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percent to recover overhead expenses and to make a profit on the
job. The bid price submitted to the general contractor is a
lump-sum bid; the general contractor is not informed of the
various costs making up the bid. If accepted, the proposal forms
the basis of the contract between petitioner and the customer.
Once a contract is signed, petitioner orders materials
required for a particular job, such as steel piping and heating,
ventilation and air conditioning (HVAC) systems, on an as-needed
basis from various vendors. Petitioner supplies the purchase
order to the vendor, and the vendor looks to petitioner, not the
customer, for payment. Generally, when petitioner purchases
materials for a job, it has the items delivered directly from the
vendor to the job site, unless the weather or other exigent
circumstances require petitioner to ship the materials directly
to its warehouse. For instance, petitioner had a contract where
the schedule originally called for the materials to be delivered
to a job site in February. Due to inclement weather the job did
not progress as scheduled. Petitioner, however, had already
ordered the materials for the job, so the general contractor
asked petitioner to store the items at its warehouse. On another
occasion, petitioner was working during the summer at a school,
but the project could not be completed by the time the students
returned in September. Under those circumstances, petitioner
ordered the materials for the job and had the items shipped
directly to its warehouse.
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Last modified: May 25, 2011