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Over -absorbed Overhead: Over recovery of fixed indirect costs that occurs when a Contractor performs <br />more overall Work than it otherwise would have performed. <br />Overhead: For the purpose of calculating additional compensation under this section of the Contract, <br />Overhead shall include only those costs that are expended for the administration of the business as a <br />whole. Such costs usually accrue or are incurred due to the passage of time, and cannot be traced to a <br />particular project or Contract. Examples of possible Overhead costs include, but are not limited to, <br />General and Administrative salaries and benefits, rent, general company insurance (exclusive of insurance <br />on owned equipment that is directly job costed), depreciation on office facilities, utilities, maintenance, <br />office supplies, general company accounting and legal fees (exclusive of amounts expended directly on <br />any specific project), personal property taxes, general company business licenses, dues and subscriptions. <br />The following costs and expenses are excluded from the definition and calculation of Overhead. <br />Overhead costs that vary substantially with the volume of Work performed (as measured by billings) shall <br />not be included in Overhead for the purpose of determining additional compensation for Extended or <br />Unabsorbed Home Office Overhead or both. <br />Examples of costs that are not included in Overhead include, but are not limited to, travel and business <br />meetings, telephones, professional fees expended for the benefit of a specific project, union welfare <br />benefits, payroll taxes and equipment rental. <br />If related party transactions are included in a Contractor's Overhead, they shall be explicitly identified as <br />related party transactions and shall not exceed amounts that would be incurred in an arms -length <br />transaction for the provision of the same or similar goods and services. If such transactions exist and the <br />amounts paid by the Contractor and included in Overhead are in excess of that which would normally be <br />expended in an arms -length transaction, an adjustment, in the form of a reduction in the amount for <br />calculation purposes, shall be included in any calculation in determining the amount of Allocable <br />Overhead. <br />Overhead shall not include any cost directly attributable to a particular project. If a cost can be traced to a <br />particular Contract, the Contractor may not classify the cost as Overhead. <br />Indirect or home office costs that vary substantially with the amount of Work performed shall not be <br />included in the group of costs comprising Overhead. <br />Overhead shall not include costs specifically disallowed by Federal Acquisition Regulations, Subpart 31.2 <br />— Contracts with Commercial Organizations, or its successor. Further, "Overhead" shall not include the <br />costs of "field support services" that are more closely direct costs in nature, regardless of the manner in <br />which the Contractor normally accounts for such costs. An example of such disallowed cost would be for <br />material handling and expediting, which are costs incurred for the direct support and benefit of specific <br />project(s). <br />In addition to compliance with Federal Acquisition Regulations, Subpart 31.2 examples of specific costs <br />not allowed in a calculation under this section of the Contract include, but are not limited to, Incentive <br />Compensation paid to personnel classified as Overhead and otherwise includable under this section of <br />Contract, travel and business meetings, employer paid benefits and taxes on direct payroll costs of any <br />project, insurance costs directly identifiable to a specific project, penalties, and costs incurred regarding <br />company owned equipment normally classified as a direct project costs. <br />Owner: The City of Everett, Washington. "Owner" and the "City" mean the same. <br />Owner's Representative: The person designated in writing and employed or retained by the Owner to <br />act as its representative at the construction Site and to perform construction inspection service and <br />administrative functions relating to this Contract. The terms "Owner's Representative", "Engineer" and <br />"Architect" are interchangeable. <br />Person: Includes individuals, associations, firms, companies, corporations, partnerships, and joint <br />ventures. <br />Reservoir 3 Replacement Phase 1 <br />Work Order No. UP3739 00 72 00 <br />GENERAL CONDITIONS March 2024 <br />