Problem / Opportunity:
The vast majority of federal and state government contracts require Federal Prime contractors to subcontract on average 10-25% of the contracts to small businesses. However, most small business construction companies do not have the balance sheet strength necessary to obtain credit and construction surety bonds that are required for government projects.


Iron Eagle Strategic Plan:

Iron Eagle is able to acquire synergistic small business construction companies and increase their capacity to qualify for greater dollar amounts of surety bonds on both a per instance and aggregate basis.   In addition, Iron Eagle has a partnership with Lockton, the world’s largest, privately owned, independent insurance broker and one of the largest providers of surety contracts, This will enable Iron Eagle to provide its portfolio companies with greater levels of surety.

Construction Surety Bonds:

Most government and many private construction projects require a surety bond.  This is similar to an insurance policy whereby the company providing the surety bond guarantees that the construction company will fulfill its obligations to the original developer. In the event that the obligations are not met, the surety bond provider will pay the developer any losses due to the failed obligations of the construction company.

A surety bond is a contract among at least three parties:

• The obligee - the party who is the recipient of an obligation,

• The principal - the primary party who will be performing the contractual obligation,

• The surety - who assures the obligee that the principal can perform the task

The Miller Act:
 
Under the Miller Act, payment and performance bonds are required for general contractors on all U.S. federal government construction projects where the contract price exceeds $100,000.00.
In the United States, the law requiring contract surety bonds on federal construction projects is known as the Miller Act (40 U.S.C. Section 3131 to 3134). This law requires a contractor on a federal project to post two bonds: a performance bond and a labor and material payment bond. A corporate surety company issuing these bonds must be listed as a qualified surety on the Treasury List, which the U.S. Department of the Treasury issues each year.

The Miller Act provides that, before a contract that exceeds $100,000 in amount for the construction, alteration, or repair of any building or public work of the United States is awarded to any person, that person shall furnish the federal government with the following:

1. A performance bond in an amount that the contracting officer regards as adequate for the protection of the federal government.
2. A separate payment bond for the protection of suppliers of labor and materials. The amount of the payment bond shall be equal to the total amount payable by the terms of the contract unless the contracting officer awarding the contract makes a written determination supported by specific findings that a payment bond in that amount is impractical, in which case the amount of the payment bond shall be set by the contracting officer. The amount of the payment bond shall not be less than the amount of the performance bond.

The Miller Act payment bond covers subcontractors and suppliers of material who have direct contracts with the prime contractor. These are called first-tier claimants. Subcontractors and material suppliers who have contracts with a subcontractor, but not those who have contracts with a supplier, are also covered and are called second-tier claimants. Anyone further down the contract chain is considered too remote and cannot assert a claim against a Miller Act payment bond posted by the contractor.

Many states in the U.S. have adapted the Miller Act for use at the state level. These state statutes may be referred to as, "Little Miller Acts."