Our subcontractor applies travel/subsistence labour rates every time we ask them to do some additional work.
Also, when the rate excluding travel/subsistence can be used, as it seems this is never a case and since the rate allowing for travel/subsistence has been added into the contract.
Does the subcontractor have to provide any backup for it to justify higher rate application?
On the other hand, surely there should be a mechanism to justify which rate can be used as both of them (including and excluding travel/subsistence ) is in the subcontract?
Firstly, it is not clear, from what you have said, how these rates are incorporated in the subcontract and how they are to be applied. The fact that they are ‘in the subcontract’ doesn’t mean they are automatically used, unless they are applicable to what you are using them for.
The first test would be to decide what the additional Defined Cost would be for the compensation event, specifically People, and to consider the working arrangements of these People.
If the Site is determined to be a ‘temporary workplace’ which means these People are paid travel and subsistence, then the next test would be whether the time associated with the compensation event is additional to the duration that these People would have been on Site for anyway.
If the compensation event means that Person A was required to spend 2 additional days on Site then the 2 additional days would incur travel and subsistence. If there are no additional days then travel and subsistence is already provided for.
Remember that the assessment is based on ‘amounts paid by the Subcontractor’ so you may also need to consider associated issues, such as; statutory tests relating to a ‘temporary workplace’, any ‘salary sacrifice’ scheme and also how the resource is actually engaged by the Subcontractor, which may determine what is actually paid, such as a fixed term contract where the substantial part of the term is spent working at Site.