Tusco, a subcontractor, sued Clark Construction and its surety Travelers for unpaid change order work on a federal project. Tusco claimed the surety violated the Miller Act payment bond. The court ruled that a surety cannot hide behind pay-when-paid clauses or dispute resolution procedures in the subcontract—the surety must pay valid claims regardless. This means sureties are directly liable to subcontractors and cannot use the prime contractor's contract terms as a shield.
Pay-when-paid and pay-if-paid clauses in your subcontract do NOT apply to the surety's payment bond obligations under the Miller Act
You can sue the surety directly for unpaid work without first resolving disputes through the subcontract's dispute resolution process
On federal projects, the surety's payment bond is a separate, independent obligation that protects you even if the prime contractor withholds payment