A subcontractor sued a surety company on a Miller Act payment bond for work on federal projects. The surety tried to offset what it owed by using debts the subcontractor owed on unrelated non-federal projects. The court ruled that sureties cannot use setoff clauses to delay payment on federal work, because the Miller Act requires prompt payment to subcontractors regardless of disputes on other jobs.
Setoff clauses in your subcontract cannot be used to withhold payment for federal project work, even if you owe money on other projects
The Miller Act protects your right to prompt payment on federal jobs—sureties must pay you for completed federal work without delay
If a general contractor tries to offset federal project payments with claims from non-federal projects, you have grounds to sue the surety directly