The 12-point verification every federal prime must run on every performance bond. Miller Act eligibility, Treasury 570 status, A.M. Best rating, and the riders nobody remembers.
Performance Bond Requirements Checklist (Federal)
Why federal primes need a performance bond requirements checklist
If you’re a federal prime, the performance bond is the document everyone assumes is right and nobody actually verifies. The surety mailed it. The sub mailed theirs. Somebody filed both in a binder. Five months later, the contract value gets revised by a CO mod, the apparent low sub gets replaced, and a junior PM realizes the bond on file is for the wrong penal sum and was issued by a surety the contracting officer’s already kicked off the Treasury 570 list.
The Miller Act doesn’t care that your sub’s bond agent emailed the wrong PDF. The contracting officer doesn’t care that you assumed A.M. Best stayed unchanged. They care whether the prime, you, verified each bond before contract award and continued to verify each one as the contract changed. When something’s wrong, the work stops, the funds get withheld, or worse, a claim gets filed against a bond that was technically invalid from day one.
That’s the part nobody trains you on.
Performance bonds aren’t filed and forgotten. They’re a live compliance asset that requires verification at award, at every change order over a threshold, at every CO modification of contract value, and at every multi-year renewal. The 12 things on this checklist are what an experienced federal compliance officer actually verifies. Not what the surety industry’s marketing pages say. Not what a generic legal blog says. The real ones. The items that have caused bond rejections, contract delays, and back-and-forth with contracting officers over 15 years of federal projects.
The Miller Act trigger ($150,000 federal contract value) hasn’t changed in years, but the way contracting officers verify compliance has tightened significantly since 2023. Treasury Circular 570 updates more frequently. A.M. Best rating cuts have removed sureties from federal-eligible status mid-project on contractors who weren’t watching. The volume of bond riders required for change-order amendments has grown alongside agency mod activity. And the 2024 GAO report on federal bond compliance findings has agencies asking harder questions during audits about how primes verified subcontractor bonding capacity at award.
We built this checklist from years of running federal projects, not in a clean compliance system, but in a stack of bond originals, A.M. Best printouts, Treasury 570 page screenshots, and a redline of the contract penal sum every time a CO mod hit. The 12 things on this list are the things that actually trip up primes when a bond claim or a contract audit happens. Not the textbook items. The real ones.
You can use this manually for the next 200 contract awards in your career. Or, when you’re ready, Contracts Connected’s Subcontractor Prequalification module runs the same 12 verifications automatically on every bond your subs submit during prequal, then alerts you when contract value, A.M. Best rating, or Treasury 570 status changes. Your call.
Who this checklist is for
- Federal general contractors awarding subcontracts on contracts above the Miller Act $150,000 trigger
- Prime contractors required to obtain performance and payment bonds on federal projects
- 8(a) federal subs acting as primes on set-aside contracts requiring bond verification
- Compliance officers auditing existing bond files before contract closeout or renewal
- Project administrators coordinating bond riders when CO modifications change contract value
- Risk managers verifying surety financial strength before high-value contract award
If you’re the sub uploading your bond to a prime, this isn’t your checklist. It’s what they’re checking. Use it as a self-audit before submission so the prime doesn’t bounce your bond back.
The 12-point performance bond verification
The checklist covers 12 things every federal prime must verify on every performance bond, before award and at every contract amendment that changes value:
- Confirm Miller Act applicability and contract-value trigger. Federal contracts over $150,000 trigger mandatory performance and payment bonds under 40 USC §3131. Verify the contract value at award against the trigger; verify again on every CO mod that increases value across the threshold. Contracts hovering near $150,000 that grow via change orders quietly cross into Miller Act territory and need bonding immediately. Missing this transition is a common audit finding.
- Verify penal sum equals 100% of contract value (performance) plus separate 100% (payment). The performance bond’s penal sum should equal the contract amount; a separate payment bond at 100% protects sub-tier labor and material claimants. If you only see one bond and one penal sum on the file, something is wrong. Confirm both exist, both reflect the current contract value, and both name the federal government as obligee.
