Your first federal construction job: what changes

1. Bonds are required, and they are bigger than you think

Federal construction contracts above the threshold in the FAR need a performance bond and a payment bond before award, under the law still called the Miller Act. The statute says the payment bond equals the total amount payable under the contract unless the contracting officer finds that impractical in writing, and it may not be less than the performance bond. The statute text and the current FAR show different dollar thresholds, so take the figure from the solicitation. Details, including who can claim on the payment bond and the 90-day and one-year limits, are in the Miller Act and Little Miller Acts.

What that means in practice: a $2,400,000 contract can need a payment bond of $2,400,000 on top of the performance bond. Your surety counts the job against your aggregate limit from the day of award. If you have not been through prequalification, start months ahead. See bonding capacity and surety prequalification. Most solicitations also ask for bid security; what is a bid bond covers it.

2. Labor is priced from the wage determination

Covered federal construction carries Davis-Bacon wage rates. The contract includes a Department of Labor wage determination listing a base rate and a fringe amount for each classification, and you pay at least that, weekly, to every laborer and mechanic on site, your own and your subs'. The full rules are in Davis-Bacon prevailing wage.

A worked labor price with invented rates. Your usual all-in rate for a carpenter, wages and benefits, is $28.00 an hour. The wage determination in the bid documents shows a base of $24.10 and a fringe of $9.85 for that classification. The estimate has 1,200 carpenter hours.

• Required package per hour: 24.10 + 9.85 = $33.95
• Labor at the wage determination: 1,200 x 33.95 = $40,740
• At your usual rate: 1,200 x 28.00 = $33,600
• Difference to carry in the bid: 40,740 - 33,600 = $7,140

Check: (33.95 - 28.00) x 1,200 = 5.95 x 1,200 = 7,140.

Payroll taxes and insurance still go on top, and so does the office time for certified payroll. Missing this in the estimate is a common way for a first federal job to lose money.

3. Weekly certified payroll

The Department of Labor's rules, under 40 U.S.C. 3145, require each contractor and sub to submit a weekly statement of wages paid to each worker. That means:

• every worker classified by the work actually done
• hours each day, rate, fringe paid in cash or to plans, deductions and net pay
• a signed statement that the payroll is correct, which carries criminal penalties if false
• the prime contractor collecting and checking every sub's payroll before submitting

The contracting officer can withhold payment to cover underpaid workers. Build the routine before the first payroll week, not after the first rejected one.

4. FAR clauses do the work of your usual general conditions

On a private job, the general conditions come from a standard form or the owner's lawyer. On a federal job, they come from FAR clauses included in the contract. Some to read before you bid:

• Differing site conditions. FAR 52.236-2 sets out Type I and Type II conditions and requires written notice before the conditions are disturbed. See differing site conditions.
• Changes. Only the contracting officer can change the contract. A field engineer's instruction is not a change order unless the contracting officer makes it one.
• Payments. Progress payments, retainage and the paperwork that goes with them are set by the contract's clauses.
• Termination. The government can end the contract for its convenience, with payment rules set in the clause.

The FAR is being rewritten in stages, and clause numbers can move. Read the clauses in your solicitation, not a list from a book.

5. Payment protection runs the other way too

Your subs and suppliers on a federal job cannot lien the property. Their protection is your payment bond. A sub's supplier who is not paid can claim on your bond, and your surety will look to you to repay it. Pay your subs on time, and collect lien and bond waivers that your contract allows.

Before you bid the first one

1. Talk to your surety about the job size and your aggregate.
2. Read the wage determination and price labor from it.
3. Set up certified payroll for yourself and your subs.
4. Read every FAR clause listed in the solicitation.
5. Price in the time it takes: submittals, schedule updates and reporting are often more formal.

Where this sits for the exam

The bulletin lists subject areas only. Our reading puts bonds, payroll law and public contracting under Procurement and Contracting Requirements, 31 of the 115 scored questions. Because the exam is used in many states, expect the federal ideas and general principles, not one state's numbers.

Test your contract knowledge

Take the free 10-question check. It needs no signup and explains every answer. For a lesson on Procurement and Contracting and four timed 115-question practice exams on the 330-minute clock, see the plans.

Sources

• 40 U.S.C. 3131 and 3133 (bonds), Legal Information Institute. Retrieved 7 Nov 2026.
• 40 U.S.C. 3142 and 3145 (wages and payroll statements), Legal Information Institute. Retrieved 7 Nov 2026.
• FAR 28.102-1 and FAR 52.236-2, acquisition.gov. Retrieved 7 Nov 2026.
• PSI Candidate Information Bulletin 1458, content outline, updated 7 Jul 2026. Retrieved 5 Nov 2026.
• All rates and amounts are invented.

FAQ

Do I need a payment bond on every federal job?

Contracts above the FAR threshold need both bonds. Smaller ones may use other payment protections the contracting officer selects. Check the solicitation.

Who submits certified payroll?

Every contractor and subcontractor with covered workers on site, weekly. The prime collects and checks the subs' payrolls.

Can a supplier lien a federal building?

No. Federal property cannot be liened. Unpaid subs and suppliers claim on the payment bond instead.