ESCALATION_CLAUSE_Doc1 3.21.25(1).docx

Cost Escalation / De-escalation

a) The Contract Pricing for all materials, supplies and services will remain firm for the duration of the Contract. Only properly documented and timely advanced notice requests for an actual cost increase in excess of 10% for the subject materials due to a tariff tax imposed that result in significant and actual cost impacts after the date of Bid Proposal will be entertained.

b) A proper request for a cost escalation will:

i. only be considered for advanced, timely noticed, and properly documented materials escalation due to tariffs or natural disasters through no fault of the Contractor; and

ii. must be submitted within thirty (30) days of actual tariff related cost escalation exceeding a total cost increase of 10% or more of the commodity’s documented bid pricing; and

iii. must be approved by the Owner and allowed only on a shared impact at actual pass-through cost basis, absent any mark-ups.

c) Approval of a cost escalation request will be at the sole discretion of the Owner on a shared cost basis. Retroactive cost increase adjustments will not be considered, nor will increases unrelated to tariff taxes. Adjustments to pricing shall be the result of increases at the manufacturer’s level pricing incurred after the Contract commencement date that:

i. will not yield a higher profit margin than that reflected in the costs awarded in the original proposal; and

ii. clearly identifies the items impacted by the increase; and

iii. is accompanied by sufficient documentation, acceptable to the Owner, and subject to audit requirements below.

d) Contractor will be required to provide sufficient documentation to justify the requested cost escalations(s), and Owner will determine the acceptability of documentation and sources. Documentation will include a cost proposal in sufficient detail for the Owner to perform a cost/price analysis upon which the original proposal was made. An evaluation and/or audit will be performed on the cost proposal, as well as other submitted documentation in order to determine if the requested cost increase is a fair and reasonable reflection of the actual material cost increase(s).

e) In addition to the General Conditions Article 17 surrounding Accounting, Inspection and Audit requirements, the Contractor agrees to maintain and retain books and records showing all relevant and original costs included in Contractor bids surrounding the materials and pricing in the asserted cost escalation, as well records satisfactorily demonstrating the actual cost(s) incurred for the subject materials that are asserted to be the result of tariff impacts. Each Sub-Contractor shall be similarly obligated to maintain, for inspection and audit by the Owner, books and records respecting the relevant materials and their original pricing, as well as the subsequent actual cost(s). If requested by the Owner, the Contractor shall furnish copies of any and all relevant documents, subcontracts, purchase orders and/or requisitions of any nature associated with the project and the impacts due to tariffs. The absence of sufficient documentation shall be grounds to deny any claimed escalation in pricing due to tariffs.

f) If the Owner does not find the documentation sufficient to support a cost escalation request on a pass-through basis the Owner reserves the option to counter-offer. When agreed upon by both Parties, the contract cost changes shall be binding on the Contractor. This escalation/de-escalation provision shall apply equally to cost decreases as well as increases. Cost decreases may be considered and implemented at any time during the term of the Contract.

g) All cost escalations/de-escalations shall be processed via a Change Order to the Contract.