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Subcnotractor Costs in Equitable Adjustment


alexreb

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The basic EA formula is "what it would have reasonably cost to perform the work as originally required and what it reasonably cost to perform the work as changed." Cibinic and Nash, Administration of Government Contracts, 4th Ed. How does that apply to work performed for a prime by a sub. For example, if prime's bid price is $5.00 each and a sub performs the work for the prime at price of $3.00 each, then is the original cost to do the work considered the sub's price of $3.00 or the sub's cost to perform the work?

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The basic EA formula is "what it would have reasonably cost to perform the work as originally required and what it reasonably cost to perform the work as changed." Cibinic and Nash, Administration of Government Contracts, 4th Ed. How does that apply to work performed for a prime by a sub. For example, if prime's bid price is $5.00 each and a sub performs the work for the prime at price of $3.00 each, then is the original cost to do the work considered the sub's price of $3.00 or the sub's cost to perform the work?

Nash and Cibinic explain it pretty well. But generally, the credit would be based upon the direct and indirect cost to the sub to perform the work plus its markups; then add any direct or indirect costs that the prime would have incurred or would have charged to the sub's work plus a reasonable profit. If construction, any applicable bond premiums would be added to all that. There are exceptions, but that is a general outline of the expected credit due for the work not performed.

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