Access Communications Group, a Texas-based LLC, has filed a Miller Act Claim against SLSCO LTD, Hartford Fire, and Casualty Insurance Company, as well as Travelers Casualty and Surety Company after their contract for work on the Texas border wall was canceled.
Access Communications was hired on November 13, 2020, to provide labor, supplies, and other materials for work along a stretch of the border stretching from West Texas into New Mexico. On May 1, 2021, the contract was canceled for convenience by the Government, and on July 28, Access Communications submitted a claim notice for the amounts they were owed.
Access Communications group is requesting a jury trial against SLSCO, Hartford, and Travelers after receiving no payment for almost a year since the project’s cancelation.
As this suit is a Miller Act claim, Access Communications is entitled to submit its name in the suit alongside the US Government. This project was a federal construction project and thus it’s subject to laws that protect contractors and subcontractors who may not receive payment.
To be entitled to payment under these laws, a payment bond must be submitted at the start of the project, a claim notice must be submitted within 90 days of completion or cancellation of the project, and a suit, if necessary, must be filed within one year of the last day of work.
Government contracts like these, which are fraught with partisanship, have made dealings with surety companies and bond claims more challenging. This contract in particular seems to be one of the first canceled by the Biden administration’s Department of Homeland Security.
In a press release in mid-2021 confirming the cancelation of a similar project in Laredo, Texas, the Department said that these contracts “are not necessary to address any life, safety, environmental or other remediation requirements.”
This Miller Act claim is not SLSCO’s first border wall construction controversy: After being awarded $2.2 billion in border wall contracts from the Trump Administration, California Governor Gavin Newsom made efforts to halt the SLSCO’s construction of a border wall in Calexico, California — a wall that later fell over due to high winds.
Any general contractor on a government project must procure a contract bond with the required surety companies, which will protect any subcontractor in cases of non-payment. There are certain steps a contractor must take first in order to secure such a bond.
A contractor must gather all information about the specific bonds needed, submit a bond application with all the necessary documentation and financial info, wait for the bond quote, and then submit bond payment once the quote is received. Soon after, the GC will file the bond claim and give copies of it to any subcontractor they hire.
Many states have laws covering how and when these bonds are to be submitted to contractors and the insurance and surety companies. In Texas however, the GC is required to submit bond claims on a recurring basis.
Judgments on a case like this one may complicate the growing incomes and revenues that surety companies like Travelers are experiencing currently. Travelers Surety and Casualty Insurance reported a 38.88% increase in net income in the first quarter of 2022 compared to the first quarter of 2021.
This rise in revenues from a well-established surety company shows great signs that the economy is rebounding from the damages brought by the pandemic. However, labor shortages, rising costs of materials, and the need for a jury trial for a case like this one could cause stagnation to the current recovery.
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