Quote:
Originally Posted by GGG
I think the sub could charge the contractor what ever rate the contractor agreed to even in retrospect. There would be nothing illegal on the sub side to submit a change order adjusting the rate from $80 an hour to $100 per hour getting it signed off and then billing and being paid at the revised rate. If you inflated hours or material costs that would be fraudulent but charging an increased rate you likely would be okay.
On the contractor side though this might break the terms of the cost plus contract because to protect yourself in a cost + you should have an agreed rate sheet and an agreed material mark up.
If the contracts are well crafted what is being proposed should be fraudulent.
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Oops, I originally read that bolded part as "Should not be fraudulent".
But I'm gonna post my replay anyway because #-3 seems to think there is some grey area, when there most certainly is not.
It's 100% fraudulent.
Let's do some round numbers.
Main contractor (GC) has a contract with the customer for a cost+ contract.
Let's say the terms are Cost + 20%.
#-3's submits an invoice for $80, then the GC pays him his $80 and can charge the customer 20% ($16).
Total bill to the customer = ($96)
Profit for GC = $16
Now #-3 gives GC a new invoice that is higher than what he got paid.
New invoice is $100 say.
So now GC says he paid $100 and charges his 20% on top of that.
GC charges customer $120.
GC profits $40, which is now cost +50%
The GC has straight up stolen $24 from the customer and #-3 is a knowing party to fraud.
Nothing in this scenario is legal or a grey area.