NEC ECC: Do Labour rates in the SSOCC include the direct fee?

We are working on an Option A contract and within a CE quote have built up our people and equipment costs using the SSCC and then applied the direct fee to these as well. This has been queried as being a fee on a fee.

Under the SSoCC you calculate the People rate and then apply the percentage for people overheads stated in the Contract Data. Equipment costs are calculated in accordance with component 2 and then you apply the direct fee percentage to both of these.

Under NEC3, if you have any subcontract costs then these are also allocated to the appropriate components of the SSoCC in the same way, although they are treated differently under NEC4.

From your question it is not clear why the ‘fee on fee’ query has been raised.

We have calculated the people cost using the labour rates in the SSOCC in the contract, added the people overhead %, calculated the equipment costs and then added our direct fee to both of these sections. Our client is saying our SSOCC already include our fee so the direct fee should not be applied to the people cost?

Are the rates derived from a schedule in Contract Data Part 2, or have they been calculated from ‘first principles’. From what you have said it looks like you are correct, so not sure why these are queried.