- Confirm surety carrier appears on Treasury Circular 570 list of approved sureties. The Treasury Department maintains a list of sureties acceptable on federal contracts at fiscal.treasury.gov. Verify the carrier directly at the source, not from the surety’s website, not from the agent’s certification. Sureties get added and removed from this list throughout the year; a carrier accepted six months ago may no longer be eligible.
- Verify surety A.M. Best rating meets minimum requirements. Most federal contracting officers expect A or better; A- is typically the absolute minimum. Pull the rating directly from ambest.com, not from the surety’s marketing materials. Rating cuts mid-project (B++ or below) can disqualify a surety from continuing to bond federal work. Track this annually for any multi-year contract.
- Confirm bond effective date is on or before contract award date. A bond dated after the contract award is back-dated, which auditors flag immediately. The bond must be in place before work commences. Compare the bond’s effective date to the contract’s award date in writing. Even a one-day discrepancy raises questions during agency review.
- Confirm bond penal sum amount in writing exactly matches contract value. Typo-level errors are surprisingly common. The bond face shows “$2,450,000” while the contract reads “$2,540,000”. A transposition error on the surety’s part that becomes the prime’s problem. Match the bond’s written-out and numerical penal sums to each other and to the executed contract; reject and re-issue any mismatch.
- Verify Power of Attorney from surety to attorney-in-fact is on file. The bond is signed by an attorney-in-fact, not the surety directly. The Power of Attorney (POA) authorizing that signer must be attached to the bond and dated on or before the bond’s effective date. Missing or expired POAs invalidate the bond. Auditors check this on every bond they review.
- Request surety financial statement for high-value contracts when warranted. For contracts above the surety’s standard underwriting threshold, request the surety’s financial statement to confirm sufficient bonding capacity exists. This protects the prime in the event a bond claim is filed and the surety’s capacity is exhausted. Document the request and the response in the contract file.
- Verify a bond rider has been issued for any change order above the threshold. When CO modifications increase contract value beyond the original bond’s penal sum, the surety must issue a bond rider increasing the penal sum to match. Many contracting officers set a threshold (often 10% of original contract value) below which riders aren’t required, but document the threshold per contract and track CO mod activity against it.
- Confirm bond renewal cadence for multi-year contracts. Multi-year federal contracts often require annual renewal certifications from the surety confirming the bond remains in force. Track renewal due dates against the contract’s anniversary; missed renewals leave windows of unbonded work that the contracting officer can use to withhold payment or terminate.
- Document the Miller Act bond claim notification procedure. Under the Miller Act, claimants have 90 days from the last day labor or materials were provided to give written notice to the contractor before suing on the payment bond. Maintain the surety’s claim-notification address in the project file along with the prime’s protocol for receiving and responding to claims. Mishandled claim notices cost primes time and money.
- Confirm bond cancellation/termination notice requirements. Federal performance bonds typically require 30 days written notice to the contracting officer before cancellation or termination by the surety. Verify the notice provision on each bond’s face; if a surety attempts to cancel without proper notice, the contracting officer can hold both surety and prime liable. Keep cancellation language in your contract review checklist for award.
How to run the checklist at award, at every CO mod, and quarterly
Run this checklist at three checkpoints on every federal contract: at contract award (every item, top to bottom), at every CO modification that changes contract value (items 2, 6, and 9 minimum), and quarterly during contract performance (items 3, 4, and 10 minimum). For each bond received:
- Print the checklist or open the working Excel.
- Walk down the 12 items in order, marking each
- OK, Flag, or Reject and resubmit.
- Anything Flagged needs surety follow-up by end of the next business day.
- Anything Rejected stops contract performance until corrected.
- File the completed checklist alongside the bond, the POA, the Treasury 570 verification screenshot, and the A.M. Best rating printout.
