Tebarco Mechanical Corporation - Page 4

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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