The Electronic Systems Command at Hanscomb AFB, awarded a $107 million prime contract to upgrade the radar facility at Clear AFS, Alaska. In a unique situation, the general contractor with overall responsibility for constructing the project was actually a second tier subcontractor and our client, the electrical subcontractor, was a third tier subcontractor.

Normally, a third tier subcontractor has no rights under the Miller Act. However, we argued that the prime contractor and first tier subcontractor, who were related entities and owned by the same parent, should be treated as a single entity for the purposes of the Miller Act.  The court agreed and, as a result, our client became a second-tier subcontractor with rights under the Miller Act.

We anticipated that the litigation would likely be lengthy, expensive and risky, primarily because the prime contractor had—after the court accepted our argument permitting our client protection under the Miller Act—sought and obtained bankruptcy protection. At that point, none of the Miller Act plaintiffs seemed to have a good chance of recovery.  We then began working with our client and the Congressional delegation to arrange for a special appropriation to fund the Miller Act settlements.  That effort was successful, as an appropriation was passed and administered by a contracting officer for the U.S. Army Corps of Engineers for the express purpose of paying subcontractor claims on the project. Our client received a multi-million dollar recovery.