Quarterly cadence matters most for items 3 (Treasury 570 status) and 4 (A.M. Best rating). Both can change without notice and remove a surety from federal eligibility mid-contract. The full PDF download includes a printable cover sheet so you can clip it to the front of each bond’s file.
Stop chasing bond compliance gaps mid-project
The 12 verifications on this list take 30 minutes per bond if you’re fast. Multiply by 20 active subs across 4 federal projects, plus quarterly Treasury 570 and A.M. Best re-verification, and you’ve burned a week. Contracts Connected’s Subcontractor Prequalification module verifies all 12 items the moment a sub uploads a bond. Treasury 570 status, A.M. Best rating, penal sum match, POA validity, and re-checks them automatically on every contract value change. Between us, that’s the part of the job nobody wanted anyway.
For educational purposes. These templates, checklists, and trackers are operator-built starting points designed to help you move faster on the kind of work that usually drowns construction admins in email chains. They are not legal, insurance, accounting, or tax advice. Each project, jurisdiction, and contract has its own quirks. Review the document, refine the language, and consult your attorney, broker, CPA, or compliance officer before relying on it for a live project decision.
Frequently asked questions about federal performance bonds
What is the Miller Act and when does it require performance bonds?
The Miller Act (40 USC §3131-3134) requires performance and payment bonds on every federal-government construction contract over $150,000. The performance bond protects the federal government from contractor default; the payment bond protects subcontractors and suppliers from non-payment. Both bonds must be issued by a surety listed on the Treasury Department’s Circular 570. Contracts that grow above $150,000 mid-project through CO modifications also become Miller Act-eligible and require bonding from that point forward.
What does it mean for a surety to be on the Treasury 570 list?
The Treasury Department’s Circular 570 lists sureties approved to issue bonds on federal contracts. The list specifies each surety’s underwriting limit per bond, and Treasury updates it regularly. Sureties can be added, suspended, or removed throughout the year based on financial stability. Federal contracting officers are required to verify a bond’s surety against the current Treasury 570 list at award. Verifying directly at fiscal.treasury.gov is the only authoritative source. Surety websites and broker certifications can lag the official list.
What A.M. Best rating is required for federal performance bonds?
Federal contracting officers typically expect A.M. Best ratings of A or better, and most agency policies set A- as the absolute minimum. A.M. Best ratings reflect the surety’s financial strength and ability to pay claims; ratings of B++ or below typically disqualify a surety from federal work. Pull ratings directly from ambest.com at award, then re-verify at least annually for multi-year contracts. Rating cuts mid-project can require a bond replacement. Leave the verification on a calendar reminder.
When does a bond rider become required for change orders?
A bond rider is required when a change-order modification increases contract value beyond the original bond’s penal sum. Most contracting officers set a threshold (commonly 10% of the original contract amount) below which riders aren’t required, but the threshold varies by agency and contract. Check the specific contract clauses. Without a rider, the bond’s penal sum doesn’t cover the additional contract value, leaving the federal government partially unprotected. Track CO mod activity against the bond’s penal sum continuously, not just at major mod cycles.
How long do claimants have to file a claim under the Miller Act payment bond?
Under the Miller Act, claimants who have a direct contractual relationship with the prime have one year from the last day they provided labor or materials to file a lawsuit on the payment bond. Sub-tier claimants (those without a direct contract with the prime) must give written notice to the prime contractor within 90 days of their last labor or materials delivery, then have one year from that delivery to file suit. Notice must be sent by registered mail or another verifiable delivery method to the prime’s place of business or principal office.
What happens if a surety wants to cancel or terminate a performance bond mid-contract?
Federal performance bonds typically include a cancellation/termination clause requiring the surety to provide 30 days written notice to the contracting officer before cancellation. Notice given without the proper period is generally invalid. If a surety attempts to cancel improperly, the contracting officer can require the prime to obtain a replacement bond from a different Treasury 570-approved surety, and the contracting officer may pause payment until the replacement is in place. Track every cancellation notice received and notify the contracting officer immediately.