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  • Question

    If the supplier completes a repair prior to submitting a proposal and then submits to me a 'proposal' for the actuals plus a percent for fee (i.e. actuals $1,000 and 10% fee of $100 for a total of $1,100), is that transaction considered a 'cost plus a percent of cost' contract? Would I be obligated to pay the total amount or only the 'actuals'?


    Answer

    Yes, that would be considered a prohibited cost-plus-percentage of cost transaction because the fee is based on actual cost rather than on a pre-negotiated target cost. The best way to resolve this in a "win-win" manner is to negotiate an amount that is fair and reasonable, based on past similar work.

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