A $1.6 million payment dispute over a federal military renovation has put Sauer Construction, LLC and Federal Insurance Company at the center of a legal battle over surety bond obligations under the Miller Act.
Paramount Mechanical Corporation, based in Virginia, filed a complaint in the United States District Court for the Eastern District of Virginia, alleging it is owed at least $1,648,164 for work completed at Fort Myer, Virginia. The complaint, dated October 17, 2025, names Sauer Construction, the general contractor, and Federal Insurance Company, the surety, as defendants in the case involving the repair and renovation of Barracks, Building 416.
According to the complaint, Sauer entered into a prime contract with the US Army Corps of Engineers for the project at Fort Myer. On October 6, 2022, Sauer and Paramount signed an agreement for Paramount to provide mechanical and plumbing services, with an initial subcontract price of $6,991,500. This amount was later increased by $1,995,000, bringing the total subcontract price to $8,986,500, through a change order executed on April 11, 2024.
To secure payment obligations on the project, Sauer obtained a bond from Federal Insurance Company in the penal sum of $9,711,000. Paramount alleges that, after submitting progress payment applications, Sauer failed to make timely payments as required under the agreement, despite allegedly receiving corresponding payments from the project owner. The complaint further claims that Federal Insurance Company, as surety, also failed to pay the amounts owed to Paramount under the bond.
The complaint references several contract provisions relevant to the dispute. Paramount points to a clause requiring Sauer to pay within seven days of receiving payment from the owner. Another provision requires Sauer to make payment no later than 60 days from the date of the approved invoice and receipt of all required payment documentation if delays or non-payment are caused by Sauer or parties within its control. The indemnification clause limits Paramount’s liability to its own fault, negligence, wrongful conduct, or breach of the agreement, and excludes gross or willful negligence or intentional harmful acts by others.
Paramount seeks recovery under three counts: breach of contract against Sauer, breach of payment bond against Federal Insurance Company, and, in the alternative, quantum meruit for the value of labor, materials, and services provided. The complaint requests judgment for at least $1,648,164, plus interest, court costs, and any other relief the court deems just and proper.
All allegations remain unproven and await resolution by the court.
