Can someone help clarify contract language and how that applies to markup? The language says "Trade contractor markup for Overhead is 10% and 4% for Profit. Trade contractor shall be limited to a 5% fee on its lower tier contractors."
So if I am the trade contractor and I have a proposal from a lower tier contractor for materials and labor totaling $250,000. How do I calculate my markup? Is it +5% ($12,500.00). So now I am at $262,500 and add 10% for Overhead ($26,250.00) totaling $288,750. Now do I add the 4% ($11,500.00) so my final proposal is $300,250.00? So my markup total is $50,250?
Or is there another way to interpret the language? Is this a standard for federal contracts to limit pass through costs?
Any help would be greatly appreciated.