requires that the prime contractors who get federal contracts put bonds on the job. A bond is a form of insurance policy that it provides protection for you and I out there who are working on these federal contracts because as you may or may not know you cannot sue the federal government for non-payment so if you are working on a federal job you do not have the right or ability to put a lien on a federal facility that Department of Justice the White House you can't lien the White House you can lien your aunt Sally's house. So the Miller Act requires that prime contractors give a bond to ensure protection for the little guys out there in this world that's the good thing. Now again if you comply and you meet the requirements meaning that if the bond the job 90 days afterwards you weren't not paid you filed a claim you have up to one year to file that claim if you meet all those provisions then you are do your monies. However the bad side of that is this the Miller Act provision provides protection if you are first tier and second tier subcontractors it does not provide protection if you fall outside of that window. So Eric what is the first tier and a second tier subcontractor let's go over here to my screen and take a look at what I'm talking about here. So first tier and second tier subcontractors you have the government at the top right and then they provide a contract to the prime. So the prime is the one that provides the bond for the job. Cool so we're protected so we got the government and then we got the prime. Now then we start talking about people who work underneath the prime and as you know some of these jobs are really large 50 million a hundred million even 50 billion so they're going to have a whole bunch of people working below them. Now those companies sometimes a subcontractor when we're looking at on the federal level a subcontractor his scope of work his scope of services could be $50 million himself or $500 million for all that matter if they're building for example ships or submarines their scope of work could be a $50 million package. So naturally if you're building a ship and you're giving a part of the contract that's 50 million you're gonna have people working below you. The people that work below that guy is considered second tier subcontractors. So again we've got this really large company that's building this military installation that they're going to be then in turn building ships and submarines. Now the big company has the one billion dollar contract right so we got big company has the one billion dollar contract that big company is considered the prime contractor. Now he hires a company to build a ship so this next guy his job is to build the ship his contract is 50 million they hire five of those companies. So now the prime contractor has a one billion dollar contract the second guy has a 50 million dollar contract. That guy is considered a first tier subcontractor. Now anybody that works below him is considered a second tier subcontractor. Alright so again you've got the guys building the ships it's number one then the ship building guy hires some companies let's say he hires a company to paint the entire ship and we know ships are pretty big so let's say the ship's contract for painting is four million right they've got to paint the ship inside and out beautiful ship they need to paint it sparkly clean. Alright so that package is four million dollars. Now you come along right and you're this little guy coming out here you're excited to get started working in the field arena you're like bam I got my first contract this guy gave me a contract to paint this ship right so but again because you want to start small because you're afraid to go after the big contracts you're starting small you're saying look man just you you're bragging you're excited hey Eric look I just got this contract for $200,000 to paint this ship well guess what you're a third tier subcontractor so guess what there's no you have no remedies for ensuring that that person who got the painting counter to paint the ship is gonna pay you to paint that ship there's no recourse and there's no remedies yet naturally you could sue them if you've got the money and the resources but there's no protections there's no provisions in the law that govern that so now you would have to sue them at your own expense and also let's assume that you try to complain to someone at the top they're gonna tell you they're gonna read you this law they're gonna reference this particular section in the law they're gonna reference this chapter here that says talks about bonds what's called formerly known as the Miller Act so I want to let you guys know out there if you're out there and you're operating and the office of the government when you're out there and you're operating and you're excited know what position you are in on a contract know how close you are to the actual contract holder so that that way you can ensure you're protected I'll give you a really quick example story of how this affected me I was on a job and again the same thing there's this prime contract they were hired by the actual military base and we're working out in Texas and we were building these we were actually working on the border building a border patrol station so the major contract they had the job to do the entire like border patrol station itself they then hired out a package a metal building package to someone to do all the supply the design the engineering so then that guy became the first here he then hired me to do the actual buildings themselves right so then I became the second tier subcontractor well I then supplied I got my equipment from H&E which provided equipment to the job so they were the ones that provide the equipment to the job of course naturally I need equipment right and I don't own all the boom lifts and the machines that I need it so then H&E then became a third tier to me so guess what happens when the second guy who had the contract decided not to pay because he failed to do something on his part it then left me in a position where I could not pay H&E but H&E had no recourse to pursue the actual prime contractor or the government or the other guy for that matter so it left kind of us all in this conundrum where everyone we were kind of like it kind of rolled downhill as you know the old saying now the good thing about that for me at least was because H&E was a much larger entity than myself H&E then had the power they had the attorneys and the muscle behind them to actually sue the company who hired me to do the job now you and I may not have the ability to do that but the good side was H&E hired an attorney the attorney I gave him all the contract information I let them know what was happening they've read my contract they knew who hired me they read that person's contract and then H&E was able to go above my head and sue the actual contractor the second tier guy who hired me who didn't pay me they were able to sue him and get the money that was due to them in that case so my particular situation it worked out great it's not gonna always work out that way for everyone out there but again the point is the more information that you know the more you're aware then you can take precautionary efforts in place when we work with some of these companies maybe you could do things like ask for some money upfront maybe you can ask for a smaller window in terms of being paid whatever steps that you need to take to protect yourselves I want to inform and educate everyone out there so that you can take those necessary steps all right thanks for watching today